Get All Access for $5/mo

India Emerging As Global Hub For Green Energy Deals The renewables sector has witnessed the evolution of a few interesting deal themes against the backdrop of this astounding capacity and capability ramp up

By Satyaroop Panigrahy

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Unsplash

The paradigm has definitely changed for green energy deals in India. The renewable energy (RE) space which was estimated to have undergone a consolidation between 4-5 strategic players and 3-4 large RE platforms till a few years back has re-transitioned into one of the fastest-growing sectors in India. It has been witnessing a phenomenal increase in both the number and type of investors.

India's total installed capacity of renewable energy recently crossed the landmark 100GW, doubling in five years with solar power alone increasing from 2.5GW in 2014 to 42GW in 2021. India is already the world's largest market for renewable auctions having one of the lowest tariff rates in the world. A heightened churn rate in the market implies that market leaders across various segments in terms of installed capacity keep changing every year.

The renewables sector has witnessed the evolution of a few interesting deal themes against the backdrop of this astounding capacity and capability ramp up.

Many global private equity backed RE platforms have shifted their approach from a "bolt-on' acquisition model to an organic growth model, a key reason for boosting confidence in the country's institutional framework for development of greenfield projects.

The pension and sovereign funds have traditionally engaged in the buyout of utility scale operational RE portfolios on a "yield return" basis. The renewables segment is also witnessing the emergence of a new trend with many US and European hedge funds that typically do "multiple return" investing looking to buyout operational RE assets.

A key reason for the changing sector dynamics is the diversification of exit opportunities for private equity players. The exit options have evolved from raising a larger round followed by domestic /offshore IPO to setting-up an InvIT and exiting through acquisitions by offshore SPAC (Special Purpose Acquisition Company) vehicles. We are witnessing an enhanced level of interest from SPAC sponsors in US and Europe to acquire targets in India's RE space, especially in the "cleantech" domain.

The deal fervor is not only limited to funds and institutions. A new class of global strategic investors comprising oil majors, steel producers to leading consumer brands and global corporates from different sectors have forayed into the renewable market with a long-only strategy to fulfil their ESG commitments. The pure play renewables players with presence in solar and wind are now expanding into futuristic resources such as Green Hydrogen by entering into technology partnerships with European and US firms.

The investment opportunity landscape has also diversified. While large utility scale portfolios still remain the favorite, there has been a recent surge in M&A deal closure and traction in Rooftop, C&I space, Renewable Energy Certificate based projects and other smaller portfolios. As a spinoff to the core RE theme, the Electric Vehicle space in India is witnessing a frenzy driven by the influx of large overseas capital with firms commanding valuations exceeding $500 million-plus at the pre-production stage. The ripple impact is being witnessed in emergence of a new and powerful category – "EV-as-a-Service" – which is expected to be the flavor of season in 2022.

With the target to attain installed renewable energy capacity of 175 GW this year under the world's largest clean energy expansion program, India has undoubtedly emerged as the global focal point for M&A and PE deals. As a bellwether of things to come, acquisitions of renewable power assets have surged in 2021, now topping $6 billion.
Satyaroop Panigrahy

Associate Partner, Singhi Advisors

News and Trends

Recur Club Announces Credit Offerings for Startups Beyond Series A and SMEs

In FY 24–25, the platform also plans to deploy an additional INR 2000 crores through its Recur Swift program for startups.

News and Trends

Uber Launches Moto Women in Bengaluru, Connecting Female Riders with Female Drivers

Uber Moto Women aims to ensure safety with real-time trip sharing, anonymised contact details, and RideCheck monitoring for irregularities. It also offers 24x7 priority support via Uber's Safety Helpline for women riders and drivers.

News and Trends

Talent, Digital Infra, Policy, and Startups Driving India's GCC Ecosystem

By leveraging its demographic dividend and evolving policies, India is uniquely positioned to become the preferred choice for global enterprises seeking scalability, resilience, and a future-ready operational base.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

News and Trends

Indian Venture Ecosystem Poised for Global Ascent: Recovery, IPO Resurgence, and 'Building for Bharat' to Define 2025

India's GDP is poised to scale from USD 4 trillion to USD 8 trillion over the next decade and will offer a playground that is remarkable for both founders and venture capital (VC) firms, said Pranav Pai, Founding Partner and CIO at 3one4 Capital.

News and Trends

FinX and FirstClub Raise Early-Stage Funding

The startups listed below have disclosed investment rounds.