The Top List. Key Foreign Investors in Indian Renewable Sector

Investors are moving to the renewable energy markets across the globe. Some of the largest foreign investors are finding it ideal to pour their investments into the Indian renewable sector. India promises highly favourable weather conditions and a willingness to rapidly develop the clean energy industry. In fact, it is one of the top destinations for foreign investors to direct their investments to.

Some of the perks of investing in India, instead of other Asian markets such as China, are the potential of owning up to 100 per cent of any renewable energy project in which a foreign company has a stake and a 25-year power purchase agreement (PPA). Foreign direct investment in India reached around $1.5 billion in the Financial Year 2021-22, while the total Investment in the sector reached a record $14.5 billion in the last fiscal (2021-22). It is an increase of 125 per cent compared to FY2020-21 and 72 per cent over the pre-pandemic FY2019-20. This also marks the highest ever in the Indian renewable sector in a year.

Think tanks like CEEW (Council for Environment, Energy, and Water) have estimated that India will need $10.1 Trillion in investments to meet its net zero targets by 2070. That is a massive requirement to fill, and till data, in no scenario is that possible without extensive external support and investments, from public or private sources.

Largest Foreign Investors in Indian Renewable Sector

The Indian renewable energy sector needs about $30-40 billion annually to meet the 450 GW target. In recent times, some of the biggest international investors from various continents have been flooding the Indian renewable sector. From SB Energy’s recent exit from the Indian renewables sector with a sale of assets worth $3.5 billion to Adani Green Energy Limited (AGEL) to European Scatec entering the Indian market with a plan to establish a 900 MW solar power plant in the country, there are several events of investments which signal that Indian Indian renewable sector is emerging as a preferred destination to park foreign funds on the path of Renewable energy.

American Investments

US-based infrastructure investor Global Infrastructure Partners (GIP) is a key player in the Indian infrastructure sector with energy as a key focus area. GIP entered India in 2018 acquiring the infrastructure investment management business from IDFC Group. Recently, Global Infrastructure Partners (GIP), together with its co-investors, announced that it has closed on a $500 million investment in renewable IPP BrightNight. The firm has also built a 1 GW renewable platform in India called Vector Green Energy Private Limited (worth about ₹5,000 crores). The firm looks to raise green bonds worth Rs 2,500 crore in the Indian market in the next 12-18 months to refinance its high-cost exposure to renewable assets in Andhra Pradesh, Telangana and Punjab. One of the options to raise equity is Vector Green.

Headquartered in New York City, Goldman Sachs, an American multinational investment bank and financial services company, is another big investor in the Indian renewable sector. The firm is an active investor in India and has deployed a total of $3.6 billion in capital since 2006. Its renewable investments include holding 33 per cent economic interest in ReNew Power Ventures Pvt Ltd, one of India’s largest renewable energy companies by operational capacity. Recently, Renew Power made investment plans for the next seven years or more. Renew Power is planning to develop renewable energy projects in Maharashtra across the wind, solar, hybrid power, battery storage and green hydrogen at an investment of ₹50,000 crores. It also plans to invest another ₹50,000 crores in Karnataka for developing green energy projects.

European Investments

Norway announced heavy solar investment in India. The country highlighted India as a priority market for its renewable energy growth, as the Norwegian Embassy assigned $1 billion in CIF finance for renewable energy projects in India over the next half a decade. Funding of $35 million also came from Norway’s Climate Investment Fund (CIF) and its biggest pension company KLP for the sake of developing a 420 MW solar power project in Rajasthan. The companies will have a 49 per cent stake in the Thar Surya 1 project, alongside an Italian firm, Enel Green Power.

Norway’s Scatec entered the Indian market, in June last year, in a partnership with ACME, a leading solar developer in India, to realise a 900 MW solar power plant in the state of Rajasthan. The project had an estimated total CAPEX of USD 400 million. Scatec has 3.5 gigawatts (GW) of installed capacity across four continents with South Africa, Egypt, and Latin America as its major markets. India is among the top 5 target markets for the company. The firm looks to further expand its presence in India as it aims to set up Greenfield projects in the country’s hydropower sector along with opportunities for acquisitions of distressed assets.

Other European investments include French multinational integrated energy and petroleum company, TotalEnergies entering an agreement with Adani Enterprises Limited (AEL) to acquire a 25% interest in Adani New Industries Limited (ANIL). ANIL targets to produce one million metric tons of green hydrogen Mtpa by 2030. Total is also a 51% owner in a special portfolio of over 2 GW of renewable projects hived off by the Adani group earlier. At an individual level, the firm remains by far the largest foreign investor in the renewable energy sector with its multiple investments through the Adani Group, besides its own presence now.

Besides Total, another energy major Shell also invested  $1.55 billion with the acquisition of Indian renewable energy firm Sprng Energy from Actis Solenergi. The deal effectively triple Shell’s renewable energy capacity in India.

Asian Investments

Some of the largest Asian investors have also recently joined the trend of investing in the Indian renewable sector. Petronas, a Malaysian state-owned energy giant, is in talks with ReNew Energy Global PLC to jointly set up green energy projects in India. With Continental Automotive Components(India), the firm has also signed MoU with the Karnataka state government for a total investment of Rs32,000 crores to set up a renewable energy plant in Mangaluru.

The Singapore government’s investment arm Temasek invests about $1 billion every year in India, In January 2022, European alternative asset manager EQT and Temasek announced that they have jointly set up O2 Power. O2 Power is a $500-million renewable energy platform in India. Temasek has grown its total India portfolio to $16 billion, nearly doubling the portfolio value over the last 5 years.

UAE-based International Holding Company PJSC (IHC) also made its mark in the Indian market. IHC invested ₹15,400 crores ($2 billion) as primary capital in three Adani portfolio companies — Adani Green Energy Ltd. (AGEL), Adani Transmission Ltd. (ATL) and Adani Enterprises Ltd. (AEL). The deal is so significant that it represents a whopping 4.87% of the total trade between the UAE and India, which reached $41 billion between 2020 and 2021.

Domestic Investments

Domestic players boast a substantial role in driving the Indian renewable sector. Adani Green Energy Limited (AGEL) bought the assets worth $3.5 billion from SB Energy as the latter sought an exit from Indian Market. This was indeed the largest deal in the sector in recent times. Similarly, Reliance New Energy Solar, a subsidiary of RIL, picked up REC Solar Holdings for $771 million.

 

Looking Ahead

Going forward, it seems safe to assume that more investors, especially from strong partner nations like Australia, Saudi Arabia and Germany will continue to show interest in India, as interests and ties are well aligned there.