Singapore-based renewable energy developer Equis Energy wants to sell its entire India portfolio, comprising green energy platforms Energon and Energon Soleq, two people aware of the development said.
The sell-off plan, an indication of growing consolidation in India’s green energy sector, is part of Equis Energy’s strategic review of its Asian renewable energy portfolio.
“Equis Fund has put up Energon and Energon Soleq for sale. It is seeing a lot of interest. The exercise is underway as part of their Asia portfolio strategy with them planning to run an auction process for the same,” said a person aware of the development, requesting anonymity.
While Energon is focused on wind power projects with 414 mega watt (MW) of operating assets, Energon Soleq works in the solar sector and is developing projects totaling 260MW in Telangana and Karnataka. Additionally 300MW of capacity is also being developed.
“Several firms are interested in these assets,” another person who did not want to be identified said, confirming the development.
This comes in the backdrop of declining green energy tariffs resulting in fewer clean energy deals because of concerns that electricity offtake commitments at higher tariffs may not be honoured.
“Equis Energy (Equis), Asia’s largest independent renewable energy independent power producer (IPP), has appointed Credit Suisse (Singapore) Limited and J.P. Morgan (S.E.A.) Limited as financial advisors and global coordinators to conduct a strategic review with respect to its renewable energy portfolio,” Equis Energy said in an 18 April statement.
As per information available on its website, Equis has raised around $2.7 billion in equity and started Equis Energy in 2012. The firm has 4.7 giga watts (GW) of renewable energy generation assets across Asia-Pacific, with an additional 6.3GW under development in Australia, India, Indonesia, Japan, the Philippines, Taiwan and Thailand.
Analysts have placed their bets on India’s green energy drive although some concerns such as weak finances of the state electricity boards and financing and execution risks remain.
“The Indian renewable energy market will likely see strong growth over many years, as India focuses on greening its energy mix, in line with commitments under the Paris agreement signed in December 2015,” Moody’s Investors Service wrote in a 8 June report.
The competition has intensified with India’s clean energy market witnessing record low tariffs for wind and solar power projects of Rs3.46 per unit and Rs2.44 per unit, respectively.
“Moreover, the recent round of biddings in the case of solar projects have seen a sharp drop in the quoted tariffs, and the ability of such projects to achieve financial closure, given the concerns over the fact that the long-term viability of projects at such tariffs remains to be seen,” the report went on to add.
Some of the deals in play in the Indian clean energy space include sale of Ostro Energy Pvt. Ltd being explored by global private equity fund Actis Llp. Also, IDFC Alternatives, the asset management arm of the infrastructure-focused lender, is in talks to buy First Solar’s 200MW of renewable power assets in India, Mint reported 13 April.
It has been some time since a large deal such as Tata Power Co. Ltd buying the entire 1.1GW renewable energy portfolio of Welspun Energy Ltd for $1.4 billion and Hyderabad-based Greenko Energies Pvt. Ltd acquiring SunEdison’s Indian assets for $392 million last year have taken place in the Indian green energy space.
While spokespersons for Credit Suisse and J.P. Morgan declined to comment, David Russell, Equis board chairman in an emailed statement said, “Equis is considering a restructuring of its entire renewable energy business with longer term investors looking to support management’s growth strategy. The process involves the restructuring of 100% of Equis Energy.”
India has an ambitious clean energy target of adding 175GW by 2022 and has announced its intent to stay the course despite US’s withdrawal from the Paris climate agreement on grounds the deal favoured India and China and was unfair to the US.