Actis to set up 2 green firms with $850 million

Source: LiveMint.com, Mar 29, 2021

Private equity firm Actis Llp plans to invest $850 million in India to build two green energy platforms, said two people aware of the development, highlighting continuing interest among global investors in the domestic renewable energy market.

The first platform will focus on setting up grid-connected solar and wind power parks while the second will cater to the growing commercial and industrial (C&I) segment. These investments will be made from Actis Energy 5 LP fund.

“While Actis plans to make an equity investment of around $600 million for the new firm that will set up grid-connected wind and solar projects, the other new firm that will cater to the C&I segment may see an equity investment of around $250 million,” said one of the two people cited above requesting anonymity.

The person added that these firms will be set up shortly.

Considering the regulatory risks over green energy contracts and their enforcement, investors are increasingly looking at the C&I space as it tends to be insulated from risks such as curtailment in procuring power and tariff-shopping by state-owned distribution companies (discoms).

Green energy companies backed by global investors such as Petroliam Nasional Bhd-owned Amplus Energy Solutions Pvt. Ltd, Royal Dutch Shell-backed Cleantech Solar Energy, Netherlands Development Finance Co.-backed Avaada Energy Pvt. Ltd and Warburg Pincus-backed CleanMax Solar are currently supplying power to third-party as well as captive consumers in India who prefer such suppliers instead of depending on a more expensive electricity grid.

Also, there is considerable interest in the grid-connected clean energy space as well, given marquee deals such as the Goldman Sachs-backed ReNew Power’s proposed merger with Nasdaq-listed special purpose acquisition company (SPAC) RMG Acquisition Corp. II (RMG II), at an enterprise value of around $8 billion. Also, Greenko recently raised $940 million for refinancing through its latest dollar bond issue.

The third and the fourth firm clean energy firms being set up by Actis in India follow its earlier deal wherein it sold Ostro Energy Pvt. Ltd to ReNew Power Ventures in 2018 at an enterprise value of $1.5 billion.

Actis’s renewable energy platform in India—Sprng Energy—has an operational portfolio of 800 megawatts (MW) comprising wind and solar assets. With another 400MW coming online shortly, the PE firm plans to grow Sprng Energy to 2-gigawatt (GW) capacity before it monetizes it.

Some of the other clean energy platforms in India backed by private equity investors include KKR’s Virescent Infrastructure and European alternative asset manager EQT and Singapore’s state investment firm Temasek Holdings Pte.’s O2 Power.

The enthusiasm among global investors stems from India setting a target of 450GW renewable energy capacity by 2030. It currently has an installed renewable energy capacity of 89.63GW, with 49.59GW under execution. Also, ₹4.7 trillion has been invested in the country’s renewable energy space in the past six years, with an expected ₹1 trillion investment opportunity annually till 2030.

Actis, which invests only in emerging markets, has committed $2.1 billion in the Indian market so far spanning the energy, financial services and real estate sectors.

“Actis will also buy operating renewable and road assets through the Actis Long Life Infrastructure Fund, a yield-based fund,” said the first person cited above.

A spokesperson for Actis declined comment. Actis acquired two solar projects totaling 400MW from Acme Solar Holdings Ltd last year through Actis Long Life Infrastructure Fund. It has bid to acquire Ashoka Concessions Ltd.

ReNew commissions 300 MW wind farm in Gujarat

Source: The Economic Times, Mar 26, 2021

Clean energy firm ReNew Power has commissioned a 300 MW wind power project in Gujarat, the biggest such project since the industry faced pandemic-related issues.

This is also ReNew Power’s first project since it formally announced its listing on NASDAQ through a special purpose acquisition company (SPAC) merger with RMG Acquisition Corp II at a valuation of $8 billion.

“The commissioning is a significant achievement for everyone at ReNew Power as the team worked hard to put together one of the largest wind farms in the state with 120 turbines, laid 73 km of EHV transmission lines and over 330 km of medium voltage transmission lines despite major disruptions due to the Covid-19 pandemic,” said Sumant Sinha, chairman and managing director of Goldman-backed ReNew Power.

The project, in Gadhsisa village of Kutch district, was awarded in an auction conducted by Solar Energy Corporation of India (SECI). It will provide power to Haryana and Odisha.

The commissioning of the project takes ReNew Power’s wind capacity to 950 MW in Gujarat. Their total capacity in India is currently at 9,900 MW, out of which 5,400 MW is operational and a further 4,500 MW is under construction.

ReNew is among the country’s largest independent power producers in terms of total generation capacity from renewable energy.

Adani Green Energy acquires SkyPower’s 50MW solar project in Telangana

Source: Business Standard, Mar 20, 2021

New Delhi: Adani Green Energy Ltd (AGEL) announced on Saturday that it has signed an agreement to purchase 100 per cent stake in Toronto-headquartered SkyPower Global’s 50MW solar power project in Telangana.

With this acquisition, AGEL shall increase its operating renewable capacity of 3,395 MW with a total renewable portfolio of 14,865 MW, said the company in a statement.

Toronto-based SkyPower is planning to exit India where it has 350 MW of assets.

Leading companies were in a race to acquire the 50MW project in Telangana. The project was commissioned in October 2017 and has a long-term Power Purchase Agreement (PPA) with the Southern Power Distribution Company of Telangana.

Vneet S. Jaain, MD & CEO, AGEL said, “Strengthening our portfolio through organic and inorganic growth opportunities is in integral part of the our vision to build a capacity of 25GW by 2025 and become the largest renewables company in the world. We will leverage the strength of our platform and capital management philosophy to achieve operational improvements and value-accretive returns from the project.”

AGEL has a portfolio of 14.9GW of operating, under-construction and awarded projects – the highest in the country.

Adani Renewables bids Rs 2.77 for wind projects

Source: The Economic Times, Mar 15, 2021

Wind power tariffs dropped to two-and-half year low to Rs 2.77 per unit with Adani Renewables Energy Holding emerging as the lowest bidder in auction conducted by Solar Energy Corporation (SECI) on Monday.

Adani Renewable Energy Holding quoted Rs 2.77 per unit for 300-Mw capacity, while Ayana Renewable Power quoted Rs 2.78 per unit for a similar capacity. Evergreen Power Mauritius quoted Rs 2.78 per unit for 150-Mw. JSW Future Energy quoted the same bid for 450-Mw, data available with MSTC showed.

Other bidders who participated in the auctions are Azure Power India, O2 Power SG PTE, Shirdi Sai Electricals, AMP Energy Green, Tunga Renewable Energy, ReNew Vyan Shakti, AMP Energy Green and Halvad Renewable.

“It is worth noting that this is the first pure wind auction in over 1.5 years, first fully subscribed wind auction in over 2 years and the lowest wind tariff in over 2.5 years. With strong investor interest and risk appetite back in the sector, tariffs have expectedly fallen below Rs 2.80 per unit,” Bridge to India managing director Vinay Rustagi said.

SECI had last year issued the request for selection of wind power developers for setting up of 1200-Mw inter-state transmission system-connected wind power projects in India (Tranche-X). It will enter into power purchase agreements with the selected for a period of 25 years.

In the last tranche –IX of wind auctions conducted by SECI, JSW Solar placed a winning bid of Rs 3.01 per unit for 1,000-Mw, Vena Energy Vidhyut bagged 160-Mw at Rs 3.17 per unit tariff and Inox Wind Infrastructure won 50-Mw with Rs 3.41 per unit bid.

Govt committed to promote renewable energy, especially in MSME sector: Gadkari

Source: The Hindu Business Line, Mar 13, 2021

New Delhi: The government is committed to promote renewable energy resources in the country, especially in the micro, small and medium enterprises (MSMEs) sector, Union minister Nitin Gadkari has said. He also exuded confidence that within five years, India will be a top manufacturing hub for automobiles in the world.

Gadkari, who holds MSME portfolio along with road transport, said by making solar energy available, “we will create big market for electric vehicles”. He invited investors abroad to invest in Indian MSMEs and expressed hope that this will provide a number of opportunities to the MSME sector to become the world’s largest manufacturing hub. The minister was addressing a webinar on ‘Aatmanirbhar Bharat – Opportunities in Solar & MSME’ on Friday evening.

In his address, Gadkari said that the MSMEs with good track record are now being encouraged for capital market.

He said there exists a huge opportunity for investment in scrapping policy. The minister highlighted that India has tremendous potential and capacity for electricity generation. He said that the solar power rate in India is Rs 2.40 per unit and commercial rate of power is Rs 11 per unit and the cheap power generated through solar energy can be used for automobiles and other developmental works. The government has set an ambitious target for renewable energy and in particular, solar power generation, for this decade. The target for renewable energy installation is 450 GW by year 2030.

India to levy import tax on solar modules, solar cells from April 2022: Govt document

Source: The Hindu Business Line, Mar 10, 2021

New Delhi: India will levy 40 per cent customs duty on solar modules and 25 per cent on solar cells from April 2022, as it looks to cut imports and expand local manufacturing, according to a government document and two industry sources familiar with the matter.

India is targeting 175 gigawatts (GW) of renewable capacity by 2022 and 450 GW by 2030, as part of its commitment under Paris Climate Agreement to own 40 per cent of installed electricity capacity from non-fossil fuels by 2030.

Renewable deals get powered up

Source: LiveMint.com, Mar 03, 2021

MUMBAI : Goldman Sachs-backed ReNew Power’s successful attempt at a public listing in the US has rekindled hopes among clean energy firms of a brighter future ahead after the covid-induced turbulence of last year.

Deal activity in the renewable energy space grounded to a near halt as developers struggled to complete projects due to strict curbs placed since March 2020 to contain the pandemic while investors turned wary.

While the first three months of 2020 saw eight merger and acquisition deals worth $1.2 billion, the figure plunged to just $234 million across 10 transactions for the rest of the year, showed data from financial market data provider Refinitiv.

With covid crimping plans by clean energy firms to raise capital from the public markets through either debt or equity, scheduled launches of initial public offers and infrastructure investment trusts did not materialize.

Deal activity in the clean energy space was in sharp contrast with the overall M&A activity in India in 2020, which climbed 33% to $36.9 billion. A total of 18 companies raised $6.5 billion via public equity offerings, marking a 2.5 times rise from 2019.

Despite the clean energy industry achieving priority status under government regulations, new projects took time for completion while distribution companies were slow to pay bills to developers. Unable to cope with these challenges, some companies surrendered projects won through public auctions while others were not able to sign power purchase agreements with buyers. All these factors contributed to the overall investment slowdown in the sector.

The tide, however, seems to be turning. Earlier in February, ReNew announced a merger with Nasdaq-listed special purpose acquisition company (SPAC) RMG Acquisition Corp. II (RMG II) at an enterprise value of around $8 billion.

ReNew completed the listing after unsuccessful attempts to go public in India and plans to launch an infrastructure investment trust. Using the SPAC route helps companies bypass the regulatory tedium of a public listing. In the coming weeks, ReNew is also expected to close a ₹1,500 crore deal to sell 300 megawatts of wind farms to UK government-backed Ayana Renewable.

“ReNew’s Spac listing has been hugely positive for the sector and reaffirms global investors continued interest in the Indian renewable energy space,” Prateek Jhawar, director and head of infrastructure and real assets investment banking at Avendus Capital, told Mint. “Last year due to covid, travel restrictions had delayed deal closure but it is expected to pick pace this year. Many global strategic players have started looking at India with renewed interest and the SPAC listing has opened newer avenues for Indian renewable companies to raise capital.”

Essar Power to set up 90 MW solar plant in Madhya Pradesh for Rs 300 crore

Source: The Economic Times, Feb 24, 2021

Ruia-family run Essar Power Ltd will foray into renewable energy, setting up a 90 MW solar plant in Madhya Pradesh at an investment of Rs 300 crore, CEO Kush Singh said Wednesday. The entry into the renewable segment is part of a strategic decision to rebalance the power portfolio.

“The board of Essar Power Ltd, an investee company of Essar Global Fund (EGFL), has approved an investment of Rs 300 crore in a 90 megawatt (MW) PV Solar power plant in Madhya Pradesh, marking the fund’s foray into renewable energy,” he said.

The renewable energy venture comes close on the heels of EGFL investing in hydrogen power in the UK and coal gas in India.

The fund has overseen the completion of the deleveraging program of investee companies in the next two quarters.

It intends to repay the balance debt Rs 10,000 crore which is largely in the power portfolio.

“The strategic plan to rebalance our energy portfolio is in line with our move to an asset-light structure. In a series of calibrated steps, this shift will allow the company to bring down its debt from the current level of Rs 10,000 crore to Rs 3,000 crore through restructuring and monetisation of existing assets and further investments in this green portfolio,” Singh said.
Riding on success in unconventional energy generation such as coal-bed methane (CBM) and the hydrogen generation programme at its Stanlow refinery in the UK, Essar’s foray into renewable energy will also be a precursor to an exit from coal.

“Along with the ongoing hydrogen generation programme in our Stanlow refinery, UK, we have kicked off our transition to a new phase of investment-led growth, with the energy portfolio taking the lead,” said Singh.

“We have taken this step in line with the major thrust given by the Government of India in promoting and achieving the ambitious target of an installed capacity of 450 gigawatts of renewable energy by 2030.”

The proposed power plant is a solar photovoltaic project to be set up in Bhander, in the Datia district of Madhya Pradesh across 105 hectares of land and will be executed in two parts – 33.7 MW and 56.17 MW.

Electricity generated from this plant will be evacuated at 132 kV level and is proposed to be connected to the Bhander substation, which is located at approximately 5 km and will be supplied to industrial consumers within Madhya Pradesh.

The project is expected to be completed by June 2022.

Essar Power has a current operating capacity is around 3,185 MW.

EGFL has invested about Rs 32,000 crore in the power portfolio including 12000 crore of equity.

It has also invested in the transmission business by constructing a 465 km interstate transmission system, which spans three states.

The other two businesses of the fund’s energy portfolio are also making impressive progress both in India and the UK. Essar Oil Exploration and Production Ltd (EOGEPL) is the country’s largest unconventional energy player.

India adds 3.2 GW solar capacity in 2020; lowest in 5 years: Report

Source: LiveMint.com, Feb 23, 2021

NEW DELHI: India added 3,239 megawatt (MW) solar capacity in 2020, down 56 per cent from the previous year, according to a report.  The adding of 3,239 MW of solar capacity was the lowest addition in five-years-time, Mercom India Research said in its report on Tuesday.     

“India added 3.2 GW or 3,239 MW of solar capacity in 2020, a 56 per cent decline year-over-year (YoY) compared to 7,346 MW installed in 2019,” it said adding the country’s total solar installed capacity was at 39 GW gigawatt (GW) as of December 2020.   

The large-scale solar projects accounted for 78 per cent of installations with 2,520 MW, registering a 60 per cent year-on-year (y-o-y) decline. The addition of the remaining 719 MW rooftop installations was also down 22 per cent compared to the installation in 2019.      

Andhra Pradesh, Rajasthan, and Gujarat were the top three states for large-scale solar capacity additions, representing around 51 per cent of 2020 installations.      

“India’s solar installations in 2020 were the lowest in five years. While other top solar markets in the world have experienced positive growth, India, which had one of the most stringent lockdowns in response to the pandemic, took a while to get back up and running.

However, we expect the industry to experience significant positive growth in 2021,” said Raj Prabhu, Chief Executive Officer of Mercom Capital Group.     

According to the report, besides COVID-19, another significant bottleneck in the market has been the difficulty facing government agencies to get distribution companies (DISCOMs) to sign power sale agreements (PSA). This has left about 17-18 GW of projects without a PSA. Other short-term challenges included the rise in module prices, increased shipping and freight charges in the range of 500 per cent-800 per cent, and a surge in raw material costs.       

“As a result, the average large-scale solar project costs increased slightly by 2 per cent quarter-over-quarter (q-o-q) in Q4 (October-November) 2020. However, project costs were 2.5 per cent lower compared to the same quarter in 2019,” according to the report.    

On its outlook for 2021, the report said it expects the industry to experience positive growth in 2021. Mercom India Research is forecasting over 10 GW of solar installations in 2021.      The rooftop solar market is experiencing a turnaround, with installations improving significantly over the second half of the year. Fourth-quarter was the strongest for rooftop installations, and the report predicts momentum to continue into Q1 (January-March) 2021.

India’s green energy goals boosted by return of foreign backers

Source: LiveMint.com, Jan 26, 2021

India’s goal of doubling renewable power by next year is getting a boost from international investors who see the massive market’s potential outweighing significant risks.

French oil major Total SA’s $2.5 billion investment in Adani Green Energy Ltd. last week is a sign that global companies increasingly under pressure to invest in environmental assets are eyeing India’s 1.3 billion energy users, despite a mounting debt at generation companies and attempts by some provinces to renege on power purchase contracts.

Foreign investments are key to meeting Prime Minister Narendra Modi’s target to nearly double renewable energy capacity by 2022 and raise it five-fold to 450 gigawatts over the next decade. The plan offers investment opportunities of $20 billion a year through 2030, Modi told investors at a gathering last year.

“For India, the Total-Adani deal can also be perceived as a reflection of increasing confidence among foreign investors in India’s power sector,” said Charanjit Singh, head of ESG research at consultant firm Acuity Knowledge Partners. “With an improvement in the commercial viability of the power distribution sector, more foreign investments in the space could be expected.”

India’s renewables industry should be a prime candidate for investors increasingly demanding products that comply with the Paris climate agreement. The country is expected to have the world’s second-largest clean energy fleet by 2050, and unlike No. 1 China, it isn’t dominated by state-owned giants.

For investments to rise more, though, the country may need to fix its ailing power distribution sector. Power producers have been beset by delayed payments from provincial distribution utilities, which are often forced by local governments to sell power below cost.

Andhra Pradesh, a southern state in the country, decided to renegotiate renewable power purchase contracts in 2019, saying they were “exorbitantly priced” and needed to be reviewed to ease the financial burden of the state’s utilities and reduce power costs for consumers.

The decision, now under litigation, soured the mood of investors who kept away from project auctions for months. With the federal government’s pledge to protect the investments and enforce contracts, investors seem to be regaining that lost confidence, with participation rising in recent auctions.

In addition to Total, oil majors such as BP Plc and Malaysia’s Petroliam Nasional Bhd have invested in the sector, along with private equity and pension funds of countries including Canada and Singapore. India’s low per capita energy use, which is a third of the world average, holds promise of consistent demand growth. “A key reason that draws investors to India is the scope for growth in energy use, led by urbanization, applications from homes to transport, and a switch to green energy,” said Kameswara Rao, leader for energy and mining at PwC India. Still, “they will look for mature platforms that shuffle their assets and improve quality and lower risk.”