ReNew Power Makes First Hydro Acquisition, Adds 359 MW Acquisitions

 ReNew Power continues its strong 2021 performance with the announcement of two acquisitions of 359 MW of renewable projects. Notably, the firm has made its first Hydropower acquisition, a 99 MW project in Uttarakhand.

The second project is a clutch of 260MW/330MWp solar projects in the state of Telangana

According to the firm, the combined enterprise value of the acquisitions is around INR 28.5 billion (US$ 384.0 million). These will add approximately INR 3.8 – 4.0 billion (US$ 50.7 – 53.4 million) of EBITDA on a full-year basis.

Like most renewable energy majors ReNew also has a  strategy of organic and inorganic expansion. The firm has  also announced plans of entering manufacturing of solar components. The firm is also likely to see the star of trading in its shares by this month end at NASDAQ, following the approval by the US Securities Exchange Commission or SEC (the equivalent of India’s market regulator SEBI) to the $8 billion SPAC transaction between ReNew Power and RMG Acquisition Corporation II.

This is a landmark transaction as it represents the biggest overseas listing of an Indian company via the SPAC (special purpose acquisition company) route.

ReNew announced that it will acquire L&T Uttaranchal Hydropower Ltd., which owns the Singoli Bhatwari Hydroelectric Project (SBHEP), from L&T Power Development Ltd., a wholly-owned subsidiary of the engineering and construction firm L&T. As a part of the transaction, ReNew will add the project operations team of SBHEP to its team.

ReNew has won two such projects last year including a Peak Power (PP) Project as well as a Round-The-Clock (RTC) Power Project for which ReNew signed a Power Purchase Agreement (PPA) last week. The addition of SBHEP, which has a significant pondage capacity of 2 – 3 hours, adds 200 – 300 MWhr of low-cost hydro storage to ReNew’s portfolio. This further extends ReNew’s leadership in storage and reliable power solutions

SBHEP, situated on the Mandakini river in Rudraprayag district of Uttarakhand, was operationalised in December 2020 and is expected to have a residual life of nearly 35 years. This project is expected to have a net billed generation of 360 million units annually, or around a 50% PLF, and has a similar profitability profile as ReNew Energy’s current operating portfolio. As the project is commissioned after 8^th March 2019, the power generated from this project will facilitate recently notified Hydro Purchase Obligations (HPO) compliance for the buyer.

In a separate transaction, ReNew Power also announced the signing of a definitive agreement to acquire 260 MW/330 MWp of operating solar projects in Telangana. The projects have a 25-year PPA with Northern Power Distribution Company of Telangana Ltd. (NPDCTL) and Southern Power Distribution Company of Telangana Ltd. (SPDCTL) and have been operating for around 4 years.

The acquired assets are located close to ReNew’s existing solar projects in Telangana which should offer opportunities to enhance productivity, reduce operations and maintenance costs, and utilize ReNew’s proprietary monitoring and analytical technology to further boost output.

Speaking about the acquisitions, Sumant Sinha, Founder, Chairman and CEO of ReNew Power, said, “We believe that the acquisition of these assets is expected to earn an attractive return within our targeted range and is proof that ReNew is uniquely positioned to be a big beneficiary of the consolidation of renewable energy assets in India. We are able to overlay our competitive advantages of scale, superior operations through vertical integration and utilisation of our industry-leading monitoring and analytics technology, financing innovation and access to low-cost capital to create significant value through acquisitions. Furthermore, the hydropower acquisition strengthens our ability to provide reliable and dispatchable power to the grid which complements our solar and wind assets. The acquisition of solar assets in Telangana and the hydropower project in Uttarakhand as well as the recent 200 MW MSEDCL auction win takes our commissioned and contracted capacity to well over 10 GW and sets us on the path to attain 18 GWs of capacity by 2025.”