GE Energy Financial Services (GEEFS) is expanding its Indian renewable energy portfolio and is in talks with Avaada Power to invest in the renewable energy projects of the Vineet Mittal-promoted firm, two people aware of the development said.
Avaada Power is Mittal’s second innings in India’s clean energy space after Tata Power Co. Ltd bought the entire 1.1 GW renewable energy portfolio of Welspun Energy Ltd for $1.4 billion last year.
“GE Energy Financial Services is in talks with Avaada Power to invest in its wind and solar power projects,” said one of the people cited above, requesting anonymity. GEEFS has made investment commitments of around $15 billion globally.
The second person confirmed the development and, also requesting anonymity, added, “GE has ambitious plans for India given the scale of green energy here.”
GEEFS has previously invested in Welspun Renewables Energy Pvt. Ltd’s Neemuch plant, Atria Power’s wind projects at Anantapur district of Andhra Pradesh and Betul district of Madhya Pradesh, and Greenko Group Plc’s wind projects in India.
Also, GE Energy Financial Services plans to invest $90 million to develop a solar power project portfolio of 500 MW with RattanIndia Group, Mint reported on 29 June.
Driven by India’s ambitious clean energy target of adding 175 GW by 2022, a host of foreign investors have been scouting for opportunities.
Of the total capacity targeted, 100 GW is to come from solar power projects and 60GW from wind power.
“It’s an exciting time to raise funds and invest in the renewable space to create long-term value for shareholders given its understanding of the emerging business models and opportunities. Key would be to identify right set of promoters with track record,” said Sambitosh Mohapatra, partner (power and utilities) at PwC India.
GE’s investment in the Indian project comes at a time when financing at the lowest cost has become the key to success. India’s solar and wind energy space has become intensely competitive with tariffs falling to a record low of Rs2.44 per kilowatt hour (kWh) and Rs3.46 per kWh, respectively.
Avaada Power, on its part, has been one of the bidders which has helped bring down the solar power tariff in the country. It was South Africa’s Phelan Energy Group and Avaada Power who bid Rs2.62 per kWh to win contracts to build capacities of 50MW and 100MW, respectively, at Adani Renewable Energy Park Rajasthan Ltd. It also placed a bid of Rs2.60 per kWh at the auction of 500 MW of capacity at the Bhadla solar park in Rajasthan.
This price is lower than the average rate for power generated by the coal-fuelled projects of India’s largest power generation utility, NTPC Ltd, at Rs3.20 per unit.
While Mittal declined to comment, a GE spokesperson in an emailed response said, “There are opportunities to invest in renewable energy in India. GE continues to be interested in providing equity to projects with the right risk return profile.”
Analysts said global energy markets have been disrupted by clean energy sources.
“Numerous key markets recently reached an inflection point where renewables have become the cheapest form of new power generation, a dynamic we see spreading to nearly every country we cover by 2020. The price of solar panels has fallen 50% in less than 2 years (2016-17). All-in costs for wind power in countries with favourable wind conditions can be as low as one-half to one-third that of coal- or natural gas-fired power plants, and wind turbine output will increase exponentially as wind blade lengths continue to increase,” Morgan Stanley said in a 5 July report.
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