Despite Reuters and a whole bunch of mainstream media as well as some specialists in the renewable’s field having initially pronounced a major US$4 billion JV between SunEdison and India’s large conglomerate, Adani Group, was a done deal back at the beginning of the year, those that did so should re-acquaint themselves with the terms 'memorandum of understanding' (MOU) and 'feasibility study'.
Now according to Reuters, Adani has dumped SunEdison as a manufacturing partner in India to chase after Japan's Softbank and Taiwan’s Foxconn to build a PV manufacturing plant to feed aggressive plans to build a mere 10 gigawatts-plus of PV power plants in the country.
Even if an MOU has been signed, rarely is it worth the paper it is signed on, simply because it doesn’t mean anything other than several people having signed a piece of worthless paper.
Back in January, 2015 SunEdison and Adani Enterprises signed an MOU and even bothered to mention that the production plant would be based in Mundra, Gujarat, India over a three-year period. Though exactly what three-year period that would be undertaken in wasn’t made clear, unsurprisingly.
Other than it was only an MOU, a further caveat was that both parties would undertake a “comprehensive analysis of the joint venture opportunity and business plan”. This would be completed in the first half of 2015, according to a press statement at the time.
Not content with the signed MOU, both parties had added a further get-out-of-jail clause in the form of the feasibility study, something SunEdison had done the previous year (2014) with a grander US$6 billion JV including polysilicon production in Saudi Arabia.
On both occasions PV Tech took a more balance view on such plans, using such language as ‘considers’ and ‘potential’.
Nothing has really been said on either MOUs or feasibility studies by SunEdison since both plans were announced.
Indeed, SunEdison’s president and CEO, Ahmad Chatila, did later highlight that the purpose of the MOUs was to significantly minimise SunEdison’s involvement in manufacturing as well as its capital contribution by going down the JV route.
That may have been OK in relation to the MOU with the government of Saudi Arabia, but Adani is not cash rich on any scale you want to use. Add in that SunEdison has debts of around US$10 billion and the match between Adani and SunEdison and a US$4 billion capital requirement was not going to be easy.
Perhaps the prequel to the latest Reuters story was the signing of a large (70MW) PV module supply deal between Adani and Hanwha Q CELLS for planned projects in India, as well as a bigger 200MW supply deal with Suntech. Surely if the relationship with SunEdison was going well the deals would have been struck with them?
Therefore, the move eight months later by Adani to go after SoftBank and Foxconn as its new manufacturing partners makes a lot more sense. Both companies have billionaire owners and want to be major project developers in India.
So it would seem Adani has ditched SunEdison for richer potential partners. The only problem is that should the talks go well, we can expect another MOU.