Renew Power, Fourth Partner In Deal For On Site Solar Assets?

Business daily Economic Times has reported a deal between Sumant Sinha led Renew Power and Fourth Partner Energy for the on site solar assets across Renew Power’s renewable installations. The deal is reportedly worth Rs 650 crores, for assets with a capacity of 140 MW spread across 100 locations. For Renew, the 140 MW capacity is a tiny part of its over 7 GW of commissioned capacity on date, with a total portfolio of over 10.3 GW to 2023-24.

While we await a formal confirmation from Renew Power, it is interesting to see just what the deal indicates.

For one, it is quite rare to see such deals involving on site solar assets. typically, these on site assets would be helping power ancillary services and local power requirements for the installation itself. In other words, power generated is consumed locally. In that sense, bundling and selling these off is an easy way to monetise these assets, and effectively, outsourcing their maintainance to the buying party. Till date Renew Power has usually gone with in-house maintainance for all its large renewable asserts, be it wind or solar.  An approach it shares with a quite a few large developers in India, be it Adani Green Energy, or Tata Power even. Thus, this deal might be signaling a change in mindset on that front. Readers will be aware that Renew Power has been an active buyer of renewable assets so far, including its last deal which included a 99 MW Hydro plant too.

As its portfolio size grows larger, the firm might be seeing the benefits of outsourcing O&M finally, to focus on its core business of developing and monetising assets, even as it faces the challenge of newer ventures like large storage, or even green hydrogen and possibly manufacturing of solar cells and modules soon.

The deal also indicates the ample liquidity that exists in the system for the right firms, to build up an assets portfolio, sometimes at a premium. That augurs well for developers seeking to churn portfolios to continue investing.

We would like to think that an alternate option suggested by an insider, of a purely financial transaction where Renew continues to manage these on site assets on behalf of Fourth Partner Energy as the new owner, is far more unlikely. It doesn’t fit in with the logic of what both these firms do and are good at, and their respective trajectories at this stage.