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Tata Power Co. Ltd plans to invest around $90 million (close to Rs600 crore) in equity capital in its renewable energy arm Tata Power Renewable Energy Ltd (TPREL) as the company seeks to develop its immediate pipeline of 320 megawatts (MW) of solar assets, two people aware of the development said.
TPREL currently owns around 2 gigawatts (GW) of solar and wind assets, including the assets that it acquired from Welspun Energy. In all, Tata Power owns over 3GW of green assets, including its hydropower assets.
TPREL had in June 2016 1.1GW of solar and wind assets of Welspun Renewables Energy Pvt. Ltd, a part of the $3 billion Welspun Group, across eight states in India. Of this, about 990 megawatts (MW) is in solar projects and about 150MW in wind projects.
As part of the plan, the company invested around Rs170 crore in TPREL last quarter, said one of the two people cited above, requesting anonymity as he is not authorized to speak to reporters.
“The pipeline of projects, which is worth around 320MW, is spread across six projects in the states of Telangana, Andhra Pradesh, Karnataka, Gujarat and Maharashtra. The total equity requirement for these projects is around Rs600 crore, which the parent company will infuse in tranches. Tata Power has so far self-funded the development of the renewable arm,” he said.
These include a 150MW asset in Pavagda solar park in Karnataka and a 100MW asset in Anantapur solar park in Andhra Pradesh, he added. A Tata Power spokesperson declined to comment.
TPREL recently also raised debt of around Rs500 crore for capital expenditure and the refinancing of short-term debt of these assets. Tata Power has also been refinancing the over Rs5,000 crore debt it acquired from the purchase of Welspun’s assets.
In January, the company informed the stock exchanges that it has refinanced around Rs1,200 crore of Welspun’s debt through private placement of non-convertible debentures, with a coupon of 8%. While Tata Power has so far financed its renewable energy arm through its own funds, a large number of Indian companies have raised money from investors.
In May, Mint reported that Adani Group’s renewable energy arm is seeking to raise external equity capital after having pumped in millions of dollars of its own money to build a pipeline of projects worth over 2GW. The proposed fund-raising could see Adani’s renewable arm—Adani Green Energy Ltd—raise as much as $200 million.
In October 2015, the Aditya Birla group announced a partnership with Dubai-based private equity firm Abraaj Group to build a renewable energy platform with a focus on developing solar power plants.
Last year, Ajay Piramal-controlled Piramal Enterprises Ltd and Dutch pension fund asset manager APG Asset Management committed to jointly invest $132 million in Essel Infrastructure Ltd’s solar platform.
Deep-pocketed investors such as pension funds and sovereign wealth funds, attracted by the scale of the renewable opportunity in India, have backed large renewable platforms in recent years. In March, power minister Piyush Goyal said the country will add 15GW of solar power capacity by June 2018.
The Narendra Modi government is targeting to achieve renewable energy capacity of 175GW by the year 2022. Those that have already placed bets in India include Singapore sovereign fund GIC Pte Ltd, Abu Dhabi Investment Authority and Canadian pension fund Caisse de dépôt et placement du Québec.
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