The curious case of the 60 GW utility solar, REIT trusts and the arbitrage

Peculiarly, India is on the cusp on creating a demand supply distortion in the value chain of real estate and solar.

While in solar, we have actually shot ourselves in the foot by proposing extra-ordinary amounts of will backed by little to no action and thus lost credibility ; we have also turned around and proposed REITs and trust vehicles.

What’s more? The trust vehicles REITs proposed in the current structure are promoted to be operated by the developers themselves- in this case, it could even be the solar developers if they buy and build on the land, which I doubt they will because that is a distraction.

This infact will create an incentive for the solar developers, executives and officials to buy low cost land ( which becomes increasingly high cost over the course of execution of this 60 GW ) and gather them in a REIT structure , where they shall route their own ‘leasing revenue’ from the power plants and SPVs( which can also be an solar asset yieldco) back into their “REITs”.

If and when, the 60 GW target starts coming to fruition, we can infact see a partnership between two disparate entities – the REITs ( the UNITECH, THe Embassy Group, DLF etc ) and the Solar Yield-cos ( TERRAFORM and the likes )

Interesting times ahead for Indian solar and Real estate sectors for the next two decades.

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About V

I build things. Things aimed at changing the way we interact and live in this world. Currently building "SolarTown".
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