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Infrastructure & PPPs in India - Q4 2023 Update - Power & Energy Transition

YOG INFRA Q4 2023 insights

INDIA has attracted a lot of interest and investments on its clean energy transition journey - across the value chain of renewabele energy projects. We see increasing number of partnerships betwwen large Indian and International developers to develop new proejcts in the country across sectors - renewable energy, green hydrogen and green ammonia, smart metering etc. The financing needs for such transformation needs to by beyond commercial banks, and there is a role for climate funds to tackle the financing gap in the country.

Read more about key developments in Infrastructure and PPPs in India in power & clean energy transition sector our latest insight.

This is first publication on a 2-part insight series on India.

 

October 2023

AMPIN, JUPITER PLAN 1.3 GW INDIAN SOLAR MANUFACTURING FACILITY

New Delhi-headquartered AmpIn Energy Transition is partnering with Jupiter International to establish a joint venture (JV) dedicated to the solar manufacturing business in India. The renewable energy transition platform – previously known as Amp Energy India –that a facility will be set up to manufacture up to 1.3 GW of solar cells and modules. Under the JV’s stipulations, the modules must be used locally by AmpIn and supplied to third-party developers.

Jupiter International already has an 800 MW solar cell manufacturing stronghold in Himachal Pradesh. AmpIn Energy Transition has a total portfolio of about 3 GWp spread across 17 states in the country.


INDIAN STATE SEEKS RENEWABLES PROJECT PROPOSALS

India’s Gujarat state is seeking investors to build up to 36 GW of solar and 143 GW of wind power. The government is open to project proposals, adding that the state does not have a plan as yet to solicit bids through tenders. Gujarat published its Renewable Energy Policy 2023, effective till 2028. The state has 400,000 hectares of land that it can provide for renewables projects, requiring a total investment of about INR 5 Trn (USD 60 Bn) to achieve its targets. There are no capacity restrictions on project proposals. Small-scale rooftop wind installations by consumers are also allowed under the new policy, which also aims to encourage wind turbine manufacturers. The state’s installed renewables capacity is 21.6 GW, out of which 11 GW was added in the last 4 years.

The state cabinet recently approved a draft land allocation policy for green hydrogen projects. About 200,000 hectares have been designated for private companies planning to manufacture green hydrogen.


INDIA AND SAUDI ARABIA SIGN GREEN HYDROGEN MOU

India and Saudi Arabia have signed a Memorandum of Understanding in Riyadh in the fields of Electrical Interconnections, Green / Clean Hydrogen and Supply Chains. The MoU was signed between the visiting Union Minister for Power and New & Renewable Energy, Government of India and the Minister of Energy, Government of Saudi Arabia.

This MoU aims to establish a general framework for cooperation between the two countries in the field of electrical interconnection; exchange of electricity during peak times and emergencies; co-development of projects; co-production of green / clean hydrogen and renewable energy; and also establishing secure, reliable and resilient supply chains of materials used in green / clean hydrogen and the renewable energy sector. It was also decided between the two energy ministers that B2B Business Summits and regular B2B interactions between the two countries will be conducted to establish complete supply and value chains in the above-mentioned areas of energy sector cooperation.


REVISED BIDDING GUIDELINES FOR RENEWABLE ENERGY: FUELING INDIA’SENERGY TRANSITION

The Revised Guidelines is a step in the right direction and together with the Government focus on augmenting transmission infrastructure to support the increase in non-fossil fuel sources as part of its energy mix, India will be able to realise its vision of being a pioneer energy transition.

  • One of the key changes introduced by the Revised Guidelines is reduction in standard term of power purchase agreement (PPA) from 25 years to 20 years.

  • Another important change is the inclusion of solar projects with energy storage system (ESS) within the ambit of the Revised Guidelines, which was conspicuously absent in the erstwhile guidelines.

  • To broaden the bidder base, the minimum bid capacity has been reduced to 10 MW from 50 MW, with award to a single bidder being capped at 50 per cent of the capacity available for allocation under a bid document. The Revised Guidelines also permit existing players with untied capacity to participate in these bids.

  • Recognising that the cost of setting up of renewable energy projects has come down significantly from the earlier prohibitive levels, viability gap funding has now been done away with as a bidding parameter. Bids will now be invited only on the basis of fixed tariff.

  • The timelines for the completion of bidding process have been streamlined to ensure that awarding and implementation of projects happen in a timely manner. The procurers are required to approach the appropriate electricity regulatory commission (ERC) for adoption of tariff within 15 days of discovery of tariff and relief for delay in adoption of tariff by ERC beyond the stipulated period is required to be mandatorily granted to generators through extension of scheduled supply commencement date.



November 2023

INDIA POWERS UP: SET FOR RECORD RENEWABLE SURGE IN FY 2024

India's renewable energy sector is on the cusp of a transformative leap in 2024, with the nation poised to significantly scaleup its clean energy capacities. The installed renewable capacity is projected to swell to nearly 170 GWby March 2025, a substantial climb from the current 132 GW.

In the current financial year, ending Mar'24 the momentum is strong, evidenced by over16 GW of renewable projects tendered and another 17 GW in the pipeline. This ambitious pace is part of a larger strategy to bid out an average of 50 GW of renewable capacity annually. A key driver behind this expansion has been the dramatic decrease in solar technology costs. Solar cells and modules have witnessed price drops of 65% and 50%,respectively, in the past year, significantly enhancing the economic attractiveness of new solar.


HINDUJA RENEWABLES WINS 250 MW INDIAN SOLAR BID

Hinduja Renewables has won a contract to build solar power projects with a total capacity of 250 MW across India. The company was one of eight winning bidders for the 3 GW tender. Hinduja Renewables, part of the diversified Indian conglomerate Hinduja Group, is on track to create a multi-GW suite of clean power assets over the next few years. Areas of active exploration include hybrid renewables projects, energy storage systems, green hydrogen generation and offshore wind.


INDIAN LENDER REC TO INCREASE DEBT FINANCING FOR PPPs

Indian government-owned lender REC aims to increase financing to public-private partnership (PPP) projects to 30% of its loan book in the next 7 years. The private sector accounted for about 10% of its INR 4.7 Trn (USD 56 Bn) loan book at the end of September 2023, and it is targeting to provide about INR 3 Trn of debt to the renewables segment. The lender, traditionally focused on the power sector, is diversifying its exposure to infrastructure projects and evaluating lending to highways, airports, ports, as well as electric vehicles and charging infrastructure.

REC has signed a memorandum of understanding with Bank of India to explore the possibility of co-financing up to INR 300 Bn of power, infrastructure and logistics projects. This followed a similar understanding with Punjab National Bank to provide up to INR 550 Bn in the next 3 years.

 

December 2023

INDIAN PARLIAMENTARY PANEL RECOMMENDS SPV FOR WASTE-TO-ENERGY PPASs

A Parliamentary panel has suggested forming a special purpose vehicle, onboarding Solar Energy Corporation of India, Indian Renewable Energy Development and private firms to buy power from waste to electricity plants. These waste-to-electricity plants face huge delays in executing power purchase agreements (PPA) with the State Electricity Departments/DISCOMS as the tariff is typically high at about INR 8 (USD 0.096) per kilowatt hour (KWH) which is higher than that of other renewable energy such as Solar.

The report, tabled in Parliament stated that the Committee are of the view that a special purpose vehicle (SPV) can be created for this purpose, which can be made procurer of this power. This arrangement can have multiple partners in the form of Central PSUs like Solar Energy Corporation of India (SECI), Indian Renewable Energy Development Agency (IREDA) and also private companies. The SPV, after procuring power from the plant, can then sell this power to interested entities and can also list it for trading on power exchanges.

It opined that such an arrangement will provide guaranteed takeoff of power being generated from waste, instilling further confidence amongst the stakeholders and building a suitable case for attracting low-cost capital from the market, while encouraging more players to invest in this field, thus eventually driving down the cost of Waste to Electricity power.

 

ADANI GREEN SECURES SOLAR PPA FOR 1.79 GW

The renewables arm of the Indian diversified business Adani Group has signed a power purchase agreement (PPA) with the Solar Energy Corporation of India (SECI) to supply 1.799 GW of solar power. Adani Green Energy (AGEL) has now completed offtakes for the entire 8 GW manufacturing-linked solar tender awarded to it by SECI in June 2020.

The latest PPA takes AGEL's contracted capacity to 19.8 GW, with the balance being merchant capacity in its 20.6 GW portfolio. AGEL operates 8.4 GW of renewables in 12 states and aims to reach 45 GW by 2030.

 

SEMBCORP EXPLORES GREEN AMMONIA PRODUCTION IN INDIA

Sembcorp Industries will explore opportunities for green ammonia production in India for export to Japan. Sembcorp Green Hydrogen, a subsidiary of the Singapore-based engineering services company, has signed a memorandum of understanding with Japanese firms Sojitz Corporation and Kyushu Electric Power for the collaboration.

Subject to a final investment decision and the consortium finalizing supply arrangements, the parties will pursue the construction of green ammonia facilities in India, with Sembcorp as the lead developer. Sojitz and Kyushu Electric Power will oversee the transport of the green ammonia to Japan and secure offtakes.

 

SEMBCORP INDUSTRIES AWARDED 300 MW SOLAR PROJECT IN INDIA

Singapore-based engineering services company Sembcorp Industries has secured a contract to develop a 300 MW inter-state transmission system-connected solar power project in India. The letter of award for the build-own-operate project was issued by the Indian government-run NHPC. It is part of a 3 GW tender floated earlier in year 2023.

Sembcorp Industries won the contract through its renewable energy subsidiary Green Infra Wind Energy (GIWEL). The project, expected to be ready for commercial operation in 2026, will be funded by internal funds and debt. The electricity generated will be sold to the NHPC under a 25-year power purchase agreement. 


AIRTEL FORAYS INTO SMART METERING, PARTNERS INTELLISMART FOR END-TO-END IOT SOLUTION FOR SMART METERING

Indian teleco giant Bharti Airtel has announced that it has formed a strategic partnership to power up to 20 Mn smart meters with IntelliSmart Infrastructure Private Limited, a leading smart metering and digital solutions provider. This marks Airtel’s foray into smart metering applications such as Head End System, Meter Data Management Systems along with Cloud and Analytics. This is one of the largest such deal in the smart metering space in the country. It will significantly contribute towards Airtel’s fast-growing IoT deployment across sectors.

Airtel’s IoT proposition includes its proprietary platform the “Airtel IoT Hub” which will help the utility track and monitor these smart meters with advanced analytics while maintaining extremely high reliability augmented with telco grade security. Housed on Airtel’s own cloud network, the IoT hub will allow enterprise users the capability to connect and manage billions of devices and applications in a highly secure and seamless fashion.

 

ADANI ENERGY FORMS JV WITH ABU DHABI'S IHCBACKED FIRM FOR SMART-METER BUSINESS

Adani Energy Solutions has partnered with a business backed by Abu Dhabi's International Holding Company (IHC) in order to expand its smart meter business in India and around the world. The UAE-based Esyasoft Holdings, which is primarily controlled by IHC, a current investor in Adani group firms, was acquired by a subsidiary of the Indian power distribution company. Adani Energy has received contracts to install 20 Mn smart meters from several electricity distribution companies in India; the company did not disclose the amount of investment. 

Smart meters give consumers access to real-time data on energy usage, enabling them to make educated decisions about their usage. The Indian government intends to build 250 Mn meters nationwide by 2025; of those, tenders for 80 Mn meters have not yet been released, suggesting room for expansion.

 

Projects Announced – Renewable Energy – Q4 2023 India



Projects Awarded – Renewable Energy – Q4 2023 India


Source: YOG INFRA analysis, Publicly available information

 

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Our objective is to drive economic growth and make positive social impact through sustainable infrastructure development. ​YOG INFRA is an infrastructure focused financial advisory firm. We work with Developers and Development Finance Institutions (DFIs) and help them make informed investment decisions across infrastructure development lifecycle. With our offices in Singapore, India and UAE we work on projects globally, and the team brings strong experience in supporting development of infrastructure projects.

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