Powering on: Goldman Sachs-backed ReNew Power Ventures is India’s largest clean energy company
In a span of six years ReNew Power Ventures has become India’s largest clean energy producer and what has been remarkable is the its ability to raise large rounds of funding. Operating in the infrastructure sector is not easy given the high capex involved, but ReNew and its founder, Sumant Sinha, has done it with remarkable ease. The company is one of the well-funded in not only the renewable energy space, but also across industries in the year 2017. “To consistently be able to maintain a leadership position in the renewable energy space in India as the leading wind and solar IPP in the country is something that we pride ourselves on. We have a clean capital structure and have established a high degree of credibility which allows us to raise funds faster from marquee investors,” said a spokesperson from ReNew Power Ventures. The company boasts of investors such as Goldman Sachs, the largest shareholder in the company, Abu Dhabi Investment Authority, Asian Development Bank and Global Environment Fund. The company raised $200 million from JERA – an equal joint venture between Japan’s largest utility Tokyo Electric Power Co. (TEPCO) and Chubu Electric Power Co earlier this year. Overall, it has raised $880 million in equity funding till now.
The ability to raise equity as well as debt funding successively has helped it become one of the leading renewable energy players in the Indian industry. On the back of this capital, ReNew Power Ventures has quickly scaled up its capacity to 2 GW from 1 GW in the last one year. “We look forward to maintaining our leadership role in the sector and have at the start of the year been able to commission the largest solar project amounting to 143 MW in the state of Telangana. ReNew Power has added 1GW in the last financial year and we hope to maintain a similar pace of growth in the future as well. However, it will depend upon the upcoming auctions in the wind and solar energy sector. Our commissioned and under construction capacity today is over 3000 MW,” shared the spokesperson. Well-capitalised, but wary of pitfalls Sinha, whose father is the former finance minister Yashwant Sinha and brother is the current Minister of State for Civil Aviation Jayant Sinha, was the COO of wind turbine manufacturer Suzlon Energy before starting up in 2011. The first company in the renewable space to have over 1000 MW in wind and solar capacity, Sinha recently told ET that the company was preparing for an IPO. “The IPO could be launched within the next 12 months and could be amongst the largest listings of shares in recent times,” said Sinha to ET. According to estimates, the company is valued at $2billion.
However, there are significant challenges for the company. Some of the factors keeping the renewable energy sector in a stranglehold like high tariffs and prohibitory capital costs have been resolved to a great extent, yet payment delays by discoms is affecting the entire chain. Discoms have always been the weak link of the energy chain and have almost brought the sector to its knees many times in the past. And, ReNew wants government to step in and secure the chain. “For several states, payment cycles have been erratic, there have been delays in payments. In such cases, the risk premium attributed to a state gets increased and is reflected in the levellized cost of energy in subsequent bids. The government must therefore work towards developing a payment security mechanism which ensures payments are made on time,” shared the spokesperson. The PPAs (power purchase agreements), a contract signed between power producers and the distribution companies, have been a most abused agreements in the industry. With discoms running in losses, most of them have shown their inability to honour the agreements which they have made with power producers.
“At the state level, there should be policy consistency which will aid in the prompt signing of PPAs. Discoms should also maintain the sanctity of the signed PPAs and not try to renegotiate or cancel the commitment that has already been made. The government should continue to work on enhancing the process of grid integration of renewables and the must run status of renewables should be protected,” shares the spokesperson. Rating agency ICRABSE -1.36 % had also recently warned against the renegotiation or cancellation of signed PPAs which are bound to affect the rating of independent power producers like ReNew. State discoms in Andhra Pradesh, Karnataka and Uttar Pradesh have attempted to walk this road. The way forward With technology moving fast, renewable companies are looking at an exciting time ahead. Technological advances like smart grids and storage are two of the things which ReNew management feels will play a big part in disrupting the sector.
“Storage, both behind the meter as well as grid scale will emerge as a disruptive force in the Indian market. When the costs eventually come down, we will be able to deploy Giga-Factories for manufacturing of storage technologies in India. This will be a compliment deployment of renewable capacities across the country. A key innovation that is required to provide a fillip to the renewable energy industry is the setting up of a smart grid with an ability to accommodate a large share of renewable energy capacity,” said the spokesperson. Working in an extremely complex segment, the Sinha has insisted on fostering an entrepreneurial culture instead of a bureaucratic way of functioning and this is what, the spokesperson says, has kept the company keep abreast of the competition. With the government planning to generate 175 GW of its electricity through renewable energy, ReNew plans to consistently target 10% of the new capacity added every year in the country.