Greenko emerges as preferred buyer for NEC’s US battery arm2 min read . Updated: 25 Nov 2020, 07:37 AM IST
- NEC Energy Solutions holds the intellectual property rights for megawatt-scale lithium-ion batteries
New Delhi: Greenko Energy Holdings has emerged as the preferred buyer for Massachusetts-based NEC Energy Solutions in a deal potentially valued at around $300 million, said two people aware of the development.
NEC Energy holds the intellectual property rights for megawatt-scale lithium-ion batteries. The development assumes significance and comes in the backdrop of India’ production-linked incentives (PLI) package worth up to around ₹2 trillion for 10 manufacturing sectors including, advanced chemistry cells (ACC) battery for the next five years.
“While an exclusivity agreement is yet to be signed, Greenko has emerged as the preferred buyer," said a person cited above requesting anonymity.
Earlier, AES Corp. of the US was also in the fray for the company owned by Japan’s NEC Corp., as reported by Mint earlier. This potential deal comes against the backdrop of Greenko investing in Silicon Valley-based Keracel, a maker of solid-state batteries, and the single-largest foreign clean energy investment in India so far of $980 million for a 17% stake in Greenko announced by Japan’s ORIX Corp on 11 September.
Sovereign funds GIC Holdings Pte. Ltd and ADIA-backed Greenko have pivoted towards battery storage and green hydrogen. With India’s largest operational clean energy portfolio of 6.5 GW, Hyderabad-based Greenko plans to partner with state-run NTPC Ltd to develop ‘round-the-clock’ power supply. This assumes significance given that solar and wind are infirm sources of energy, with storage holding the key to providing on-demand electricity from these green energy projects.
“Although NEC is not in a position to comment on market speculation, if there are any other questions we can help with, please feel free to be in touch," an NEC Corp. spokesperson said in an emailed response.
An AES Corp. spokesperson declined comment.
Queries emailed to a Greenko spokesperson on Monday afternoon remained unanswered.
The Economic Times reported on 17 August about Greenko looking to buy out NEC’s US battery unit.
Mint reported on 13 September about the Hyderabad based firm’s plan to invest around $1 billion in a new battery storage business that also includes a plan to produce lithium-ion batteries in India for power grid-scale applications and electric vehicles. The fresh capital for these new renewables’ vertical investment will be used by Greenko to buy and develop lithium-ion battery technology, and for manufacturing and developing applications.
Globally, lithium-ion cell manufacturing is dominated by China, followed by the US, Thailand, Germany, and Sweden. With China dominating the lithium-ion cell manufacturing, India wants to avoid a repeat of events with solar equipment manufacturing where China leveraged its first-mover advantage to capture the market. The value chain comprises processing of raw materials and manufacturing of separators, cathodes, electrolytes, anodes, cells, and battery storage packs.
“ACC battery manufacturing represents one of the largest economic opportunities of the twenty-first century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy. The PLI scheme for ACC battery will incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country," the government said in a 11 November statement.
Greenko’ emerging playbook also has an electricity distribution business as a growth area with the firm among the ten companies that has evinced interest in buying the electricity distribution company (discom) that supplies electricity to Chandigarh. It had earlier also submitted non-binding offer to buy Reliance Infrastructure Ltd’s Delhi electricity distribution businesses.