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India’s green energy deals are getting better valuations than pre-covid levels as yield-seeking funds and financial investors flush with capital are driving up prices.
India’s green energy deals are getting better valuations than pre-covid levels as yield-seeking funds and financial investors flush with capital are driving up prices.

Solar assets see growing foreign investor interest

Norway’s Scatec, Saudi’s Aljomaih Energy are separately scouting for deals

Norway’s Scatec ASA and Saudi Arabia’s Aljomaih Energy and Water Co. are separately scouting for solar assets in India, two people aware of the development said, adding to the growing foreign investor interest in the country’s green energy assets.

India’ solar power tariffs hit a record low of 1.99 per unit on Saturday at an auction conducted by Gujarat Urja Vikas Nigam Ltd and are expected to decline even further. According to Mercom India, Aljomaih Energy and Water Co. was among the firms that bid the record-breaking tariff of 1.99 per unit. The others to bid the lowest tariff of 1.99 per unit were state run NTPC Ltd, Torrent Power Ltd, and Aditya Renewables.

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Aljomaih Energy was one of the successful bidders in the auction run by state-run Solar Energy Corp. of India Ltd (SECI) last month. The Saudi company was among the firms that placed the lowest bid of 2 per kilowatt-hour (kWh) to win a contract to build a 200 megawatts (MW) solar project.

An investment of 4.7 trillion has been made in India’s renewable energy space over the past six years. That is likely to rise to 1 trillion annually till 2030, according to government estimates. Queries emailed to spokesperson for Scatec Solar on late Thursday evening remained unanswered. Aljomaih Energy and Water Co. couldn’t be contacted.

West Asian investors looking to invest in Indian green power assets include Doha-based Nebras Power QSC and Investment Corp. of Dubai. Abu Dhabi Investment Authority has already invested in ReNew Power Ventures Pvt. Ltd and Greenko Group. Masdar, also known as Abu Dhabi Future Energy Co., acquired around 20% in Hero Future Energies Pvt. Ltd last year.

“Scatec is becoming active in India’s clean energy space and is looking to buy assets here," said the chief executive of a renewable energy firm, one of the two people cited above, requesting anonymity. Oslo-based Scatec has 1.9GW in operational and under-construction projects and is targeting a 4.5GW capacity by 2021.

India’s green energy deals are getting better valuations than pre-covid levels as yield-seeking funds and financial investors flush with capital are driving up prices. This, despite the Indian clean energy space facing multiple issues related to a curtailment in power procurement, delayed payments and tariff-shopping by electricity distribution companies.

Indian solar tariffs have been on a downward trajectory.

“The decline in tariffs is being driven by lower capital cost per MW of around 4 crore because of i) an advancement in panel designs, enabling a higher capacity utilization factor; ii) a reduction in panel costs globally, and iii) lower financing costs," India Ratings and Research Pvt. Ltd wrote in a report on Wednesday.

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