Here’s the list of companies pouring in the big bucks to push India’s sustainable energy industry to the next level
Climate change is real and it’s impacting regions around the world. There is no way to safeguard the environment without drastically altering how we produce and consume electricity.
India’s electricity generation from coal slowed markedly in 2019, putting the country on track to its slowest power-sector emissions increase in three decades. This was due to a surge in renewable power generation.
Renewable energy is one of the most effective tools we have in the fight against climate change, and there is every reason to believe it will succeed.
India has made significant progress to implement policies to harness renewable energy.
Owing to its favourable geographic position, India has abundant resources of non-conventional energy.
According to a report, the country is world's 3rd largest consumer of electricity and world's 3rd largest renewable energy producer with 38% (136 GW out of 373 GW) of total installed energy capacity in 2020 from renewable sources.
Moreover, Ministry of new & renewable energy has set ambitious targets to increase the share of renewables in its energy mix. The government of India plans to install 175 gigawatts of renewable energy projects by 2022 and 450 GW by 2030. It includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power, and 5 GW from small hydro-power.
To achieve this ambitious goal, many Indian players are pouring in the big money, pushing India’s scattered sustainable energy industry to the next level, and fueling the country’s clean energy dreams for 2030.
Tata Power's contribution towards the green energy sector has been fascinating.
Presently, the company is one of India's leading players renewable energy. It’s well-positioned to respond to the shifting landscape of India's renewable energy push.
It’s a front-runner across the renewable spectrum through its subsidiaries, Tata Power Renewable Energy, Tata Power Solar Systems (TPSSL), and Walwhan Renewable Energy (WREL).
The company has renewable power capacity of 2.6 gigawatt (GW) in 11 states. It plans to take its production to massive 15 GW by 2025.
In a recent interview with a credit rating agency, the company's CEO Praveer Sinha said,
‘Tata Power's focus will continue to remain towards the expansion of its renewable and distribution businesses and go green strategy in the existing generation business’.
Tata Power aims to scale up renewable business towards its 2030 target. Clean energy currently makes up 32% of Tata Power and portfolio which is expected to touch 80% by 2030, Sinha said.
In addition, various recent orders and deals secured by Tata Power in the solar power industry has pumped up the stock.
Recently, Tata Power announced it has been awarded a project by solar energy corporation of India (SECI) to build a 100 megawatt (MW) engineering, procurement, and construction (EPC) solar project, along with 120 MWh utility scale battery energy storage system.
Over the period of last one year, the counter has surged over 228%.
JSW Energy's green energy plans look promising as the company decides to restructure its renewables business.
Two weeks back, we wrote to you about this recent development taking place in the firm and will it be able to make valuable change in the upcoming industry.
Through this strategic stake sale in its green energy business, billionaire industrialist, Sajjan Jindal aims to catch up with peers such as Tata Power and Adani Power that have stepped up investments into non-conventional energy.
As a result of this rejig, all present and future renewable energy operations will be housed under JSW Energy Neo, a wholly owned subsidiary of the firm.
Currently, the company has about 2,458 megawatt (MW) of renewable projects are under-construction, including the 2,218 MW of wind and solar projects, for which power purchase agreement (PPA) has been signed and are expected be commissioned in the next 18-24 months.
With the commissioning of these projects, JSW Energy Neo's total generation capacity will increase to 7 gigawatt (GW), with the share of renewable energy increasing from 30% to about 55%.
3. Sterling and Wilson
Sterling & Wilson Solar is one of the leading end-to-end solar EPC solutions provider globally. It has also emerged as one of the top 5 solar EPC manufacturers in India.
It's robust EPC portfolio consists of 252 projects with a cumulative capacity of 10.6 GW, including both domestic and international projects.
This consists of 202 installed projects with a total capacity of 6,661 MW, as well as more than 50 projects that are currently under installation, which make up a capacity of 3,919 MW.
Meanwhile, the profitability of the company continues to remain impacted due to challenging environment across the entire solar industry value chain.
Sterling & Wilson Solar reported a consolidated net loss of ₹2.8 bn for September quarter 2021-22. The company had logged a consolidated net profit of ₹150.9 m in the year-ago period.
Also, the solar EPC provider is under investor's radar since last month amid acquisition news.
Reliance Industries wholly-owned subsidiary Reliance New Energy Solar agreed to acquire up to 40% stake in Sterling & Wilson Solar (SWSL) for approximately a total pay-out of ₹28.5 bn.
The company is backed by strong parentage of the Shapoorji Pallonji Group.
4. Inox Wind
One of the most buzzing stocks this week is Inox Wind as the company’s board of directors have put forth a proposal for raising funds worth ₹5 bn via an initial public offer (IPO) of the company's wholly-owned subsidiary, Inox Green Energy Services.
Energy solutions provider Inox Wind deals in independent power parts like blades, tubular towers, nacelles, among others. It claims to be a fully integrated player in the wind energy market with three state-of-the-art manufacturing plants in Gujarat, Himachal Pradesh, and Madhya Pradesh.
Last month, Inox Wind said it has bagged a 150 MW wind power project order from NTPC Renewable Energy.
The project will help NTPC achieve its target of having over 60 GW renewable energy capacity, constituting nearly 50% of the company's overall power generation capacity by 2032.
This happens to be the largest order awarded by a public sector undertaking (PSUs) in recent times.
As part of the order, Inox Wind will supply and install DF 113/92 - 2.0 MW capacity wind turbine generators with 113 metre rotor diameter and 92 metre hub height.
Inox Wind is one of the largest manufacturers of wind turbine generators in India. They are a fully integrated wind energy solution provider engaged in providing services to IPPs, utilities, PSUs, corporates, and retail investors.
The energy company shares have been outperforming on bourses lately. The shares of Inox Wind have jumped higher by more than 161% in one year.
There is a demand for clean energy across geographies and the sentiment is positive for clean energy providers. Inox Wind is the clear beneficiary of such positive change in the sentiment.
5. Reliance Industries
Mumbai based billionaire Mukesh Ambani's Reliance Industries has formed a slew of partnerships for its green energy plans.
This includes solar, battery, and hydrogen investments. It may generate over 10% of the company's pre-tax earnings in five years, according to a study.
The oil-to-retail conglomerate announced a wave of partnerships with REC, NexWafe, Sterling and Wilson, Stiesal, and Ambri for an estimated cost of US$1.2 bn.
With these investments, Reliance has acquired the expertise and technology portfolio to start to build a fully integrated end-to-end renewables energy ecosystem through solar, batteries, and hydrogen.
The company is targeting solar manufacturing of 100 GW and green hydrogen costs of US$1 per kg by 2030. It will spend US$10 bn in these businesses over the next 3 years to meet these targets.
Over the next 3 years, the company will spend ₹600 bn to construct four 'giga factories' to make integrated solar PV modules, electrolysers, fuel cells, and batteries to store energy from the grid.
An additional ₹150 bn will be used for investments across the value chain, technology, and partnerships for the new energy business.
Also, the firm has committed to being net carbon zero by 2035, which is earlier than any other energy company in the region.
This move has made Reliance Industries to directly compete with the Adani group.
Adani Solar has 3.5 GW of annual solar photovoltaic production capacity while Adani Green Energy has a portfolio of 25 GW of commissioned and under construction projects.
In an effort to increase its presence in clean energy space, recently, Gautam Adani, chairperson of Adani Group, sealed the largest deal in India's renewable sector with acquisition of SB Energy for US$3.5 bn.
6. Borosil Renewables
For more than a decade, Borosil Renewables has been India's only solar glass manufacturer.
It’s engaged in the manufacturing of low iron solar glass for application in photovoltaic panels, solar thermal flat plate collectors, and greenhouses.
Manufacturers large and small have jumped into the solar glass race as a result of the country's sustainability goals, but they'll have to compete with Borosil's skill, experience, and near-monopoly in the market.
Due to Borosil's limitations and its monopolistic position in Indian market, the rest of country's huge solar glass requirement is met through imports from China and Malaysia on a daily basis.
The company faces a huge risk because in India there is no import duty for the import of solar glass. There is a 21% import duty for the glasses imported from China but Chinese companies used Vietnam and Malaysia as their manufacturing hubs and these free imports have mitigated the growth of the domestic Industries.
However, Borosil Renewables has a strong focus on expanding its domestic and exports footprints. It derives 77% of its revenue from India and the remaining by catering to exports mainly to USA, Turkey, and Europe.
Its export business has grown at a compounded annual growth rate (CAGR) of 33% in the last 3 financial years.
Also, the stock has seen a spectacular rally over the last one year. The stock of this solar glass manufacturing company, established in the year 2010, has made record gains during the last one year of 321%.
Should you invest in renewable energy stocks?
Renewable energy is already disrupting most parts of the energy industry, from electricity generation to transportation.
The future is certainly looking pretty ‘green’ for renewable energy bulls as many players are joining the race.
Also, increasing government spending, new policies that favour renewable energy, and regular incentives have driven people to invest in renewable energy stocks now more than ever.
Thus, the market has potential for strong overall growth in the decade to come.
Investors hoping to profit from India's renewable growth should look into the financials, management, business strategy, and all other fundamental factors of the companies in this sector before investing in them.