A joint venture company between Japan-based SoftBank, Taiwan-based Foxconn, and Indian conglomerate Bharti Enterprises has stuck its first deal in the solar power market.

SBJ Cleantech has signed an agreement with the state government of Andhra Pradesh to set up 2 GW of solar power capacity, which will be further expanded. The company will also set up 1 GW wind energy capacity in the state.

The solar power projects are likely to be commissioned in hybrid mode with wind energy projects. The Andhra Pradesh government is looking to promote large-scale renewable energy projects hosting solar and wind energy projects.

SBJ Cleantech was formed earlier this year when the 3 companies announced plans to invest $20 billion in India’s renewable energy market. SoftBank chairman and CEO Masayoshi Son has mentioned to the press that the three-way joint venture company will develop at least 20 GW solar power capacity in India.

SBJ Cleantech has not participated in the any auctions since its launch but may be looking to set up projects by signing bilateral agreements with state governments. However, giving competitive auctions a miss may not mean that it would be able to extract a higher feed-in tariff. At the occasion of signing the memorandum of understanding, Andhra Pradesh Chief Minister urged the companies to ensure that solar power output cost is reduced to Rs 3.50-4.00/kWh compared to the current Rs 5-6/kWh.

Earlier this year the state government has announced a fresh solar power policy with a target to add at least 5 GW capacity over a period of 5 years. The government has auctioned 726 MW capacity in two auctions held April 2013 and October 2014.