Reading 4 minutes l With Kwong-Wing Law - Head of Infrastructure and Energy Finance, Asia Pacific
Natixis Corporate & Investment Banking was recognized by The Banker in its 2023 Deal of the Year awards, for our role on ReNew Power's 'Round-the-Clock' renewable power project, which won the Infrastructure and Project Finance Deal of the Year for India. The transaction was also recognized as Green Deal of the Year by PFI.
The USD 985m (equivalent of up to INR 77.6bn) financing was for the construction and operation of a 400MW capacity Round The Clock (“RTC”) Project (comprising wind, solar and battery storage) in India by ReNew Power, one of the largest Indian renewable energy project developers, and Mitsui & Co, a global diversified conglomerate based in Japan.
Kwong-Wing, could you tell us more about the transaction?
In May 2020, ReNew Power won the first-ever 400MW Round The Clock (“RTC”) tender process launched by the Solar Energy Corporation of India Limited (“SECI”), a government entity established to facilitate the development of the renewable energy sector in the country. ReNew Power has since signed a 25-year Power Purchase Agreement (“PPA”) with SECI; per the terms of the PPA, the project company is required to supply electricity in the first year at a tariff of Rs2.90/kWh (~US$0.039), with the tariff to be increased by 3% annually for the first 15 years and thereafter stabilized for the remaining 10 years of the PPA. In order to produce 400MW of RTC electricity capacity, ReNew Power will be constructing an oversized portfolio with total capacity of 1.3GW (400MW from Solar; 3 x 300MW from Wind) along with a 100MWh battery. The RTC project will be developed at sites located in the states of Rajasthan, Maharashtra and Karnataka in India.Mitsui & Co has also signed a strategic partnership agreement with ReNew Power to invest equity in several of its renewable projects including this one at hand, holding a 49% stake in the RTC project.
Natixis CIB’s Infrastructure & Energy Finance team in Asia Pacific was a Mandated Lead Arranger and Green Loan Co-Ordinator on the USD 985m financing, for the construction and operation of the RTC project.
Could you tell us more about the RTC concept?
The concept for RTC power generated from renewable sources simply means to create a power supply through renewable energy generation that can be firmly available to meet the peak electricity demand of the country during morning and evening hours.
Traditional renewable energy projects are typically dependent on the availability and sufficiency of solar/sunshine or wind for electricity generation. These factors are subject to changes based on the weather and pattern shifts in tidal cycles and solar irradiation, and hence affect the reliability of renewable energy sources to cater to the variability of electricity demand of the country. RTC renewable projects seeks to address the intermittencies associated with renewable energy generation. These projects assist to provide stability and flexibility in energy generation through the combination of renewable energy generation and energy storage systems.
What can you tell us about India’s Energy Sector?
In 2022, India announced its pledge to draw 50% of its energy from renewable sources by 2030, to reduce total projected carbon emissions by one billion tones by the same year, and to reach net zero by 2070. While the 2070 target was a disappointment to some, it is ambitious when you consider the speed at which India is growing – its population was reported to have passed China at the end of 2022 – and half of that population is under the age of 30, which positions India to be the world’s fastest growing economy in the coming years. All of this means that energy demand is set to grow in India at a faster rate than any other country.
The good news is that energy transition is already progressing rapidly in India. Targets pledged at COP21 have already been surpassed, with India now sourcing ~40% of its power capacity from non-fossil fuels, and the country is well placed to become a global leader in renewable batteries and green hydrogen.
That said, there is still considerable work to do. The international Energy Agency estimates that an investment of USD160 billion per year will be needed up to 2030 if India is to reach its net zero objective by 2070.
