Key Financings

Major debt and equity deals

The year 2020 saw a mix of positives and negatives for renewable energy financing. The downside was a significant decline in debt activity, as Covid-19 worsened the condition of the banking sector and the stream of loans from non-banking financial companies (NBFCs) remained modest. However, despite the setback on the debt front, the Indian renewable energy market continued to be an attractive one for large global equity investors. Thus, although domestic lenders continued to remain cautious owing to Covid-19 challenges and perceived risks regarding payment delays, contract sanctity and construction timelines, a series of merger and acquisition (M&A) deals were signed as large investors focused on portfolio expansion.

Renewable Watch highlights the major debt and equity deals in the industry over the past 12 months…

Equity deals

Equity financing continued to dominate renewable energy investments during the past year. Many business groups that had entered the renewable energy sector in the past few years are now looking to sell their solar portfolios. This bodes well for large investors with deep pockets, who want to expand their asset base quickly without

having to go through the lengthy process of winning a bid, getting the required approvals and implementing the project.

Renewable Watch tracked 17 equity deals during the year, of which the biggest was the $980 million deal between ORIX and Greenko for a 20 per cent stake in the latter.

  • In February 2020, Adani Green Energy Limited (AGEL) and Total SA entered into a binding arrangement for the acquisition of a 50 per cent stake and other instruments in a joint venture (JV), which will house 2,148 MW of operating solar projects, at an investment of around $510 million. The remaining 50 per cent stake in the JV will be held by AGEL.
  •  Yinson Holdings Berhad, through its subsidiary Yinson Renewables (S) Pte Limited, acquired a 37.5 per cent equity stake in solar development firm Rising Sun Energy, in March 2020 for a sum of Rs 554 million along with Rs 600 million funding to repay certain outstanding liabilities of the developer. Yinson Holdings Berhad has decided to acquire an additional 57.5 per cent stake in Rising Sun Energy for Rs 1.1 billion, as per an announcement in August 2020.
  • In April 2020, global investment firm KKR signed a definitive agreement with Shapoorji Pallonji Infrastructure Capital (SP Infra) to acquire its five solar energy assets totalling 317 MWp, for a total consideration of Rs 15.54 billion, of which 169 MWp of assets are in Maharashtra and 148 MWp of projects are located in Tamil Nadu.
  • As per a major announcement made in April 2020, Senvion India and Alfanar signed a binding pact to offload the former’s manufacturing operations in India. The Indian unit of Senvion has 500 MW of manufacturing capacity.
  • In April 2020, the cash-strapped Infrastructure Leasing and Financial Services (IL&FS) sold its 100 per cent stake in IL&FS Wind Power Services Limited (IWPSL) to Japan-based Orix Corporation for Rs 60.5 million.
  • In July 2020, Hindustan Zinc, a subsidiary of the Vedanta Group, announced its plans to sell its wind energy assets of 273 MW, valued at around Rs 15 billion. The projects are located across the states of Rajasthan, Gujarat, Maharashtra, Karnataka and Tamil Nadu, and have power purchase agreements (PPAs) with the respective state discoms.
  •  In July 2020, BP announced its decision to invest $70 million in India’s Green Growth Equity Fund (GGEF). With this, BP will become a limited partner in the GGEF and get representation on its advisory committee. The fund is managed by EverSource Capital, a JV between Lightsource BP and Everstone Capital.
  • In July 2020, the UK-based NextEnergy Capital Limited acquired a 27.4 MWp solar project in Odisha from Germany’s IBC SOLAR Energy GmbH. This deal is NextEnergy Capital’s first acquisition in the Indian market, and was made through its third institutional solar fund, NextPower III.
  • In July 2020, Enel Green Power finalised a deal with the Norwegian investment fund Norfund to bankroll, build and operate renewable projects in India. Under the deal, Enel’s green power unit will develop and build the projects, which will be jointly financed and governed by Enel and Norfund.
  • In August 2020, Ayana Renewable Power Private Limited acquired 100 per cent equity stake in two solar PV power plants, with a total capacity of 40 MW, developed by First Solar. The two projects are located in Karnataka and will supply power to Chamundeshwari Electricity Supply Corporation Limited and Gulbarga Electricity Supply Company Limited under 25-year PPAs.
  • In August 2020, UK-based fund Actis closed its acquisition of 400 MW of assets from ACME for a consideration of Rs 2.5 billion.
  • ACME sold 100 MW of solar assets to Petronas through its Indian arm Amplus Energy Solutions in September 2020. The capacity is located in Karnataka’s Pavagada Solar Park and was developed under the National Solar Mission, with a tariff of Rs 4.79 per kWh. It was commissioned in 2018. The deal is reportedly valued at around Rs 8 billion.
  • In September 2020, the RattanIndia Group sold 306 MW of solar assets to Global Infrastructure Partners for Rs 16.7 billion. The portfolio of assets included ground-mounted solar projects with a cumulative capacity of 297 MW spread across Pavagada in Karnataka, Katol in Maharashtra, Bhadla in Rajasthan, and in Allahabad and Bareilly in Uttar Pradesh. It also included 9 MW of rooftop solar projects spread across 10 cities.
  • As per an announcement in September 2020, Orix is acquiring over 20 per cent of Greenko’s shares, worth $980 million, by selling its seven wind power projects, aggregating 873 MW, to Greenko.
  • In October 2020, AGEL completed the acquisition of 205 MW of solar assets from the Essel Group. The projects are located in Punjab, Karnataka and Uttar Pradesh, and have been acquired for about Rs 13 billion. These assets have been transferred to the company’s JV with Total SA.
  • In November 2020, ReNew Power authorised the sale of its wind farms in Karnataka to Ayana Renewable for Rs 16 billion. The wind farms are located in the Raichur, Bijapur, Belgaum and  Bellary districts of Karnataka, and have an aggregate capacity of 300 MW. The two companies have signed definitive agreements for the sale of these assets.

Debt deals

Debt activity has been on the decline in recent years, primarily due to the fragile state of the banking sector and the volatility of the rupee in global markets. Thus, over the past 12 months the participation by domestic commercial banks has been almost negligible and the majority of the financing has been done through NBFCs. Nevertheless, a number of loan agreements were signed with multilateral institutions such as the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and KfW Development Bank, despite the Covid-19 situation.

  • In December 2019, the AIIB approved a $65 million loan for Hero Future Energies’ 250 MW solar power project in Jodhpur, Rajasthan. The company will develop the project through its special purpose vehicle (SPV), Clean Solar Power (Jodhpur) Private Limited. The project is expected to generate 616 MWh of electricity by 2022.
  • In December 2019, the Bank of America announced its plans to lend Rs 3.56 billion to Fourth Partner Energy, which is expected to use these funds to boost its solar portfolio in the country by 150 MW over the next year and a half. The loan was the Bank of America’s first foray into commercial solar financing in India.
  • In January 2020, the International Finance Corporation (IFC) announced its plans to lend $36 million for a 250 MW solar project by Mahindra Renewables Private Limited in Rajasthan. Mahindra Susten won the bid to develop the project, quoting a tariff of Rs 2.53 per kWh.
  • In March 2020, Fourth Partner Energy received a loan of Rs 5 million from Grameen Impact India, an NBFC registered with the Reserve Bank of India. The company will use the funds to implement its Power@1 programme at the Madras Diabetes Research Centre in Tamil Nadu.
  • In April 2020, ZunRoof, an Indian startup in the rooftop solar segment, received Series A funding of $3 million from the Godrej Investment Office. This is the second round of investment by Godrej, after its $1.2 million investment in a pre-Series A round in April 2019.
  • Fourth Partner Energy raised about Rs 1.12 billion in debt funding from Swiss asset manager responsAbility in July 2020. This was the third round of funding by responsAbility through its climate finance funds, with the first two rounds of financing being closed in 2016 and 2017. The funds received will be used for the construction of new assets across Fourth Partner’s distributed solar and open access portfolios.
  • ADB signed a long-term loan agreement with ENGIE, worth Rs 4.66 billion, in July 2020. As part of the agreement, the funds will be used to develop and operate a 200 MW solar project in Gujarat. ADB, along with another international lender, will provide the entire debt funding required for developing the project. ENGIE’s SPV, Electro Solaire Private Limited, will implement the project.
  • In August 2020, KfW agreed to extend a soft loan of Rs 6 billion to West Bengal State Electricity Distribution Company Limited (WBSEDCL) for the first phase of the upcoming 125 MW solar park project in Purba Medinipur district of the state. The 15-year loan will carry an interest rate of 0.15 per cent and cover 80 per cent of the total project cost of Rs 7.5 billion.
  • In October 2020, ADB announced its plans to invest $15 million in Avaada Energy Private Limited to catalyse solar expansion in India. Half of the investment is set to come from ADB’s Ordinary Capital Resources, and the rest will be from Leading Asia’s Private Infrastructure Fund.

Green bonds, InvITs and stressed assets

While conventional financing instruments such as debt may have seen a decline in recent months, alternative options are emerging for developers to finance their projects. The most popular of these are green bonds, although 2020 witnessed few such issuances. ReNew Power issued bonds worth $450 million in January 2020 and another $325 million in October 2020, CLP Wind Farms (India) Private Limited raised Rs 2.96 billion through green bonds in October 2020. The smaller number of issuances can be attributed to Covid-19 uncertainties, as companies are waiting for the market to stabilise. Meanwhile, Azure Power plans to issue a green bond offering of $350 million, while Urja Global Limited plans to issue green bonds of up to $500 million to finance its renewable energy projects and expand its electric vehicle business. Moreover, AGEL plans to raise up to $12 billion by selling green bonds over the next four to five years. The company expects to raise $2 billion-$3 billion annually from the sale of these green bonds. The sale is likely to start in May 2021, and the proceeds will be used towards the production of non-conventional energy. Another emerging financial instrument is the infrastructure investment trust (InvIT), and Tata Power may soon become one of the first companies in the renewable energy sector to use this route for financing. In July 2020, Tata Power selected seven out of 15 investors for its InvIT. The seven investors that will enter the due diligence phase are Petronas, Mubadala, Brookfield, Caisse de dépôt et placement du Québec, KKR, APG and Omers. In June 2020, Tata Power’s board gave its in-principle approval to the InvIT.

The resolution of stressed assets assumed importance during the past year, with two major wind manufacturers running into heavy unsustainable losses. In December 2019, the National Company Law Tribunal initiated a corporate insolvency resolution process for ReGen Powertech, a Chennai-based wind turbine manufacturer. ReGen stopped making turbines in 2018 after the central government notified the auction mechanism for awarding wind energy projects. It took up operations and maintenance work, which was inadequate to sustain the company. Further, in March 2020, Suzlon Energy received approval from its lenders, led by the State Bank of India, to restructure its debt, worth Rs 140 billion. It concluded its debt restructuring in July 2020 and has to now repay a sustainable debt in the first 10 years. The remaining portion is to be paid over the next 20 years as optionally convertible debentures and compulsorily convertible preference shares. The plan also includes promoter entities infusing around Rs 4 billion equity into the company.


The dynamics of financing renewable energy projects in India have evolved, as the sector undergoes a paradigm shift. Access to competitive finance has become a major challenge owing to Covid-19 and the unresolved issues of delays in payment and land acquisition, and transmission unavailability. Regulatory uncertainties, especially in the open access and rooftop solar space, have further hit investment prospects.

Consolidation continues to be a major trend as these challenges and risks may make it tough for smaller companies to sustain themselves, especially in the face of low tariffs, thus making them easy targets for larger players. The good news is that there is huge market demand for operational assets owing to pipeline restrictions on account of commissioning delays, and these operational assets attract good valuations. The improvement in the exit environment is a positive for the segment, as with more foreign capital coming in, other such assets could be changing hands in the near future.

By Khushboo Goyal


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