May 2021

Adani Green Energy Limited (AGEL) recently announced that it will acquire 100 per cent interest in SB Energy India’s 4,594 MW renewable energy portfolio from the SoftBank Group and the Bharti Group. The deal has an enterprise value of $3.5 billion. On closing, this will mark the largest acquisition in India’s renewable energy sector, with 4,180 MW of solar, 450 MW of wind-solar hybrid and 324 MW of wind power capacity, helping AGEL achieve a total renewable capacity of 24.3 GW.

The AGEL-SB Energy deal is the latest in a series of acquisitions in the renewables space. Prior to this, in March 2021, Japanese financial services company Orix Corporation reported the completion of the acquisition of a 21.8 per cent stake in Greenko Energy Holdings for about $961 million, adding 873 MW of its Indian wind energy portfolio to Greenko’s portfolio in exchange for the shares. In another major development, in July 2020, BP announced its decision to invest $70 million in India’s Green Growth Equity Fund (GGEF) and become a limited partner in the GGEF, which is managed by EverSource Capital.

Transparent competitive bidding mechanisms, long-term bankable power purchase agreements (PPAs) with central government agencies and an enabling environment in the form of the right policies and targets once succeeded in making the Indian renewables sector a compelling investment opportunity, especially for foreign investors. More recently, the Indian solar and wind power investment space has witnessed significant equity financing activity, supported by large investors with deep pockets, who want to expand their asset base quickly without having to go through the lengthy process of developing a new project.

The exit of a large player such as SB Energy from the Indian market could be indicative of a much larger problem in the country’s shifting renewable energy landscape. Regulatory uncertainties, delays in payments and signing of PPAs due to expectations of lower tariffs, land acquisition issues and transmission unavailability may have eroded the confidence of foreign investors and made them wary of expanding their portfolios in the country.

That said, the situation could well change post the pandemic, as the government irons out legacy issues and fast-tracks some large transmission projects that have long been under development.