Independent power producer ReNew Power on Wednesday said it will acquire two assets with a combined enterprise value of ₹285 crore ($384 million), which are expected to generate ₹380-400 crore ($50.7-53.4 million) of EBITDA annually.
It will acquire L&T Uttaranchal Hydropower Ltd, which owns the Singoli Bhatwari Hydroelectric Project (SBHEP), from L&T Power Development Ltd, a wholly-owned subsidiary of engineering and construction firm L&T.
As part of the transaction, ReNew will add the project operations team of SBHEP to its team. This acquisition marks ReNew’s entry into the hydropower sector, which is expected to play an important role in providing innovative renewable energy solutions for ReNew’s customers, the company said in a statement.
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SBHEP, situated on the Mandakini river in Rudraprayag district of Uttarakhand, was operationalised in December 2020 and is expected to have a residual life of nearly 35 years. This project is expected to have a net billed generation of 360 million units annually, or around a 50 per cent PLF, and has a similar profitability profile as ReNew Energy’s current operating portfolio, it said.
As the project is commissioned after March 8, 2019, the power generated from this project will facilitate recently notified Hydro Purchase Obligations (HPO) compliance for the buyer.
Opportunities in Telangana
In a separate transaction, ReNew Power also announced the signing of a definitive agreement to acquire 260 MW/330 MWp of operating solar projects in Telangana. The projects have a 25-year PPA with Northern Power Distribution Company of Telangana Ltd (NPDCTL) and Southern Power Distribution Company of Telangana Ltd (SPDCTL) and have been operating for around four years.
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The acquired assets are located close to ReNew’s existing solar projects in Telangana which should offer opportunities to enhance productivity, reduce operations and maintenance costs, and utilise ReNew’s proprietary monitoring and analytical technology to further boost output.
“We believe that the acquisition of these assets is expected to earn an attractive return within our targeted range and is proof that ReNew is uniquely positioned to be a big beneficiary of the consolidation of renewable energy assets in India,” Sumant Sinha, Founder, Chairman and Chief Executive Officer of ReNew Power, said.
The acquisition of solar assets in Telangana and the hydropower project in Uttarakhand as well as the recent 200 MW MSEDCL auction win take the company’s commissioned and contracted capacity to well over 10 GW and set the path to attain 18 GWs of capacity by 2025, he added.
ReNew won two such projects last year, including a peak power project as well as a round-the-clock power project for which ReNew signed a power purchase agreement last week. The addition of SBHEP, which has a significant pondage capacity of two-three hours, adds 200-300 MWhr of low-cost hydro storage to ReNew’s portfolio.