It took Greenko Group a decade to reach a gigawatt (GW) of capacity addition in the renewable energy space and then a mere 12 months to add its second GW.
Part of the reason is the spotlight enjoyed by the sector after years of negligence, but there is more to this than meets the eye. The bigger reason that Greenko Group now stands at a total of 2.5 GW of renewable energy is the strategy they have adopted for their business.
“We laid down some fundamental principles and stuck to them for the last 10 years, which led to this steep growth of the last couple of years, leading to the final capacity addition of 1 GW in the last year,” says Greenko Group, Ccofounder, President and Joint Managing Director, Mahesh Kolli.
Greenko now has 2.5 GW of operating capacity and another 800 MW under construction from 60 projects in 13 states generating 8bn units of electricity.
So, while on one hand, the government has worked progressively to streamline the policies affecting the renewable energy sector, gearing it up for faster capacity addition; on the other, the founders of Greenko — Anil Kumar Chalamalasetty and Kolli — have simultaneously been honing the company’s approach.
Diversify to grow
Wind, water and the sun can provide free energy, but there are several challenges that make generating power cumbersome and sometimes unsustainable. Over two decades, several companies have struggled in the renewable energy space. Change in policies, market dynamics, price of electricity, problems with the grid, fluctuations in price of inputs has meant solar, hydro and wind projects have faced uncertainties. Greenko wants to avoid that.
Over the years Greenko has built a portfolio using all sources of renewable energy – wind power (1079 MW), solar power (904 MW), hydro (380 MW), and clean fuel plants (78 MW). The diversification has been a conscious approach and Kolli states it has been chosen over faster capacity addition.
“We believe in a diversified portfolio because we like to balance. While it is possible to scale much faster with solar, yet we have strived to add all kinds of renewable energy. It has also been a deliberate strategic process to ensure capital allocation is split between all sources,” says Kolli.
Greenko recently raised $155 million and Kolli says the funding would be divided proportionally between all segments of renewable energy.
“We were able to build on the credibility of so many years to raise such large amount of capital. We did not face any bottlenecks in scaling up because both debt and equity market supported us,” says Kolli.
It is this diversified portfolio, adds Kolli, which has allowed Greenko to hedge its bets in times it did find it prudent to play any segment.
“Because of diversification, we never had to participate in a bidding process when we were not comfortable with the pricing because we had another asset class we had built. We never had any need to take a futuristic view when it came to pricing,” says Kolli.
Own and operate
Another conscious decision has been to have an own-and-operate model for all its projects. This, says cofounder Anil Kumar Chalamalasetty, helps them to manage the risk better and also presents them with better opportunities.
“We believe in owning and operating all types of our assets. It helps from the perspective of risk management and opportunities. With turnkey models you have to depend on OEMs (original equipment manufacturers) to provide you with a site to build the project, for the price of electricity, etc. We built our entire capacity without depending on OEMs. This approach has helped us to create scalable projects and build long-term ownership of renewable assets. Renewable energy for us is a utility business and not a tech business,” shares Chalamalasetty.
Keeping its core fundamentals always in their line of sight, the founders have developed projects which can be scaled up quickly. Kolli shares that the smallest wind farm owned by Greenko has a capacity of 100 MW.
“We build large clusters of projects. We have clusters of small hydro plants in Himachal, Karnataka and Telangana. One single radius of 450 MW of wind power projects is a pretty unique thing,” says Kolli.
The company has also added 500 MW of its capacity through acquisition, but, Kolli insists, acquisitions are selective and only done for solar and hydro projects.
“It is only the solar and hydro projects we acquire and only in those states where we have a large presence. It usually happens when we are building a cluster of projects and there’s some project in the same cluster. We do not acquire any wind project because we are not comfortable with the way wind turnkey projects are built,” says Kolli.
The company has capacity addition targets of 5 GW to be built by 2019 which will be achieved through building its own projects and selective M&As.
If achieved, Greenko will help the government inch towards its ambitious goal of generating 175 GW of its electricity through renewable energy sources by the year 2022 – an uphill task from the current capacity of over 57 GW of renewable energy.
Source: economictimes.indiatimes
