Renewable energy firm ReNew Power on Wednesday announced the acquisition of two assets with a combined enterprise value of $384.0 million.
The assets are expected to generate $50.7 – $53.4 million of EBITDA annually, the company said in a statement.
This acquisition marks ReNew’s entry into the hydropower sector.
ReNew 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 the engineering and construction firm L&T.
As a part of the transaction, the firm will add the project operations team of SBHEP to its team.
The addition of SBHEP, which has a significant pondage capacity of 2 to 3 hours, adds 200 – 300 MW per hour of low-cost hydro storage to ReNew’s portfolio.
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% PLF, and has a similar profitability profile as ReNew Energy’s current operating portfolio.
In a separate transaction, ReNew Power has also signed 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 4 years.
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, as per the statement.
“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.
We are able to overlay our competitive advantages of scale, superior operations through vertical integration and utilisation of our industry-leading monitoring and analytics technology, financing innovation and access to low-cost capital to create significant value through acquisitions,” Sumant Sinha, founder, chairman and chief executive officer, ReNew Power, said.
“Furthermore, the hydropower acquisition strengthens our ability to provide reliable and dispatchable power to the grid which complements our solar and wind assets.
The acquisition of solar assets in Telangana and the hydropower project in Uttarakhand as well as the recent 200 MW MSEDCL auction win takes our commissioned and contracted capacity to well over 10 GW and sets us on the path to attain 18 GWs of capacity by 2025,” Sinha added.