A less known fact about SunEdison is that it was founded by an Indian-American, Jigar Shah. Shah, son of a Gujarati doctor, created SunEdison in 2003 and sold it in 2008, for an undisclosed sum running into “millions”, and declined an offer to continue to be on its board.

In those five years, Shah’s SunEdison pioneered the ‘solar as a service’ concept, a ‘pay as you use’ business model that lets solar plant owners pay for it from their energy savings. It is now a case study.

Hours after SunEdison filed for Chapter 11 bankruptcy protection, the 42-year-old Jigar Shah, who now runs another company called Generate Capital, tweeted: “Founded by visionaries, built by revolutionaries, destroyed by mercenaries.” In another post, he wrote that he was “crushed” by the news.

Heavy spending The tweet was an obvious reference to the way SunEdison was being run by CEO Ahmad Chatila and his team. With deep pockets, the company went on a spree acquiring assets, till the pockets gave way.

For journalists in India, despite having access to the articulate India head, Pashupathy Gopalan, SunEdison always presented a blurred picture.

It seemed to do many things. It built solar plants for others. It built solar plants for itself and sold electricity, but sometimes sold the plants to another company promoted by it. It said it would make in India polysilicon, the basic raw material for solar panels.

It set about putting up micro-grids in partnership with others on a grand scale and bought a stake in an energy storage company to serve that end. And then it began purchasing wind plants.

Not content with small buys, it announced a mega purchase of Continuum Energy, a wind power company. An MoU was cobbled together with wind turbine manufacturer Gamesa to jointly set up 1 GW of wind power plants in India. Gopalan assured Prime Minister Narendra Modi that SunEdison would build 15 GW of renewable energy plants in five years.

‘India’s largest renewable energy company’ could legitimately boast of several firsts. A 1-MW plant built on the top of a water canal became a global talking point. Its 100-kW plant on the roof of the building of the output energy consumer, StanChart, was at that time, new. In Gandhinagar, the company built 2.5 MW of plants spread over 60-odd roofs, under a new ‘rent-a-roof’ concept. However, detractors were cynical of SunEdison’s aggressiveness, which peaked when the company bid and won 500 MW of assets in Andhra Pradesh for an unprecedented tariff of ₹4.63 a kWh. Gopalan insists that it is a profitable tariff but the industry began to foresee the company’s demise.

Debt pile-up Today, SunEdison faces a told-you-so moment, even though the bankruptcy has no origins in India. The problem, simply put, arose because as the company was building and buying assets across five continents, its debt piled up as equity investors lost interest and walked away. Many analysts have noted that this began happening from July 2015, when SunEdison announced a $2.2-billion acquisition of residential rooftop solar company, Vivint. Coming less than a year after a $2.4-billion buy of First Wind, investors were apparently wary.

Also, in the confidence that Terraform Power and Terraform Global, the yieldcos promoted by SunEdison would raise enough equity to buy SunEdison-built assets, the parent company continued to heap debt. But partly due to the slump in oil prices, which made investors’ wallets thin, the yieldcos were unable to pick up assets for which debt had been taken. SunEdison ended up with more debt than its projects could service and the consequence is Chapter 11.

‘India unaffected’ Gopalan told BusinessLine on Friday that SunEdison’s India business was “not at all affected” by the Chapter 11 filing. He said the company would “look for equity partners” either for the company or for individual projects, and mentioned ReNew Power, GreenKo and Aditya Birla group in this context.

Gopalan pointed out that SunEdison was able to secure $300 million ‘debtor-in-possession’ finance (loans given to Chapter 11 companies, which shall be repaid ahead of other debt.)

SunEdison in India has about 700 MW worth of solar projects which are operational or soon to be operational. In addition, it has 1,700 MW of new projects to be built for which it has planned to secure equity partners.

Gopalan also points to several other companies that have turned high-flyers after coming out of Chapter 11 — General Motors, for instance — but it is clear that the mercenary zeal that Jigar Shah complains about will lose a bit of its sheen.

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