Synopsis-Orix had looked into other companies but zeroed in on Hyderabad-based Greenko, a company run by two first generation entrepreneurs–Anil Kumar Chalamalasetty and Mahesh Kolli–since 2006. The near billion-dollar investment will be used to acquire Orix’s wind assets that have a capacity of 873 MW, and to further Greenko’s pump storage hydro business that will try to provide round-the-clock (RTC) power to the Indian grid.
India’s green energy potential remains “vastly attractive” for Orix Corporation despite total capacity addition in the country slowing to five-year lows on regulatory and tariff uncertainties and states reneging of contracts, said a top executive of the Japanese conglomerate.
Last week, Orix invested $980 million in Greenko Energy Holdings for a significant minority stake of around 20%, making it the largest foreign investment into the renewable energy space in the country. ET had broken the story in its September 11 issue.
“We’re looking at very long-term growth forecasts in India,” Hidetake Takahashi, head of energy and eco-services business at Orix, told ET. “The long-term Indian renewable market is very promising and is one of the fastest growing around the world.”
The senior leadership team of Tokyo-based Orix is familiar with the vagaries of the Indian market, having being present locally since 2016 when it had acquired 49% of IL&FS’s wind energy portfolio. Subsequently, it bought it out last year after the shadow bank collapsed. The IL&FS portfolio has now got merged into Greenko’s as part of the transaction. Orix is also a shareholder of the main IL&FS.
“We’re very familiar with delayed payments, which haven’t turned into non-payment by and large. What we rely upon is that India has a working legal system,” said Mike Nikkel, managing director of the energy & eco services department at Orix.
However, Takahashi said that government intervention is key if the renewable energy sector wants more investment from foreign backers.
“If government expects foreign direct investment, government should step in and sort the issue out, especially for the wind side,” he said.
Terming the investment as a strategic one rather than financial, Takahashi said they had been tracking Greenko’s progress for four years and began talks with the founders two and a half years ago. “Greenko is in a very good position in the market, and we were impressed by their entrepreneurship, diverse portfolio and track record,” Takahashi said. “Their technical understanding and efforts to make renewable power handle base load instead of intermittent power supply makes them unique.”
Orix had looked into other companies but zeroed in on Hyderabad-based Greenko, a company run by two first generation entrepreneurs–Anil Kumar Chalamalasetty and Mahesh Kolli–since 2006.
The near billion-dollar investment will be used to acquire Orix’s wind assets that have a capacity of 873 MW, and to further Greenko’s pump storage hydro business that will try to provide round-the-clock (RTC) power to the Indian grid.
“They’re looking into hydrogen in a very small way, but the main focus is the near 6,000 MW of pump storage hydro that they have under development,” said Nikkel.
Greenko Group has a current operational capacity of about 7 gigawatt (GW) and a pipeline of about 8 GW.
But from a pure play independent power producer (IPP), Greenko had pivoted towards energy storage and battery solutions, charting an evolutionary path as an energy solutions provider. The Orix investment will help it with funds for that next phase of growth which includes power storage projects with total capacity of 7.2 GW across six states, which will need an estimated $2 billion in investments.
The Rajasthan government recently announced Greenko is setting up a Rs 30,000-crore hybrid project in the state, of which one will be a pumped hydro storage project of 2,520 megawatt (MW) capacity at Shahpur, in the Baran district, estimated to cost Rs 11,882 crore.
“The project, when completed by 2023-24, will be the world’s largest renewable energy asset and would contribute to the state’s efforts as a model in the adoption of solutions for a sustainable future,” Greenko Group managing director Chalamalasetty said in a press release.
Orix also has investments in the US, Vietnam, and Spain. Takahashi said unlike their greenfield strategies elsewhere, they chose the M&A route in India because of the nature of the renewables business here.
“In India, renewable development is a pretty localised business. We need to deal with many things, such as payments with discoms,” he said, adding, “We decided to partner with a reputable local player rather than doing the business from scratch.”
Takahashi said there are no future plans to get into the manufacturing of renewable energy components as it is largely a commodity play.