The acquisition, if it happens, will further ReNew Power’s consolidation drive in India’s renewable energy sector ahead of a planned IPO
New Delhi: ReNew Power Ventures Pvt. Ltd is exploring the acquisition of Waaree Energies Ltd’s solar power projects as it seeks to consolidate its position as India’s largest clean energy firm before a planned initial public offering (IPO), two people aware of the development said.
“ReNew Power has been in talks with Waaree Energies for its solar power generation assets,” said one of the two people cited above, requesting anonymity. The second person confirmed the development.
Goldman Sachs-backed ReNew Power has around 3.5 gigawatts (GW) of operational and under-construction capacity from its own wind and solar projects. It has set a target of over 11GW of wind and solar power capacity over the next five years.
Waaree Energies is one of India’s largest solar module manufacturers and has a 500 megawatt (MW) module manufacturing plant at Surat in Gujarat.
ReNew Power also plans to acquire global private equity firm Actis LLP’s Ostro Energy Pvt. Ltd, in a transaction that may rank among India’s largest renewable energy deals, Mint reported on 7 November.
Hitesh Doshi, chairman and managing director (MD), Waaree Energies, didn’t respond to phone calls or to a message left on his cellphone. A ReNew Power spokesperson said in an emailed response: “On your query regarding Waaree Energies, we’re unfortunately not in a position to comment.”
Japan’s JERA Co. Inc. bought a 10% stake in ReNew Power for $200 million in February, valuing the company at $2 billion.
Apart from Goldman Sachs and the Abu Dhabi Investment Authority, other investors in ReNew Power include Asian Development Bank and Global Environment Fund.
India witnessed record low solar tariffs of Rs2.44 per unit in May, which rose to Rs2.65 per kilowatt-hour (kWh) in an auction conducted by the Gujarat government in September.
Last week’s auctions conducted by state-run Solar Energy Corp. of India saw winning tariffs of Rs2.47 and Rs.2.48 per unit.
India’s green energy space is witnessing consolidation with overseas investors, such as France’s Engie SA and Rosatom State Atomic Energy Corp., readying their India plans.
Some of the active deals reported by Mint include Taaleri Plc.’s interest in acquiring a stake in Finland’s state-controlled power utility Fortum Oyj’s operational Indian solar power projects and Greenko Group and Hero Future Energies Pvt. Ltd being in separate talks with Singapore-based AT Capital Group to acquire Orange Renewable’s portfolio.
Also, Subhash Chandra’s Essel Infraprojects Ltd has mandated Investec to find a buyer for its solar business; and diversified conglomerate Shapoorji Pallonji Group is in stake sale talks for its solar portfolio.
Despite India’s emerging green economy, domestic solar equipment makers have been unable to leverage their position with the domestic solar module market dominated by Chinese firms.
Domestic manufacturers account for only 10.6% market share, according to consulting firm Bridge to India.
Seized of the problem, the government is considering a 30% capital subsidy as part of a new solar manufacturing policy.
Alongside, it is also proposing a “rent a roof” policy to support its ambitious plan of generating 40 gigawatts (GW) of solar power by 2022.
India has set an ambitious clean energy target of 175GW by 2022. Of this, 100GW is to come from solar projects. The government plans to award 100GW of solar and wind contracts by March 2020.