MUMBAI: Sembcorp Industries, Singapore’s leading utilities and ship building group, is looking to invest over a billion dollars over the next 5-7 years to double its clean energy generation portfolio in the country while gradually moving away from large, greenfield thermal coal projects that are still facing land acquisition and fuel linkage logjams. The recent confusion over capping of fixed tariffs after the recent coal auctions has also made them wary.
In February, Sembcorp Utilities, a wholly-owned subsidiary, acquired a 60% stake in Green Infra -a leading renewable energy platform -from its private equity owners IDFC Alternatives for Rs 1,051 crore. This was their first invest ment in the space in India, after having backed two coastal thermal coal projects in Andhra Pradesh in 2011.
This is also the first and only FDI in the power sector in India since the Narendra Modi government came to power.
“Compared to China, we were late in entering the Indian market because it took it took us a few years to understand the amendments in Indian Electricity Act amendments of 2003.
But in the last five years, we have increased our overall power generation capacity to 2640 MW in two projects. With Green Infra, we now have 3340 MW in our portfolio here,” said Tan Cheng Guan, executive vice-president & head, Group Business Development & Commercial, Sembcorp Industries -the man in charge of the Indian operations. Chen Guan shared the India blueprint with ET during a recent interaction -his first since completing the Green Infra takeover.The focus for the moment is renewable energy, coinciding perfectly with the government’s push for clean tech. The market dynamics appear favourable, says Chen Guan. “Wind power is almost close to grid parity. It is almost comparable to imported coal in terms of cost.
The prices of turbines and other equipment have also come down over the last few years. So have solar panels and so its potential is higher. But growth in solar will probably be higher than that of wind,” he feels. “Even then, we will continue to grow wind strongly. Currently, we will have 700 MW of wind parks commissioned by the third quarter of 2015. We expect our total renewable energy capacity for Green Infra to be at least 1400 MW by 2022. Out of that, we expect to add 300-400 MW of solar and about 1,100 MW of wind,” said Chen Guan. “We plan to have 200-250MW capacity addition every year. Based on investment needed per MW, that is about $200250 million year,” he added.
Sembcorp with S$16 billion of assets across the utilities value chain and S$8 billion, is also one’s of the world’s leading offshore rig and ship builders.
The Green Infra acquisition was strategically done to broaden its renewable energy footprint to include solar and to almost triple its clean generation capacity to over 1000 MW.
On the face of it, the focus on wind -at a time when the government’s solar mission is dominating the policy conversation -seems contrarian. But the company would still tread cautiously.
“We hope solar will allow us to grow faster. We will keep adding to our current portfolio and are happy to see the government’s ambitious 100,000 MW solar target by 2022, but will look into details about where the potential is coming from and expect the government to look into power evacuation,” said Chen Guan.
Connecting the wind and solar farms to the grid is still a challenge and needs significant government investment, say power analysts.
