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NEW DELHI: ReNew Power is set to buy operational solar and hydropower generation assets totaling 359 megawatt (MW) for an enterprise value of $384 million, the green energy firm announced on Wednesday.

The acquisition includes 99 MW Singoli Bhatwari Hydroelectric Project (SBHEP) in Uttarakhand from L&T Power Development Ltd and marks ReNew Power entry into the hydropower generation space. The plan also involves 260 MW solar project in Telangana.

These operational assets add "approximately INR 3.8 – 4.0 billion (US$ 50.7 – 53.4 million) of EBITDA on a full-year basis," ReNew Power said in a statement.

This comes in the backdrop of ReNew Power's impending merger with Nasdaq-listed special purpose acquisition company (SPAC) RMG Acquisition Corp. II (RMG II) at an enterprise value of around $8 billion. The shareholders of RMG II will vote on the merger on 16 August. The new entity, ReNew Energy Global Plc, is to be listed on the Nasdaq under the ticker symbol ‘RNW’, at an equity value of $4.4 billion.

“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," the statement said.

There is a growing traction for hydropower projects among Indian clean energy majors. With an operational portfolio to 7.3 GW, Hyderabad-based Greenko is building power storage projects with a capacity of 8 GW across six states in India as part of its plan to provide on-demand power.

India also plans to shortly come out with a policy to promote hydro pump storage schemes with around 96 GW identified as a potential capacity for the same. The idea is to use cheap green power during off-peak hours to raise water to a height and then release it into a lower reservoir to generate electricity. Pump storage helps the national power grid withstand fluctuations caused by intermittent supplies from solar and wind.

“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 statement added.

ReNew Power operates 6.24 gigawatt (GW) of solar and wind power, with a total capacity of around 10 GW as of 31 December. In 2018, it had acquired 1.1GW of wind and solar power assets from Ostro Energy, one of the biggest acquisitions in the Indian renewable energy space.

“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," Sumant Sinha, founder, chairman and CEO of ReNew Power, said in the statement.

ReNew Power also plans to invest $1.2 billion to supply round-the-clock 400 MW, and recently signed the long pending power purchase agreement (PPA) with state run Solar Energy Corporation of India (SECI) for the same.

“The transaction is subject to completion of customary closing conditions and closing is expected to take place before 30th September 2021. The sale consideration is 985 Crs," Larsen & Toubro said in a separate statement.

“This is in line with the declared L&T focus of divesting non-core assets and improving shareholder value," the L&T statement added.

The $1.2 billion equity proceeds from the ReNew Power merger with RMG II includes a private investment in public equity (PIPE) deal of $855 million. The PIPE investors include BlackRock, BNP Paribas Energy Transition Fund, Chamath Palihapitiya, Sylebra Capital, TT International Asset Management Ltd, TT Environmental Solutions Fund and Zimmer Partners.

ReNew Power is among the earliest entrants in India’ green economy. ReNew Power’s existing shareholders include Goldman Sachs, Canada Pension Plan Investment Board, Japan’s JERA Co. Inc., Abu Dhabi Investment Authority, GEF SACEF India and Sumant Sinha.

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