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Green energy projects now account for more than a fifth of India’s installed power generation capacity. (Photo: Pradeep Gaur/Mint)
Green energy projects now account for more than a fifth of India’s installed power generation capacity. (Photo: Pradeep Gaur/Mint)

Hero Future Energies exploring stake sale

  • With an installed capacity of 1.3 gigawatt and another 1.5GW under construction, Hero Future Energies plans to build a 5 GW portfolio by 2022 and expand its operations in Africa and India

NEW DELHI: Rahul Munjal-led Hero Future Energies Pvt. Ltd is looking at selling part of its stake in its clean energy business, and has asked HSBC to find a buyer, said two people aware of the development.

Abu Dhabi Future Energy Co, also known as Masdar, had acquired around 20% stake in Hero Future Energies for $150 million in November, valuing the Indian renewable firm at $750 million. Masdar is owned by the United Arab Emirate's sovereign wealth fund, Mubadala Investment Co.

International Finance Corporation (IFC), part of the World Bank, had invested $125 million in the Rahul Munjal-led entity in 2017.

Queries emailed to spokespersons of Hero Future Energies, IFC and Masdar on Sunday evening remained unanswered.

A HSBC spokesperson declined to comment.

With an installed capacity of 1.3 gigawatt (GW) and another 1.5GW under construction, Hero Future Energies plans to build a 5 GW portfolio by 2022 and expand its operations in Africa and India, and be present across the solar energy value chain.

There is growing consolidation in India’s clean energy space. Some of the deals in the works reported by Mint include, a proposed 51% stake sale in Tata Power’ renewable energy InvIT, and a majority stake sale in Finland’s state-controlled power utility Fortum Oyj’s 500 megawatts (MW) Indian solar projects.

Green energy projects now account for more than a fifth of India’s installed power generation capacity. India has 34.6 GW of solar power and 38GW of wind power. The country is among the top producers of renewable energy globally, with an ambitious capacity expansion plan to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments.

In an auction conducted last month by state-run Solar Energy Corporation of India Ltd, the lowest bid recorded was 2.36 per unit, placed by Spain’s Solarpack Corporaciуn Tecnolуgica, S.A. Italy's Enel Group, Canadian firm AMP Solar Group’s India unit, France’s EDEN Renewables, Ib Vogt Singapore Pte ltd, UK’s CDC Group-backed Ayana Renewable Power and Goldman Sachs-backed ReNew Power had also participated in the auction.

While India's clean energy space has been seeing capacity addition, there are concerns of dwindling debt financing with large Indian banks reluctant to fund projects that have committed to sell power at less than 3 per unit.

The banks are wary of the viability of projects that have agreed to sell power at rock-bottom tariffs.

Concerns have also emerged, with some state governments wanting to renegotiate clean energy contracts. The latest case in point being Punjab which has sought a discount from solar power developers because of low interest rates and a financial crunch exacerbated by the pandemic.

Punjab’s move followed the widely criticised attempts of the Andhra Pradesh government to renegotiate clean energy tariffs.

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