19 December 2023
Financial Express
Op-eds
ReNew, the country’s largest renewable energy company,
last month said it plans to Rs 44,000 crore by FY26 to add about 10
gigawatt(GW) capacity. Its parent ReNew Energy Global Plc signed an MoU with
ADB for debt financing of over $5.3 billion recently. Sumant Sinha, chairman
and CEO of the company tells Raghavendra
Kamath & Arunima
Bharadwaj about its plans and new areas of business.
Excerpts:
We take great pride in leading the way in India’s
sustainable energy transition at ReNew. Our current portfolio stands at 13.8
GW, with approximately 8.3 GW already commissioned and 5.5 GW committed to
future projects. In addition, we also have won another 5 GW of auctions where
we’re awaiting PPA’s (power purchase agreements). In the next three years, we
anticipate being ranked among the top 5 companies in India in terms of capital
expenditure. As of now, we contribute 1.8% of India’s total installed power
capacity and have played a pivotal role in reducing the country’s power sector
emissions by 0.5%.
Our emphasis is on offering comprehensive
decarbonisation solutions; given the evolving market landscape,
we rebranded ourselves earlier this year from ‘ReNew Power’ to ‘ReNew’.
Renewable energy will continue to be a core part of our business. Complementary
to our renewable energy generation business, we are also participating in
projects on battery energy storage systems, green hydrogen, and others, which
could create a market worth up to $80 billion by 2030 in India alone (as per
the International Energy Agency). Nevertheless, we are open to exploring
opportunities in markets that promise favourable returns on our capital. We are
exploring overseas locations for establishment of a Green Hydrogen production
facilities and will judiciously select additional destinations based on a
thorough assessment of financial returns.
In any commodity, the key to success is being amongst
the lowest cost producer. That is the key task ahead of us. Decarbonizing
energy systems and industry will
no doubt require a significant amount of capital. RE and newer sectors like
green hydrogen, and battery storage technologies are all capital intensive. IEA
estimates that the amount of investment required per annum will be in excess of
$2-3 trillion per year over the next many years. For this quantum of capital to
flow in, we will need the sector to improve profitability and hence, returns to
equity holders. Scaling up execution will be the other big challenge; this will
include land, supply chain, approvals, construction, and the full value chain.
Green hydrogen will be expensive (compared to grey
alternatives) in the short to medium term. This is true regardless of whichever
part of the world it is produced in. Hence, its demand creation and economic
viability in the short term are dependent on government policies. We believe
India is on the path to becoming a GH export hub. This is being supported by
the very progressive policies of the union government , led by the National
Hydrogen Mission, which sets the ambition of 5 MMT( million metric tonnes)
capacity by 2030 and also provides subsidies, including the ISTS (Inter state
transmission system) waiver. Many states in India have come out with additional
support mechanisms as well. Mandates for creation of local demand will also be
key, and the government is actively working on the same.
India’s energy demand has been growing rapidly, post
Covid. We recognise that generation of additional thermal power has been a necessity
to meet this demand. However, the government has been very aggressive on
renewables as well, in line with the commitment to meet the target of achieving
500 GW renewable energy capacity by 2030.
It covers debt financing for new projects with a total
project value of $5.3 billion between 2023 and 2028. The MOU identified potential
investments in renewable energy projects, including hybrid projects,
manufacturing, carbon offset projects, and green hydrogen, with the chief aim
of jointly supporting the sustainable energy transition. The funding would come
from ADB providing financial assistance to ReNew for decarbonization-related
projects and by drawing on various sources of capital, including public,
private, and alternative sources.
ReNew entered the transmission sector in FY 2022,
capturing 17% of the annual market share. The company successfully commissioned
its first transmission project for the evacuation of 1500 MW of renewable
energy in the Koppal Area of Karnataka in
a compressed time schedule. We will continue to be an active market player
focusing on strategic green energy corridors, showcasing our commitment to
sustainable infrastructure development.
ReNew now has a 4 GW module manufacturing facility
operational in Jaipur. We are planning to add a 2.4 GW module manufacturing
facility in Dholera, Gujarat,
to be operational by next quarter, and a 2.5 GW cell manufacturing facility in
Dholera, Gujarat, to be operational by July 24. 10.
