ReNew Power is the largest renewable energy IPP in India in terms of total energy generation capacity. It has a current renewable asset base of 8 GigaWatts, out of which about 5 GigaWatt is operational. ReNew Power develops, builds, & operates utility-scale wind, solar energy projects, and distributed solar power projects which generate energy for commercial and industrial customers. With over 100 utility-scale projects, it’s generating around 1% of India’s total electricity and helping to mitigate 0.5% of India’s total carbon emissions. Since inception, this company has generated almost 75,000 jobs directly & indirectly.
ReNew Power is indeed growing like a startup, and it had its beginnings together. The organization began with three employees who worked out of a small office in Mumbai, set up business plans and investor pitches together. It raised $200 million (Rs. 1,300 crores) from Goldman Sachs in September 2011. Over the subsequent few years, it managed to raise $740 million from investors such as Abu Dhabi Investment Authority and the Asian Development Bank.
ReNew Power features a strong log of organic and inorganic growth; it was the first company in its domain to reach 1 GW of commissioned capacity and it has nearly doubled its operational capacity in each of the last three Fiscal Years. This company has achieved market leadership within the Indian renewable energy industry.
Over the years, the success and growth of ReNew Power are noted by the media, industry bodies & public at large. Along with this, the company has won several notable recognitions. The foremost recent ones include the ET Innovation Award, 2019, Entrepreneur of the Year award at ET Awards 2018, The Champion of Tomorrow at CEO Award 2018, Corporate Social Responsibility Award at FICCI CSR Awards 2018, Entrepreneur of the Year award at EY Entrepreneur of the Year Awards 2017, Outstanding Startup at Forbes India Leadership Award 2017.
The man behind the Journey
“As an Entrepreneur Let Your Gut Instinct Lead You To Uncharted Territory” – Sumant Sinha, CEO of ReNew Power.
Backed by marquee investors from across the globe such as Goldman Sachs, Abu Dhabi Investment Authority, Canada Pension Plan Investment Board, JERA (a joint venture between TEPCO Fuel & Power, a wholly-owned subsidiary of Tokyo Electric Power Company, and Chubu Electric Power) and Global Environment Fund, ReNew Power was established by Sumant Sinha in the year 2011.
Mr. Sumant Sinha is an alumnus of the IIT Delhi, IIM Calcutta and Columbia University. After a decade-long career in the banking sector in the U.S. & England, Mr. Sumant Sinha returned to India in 2002 and became the chief financial officer of Aditya Birla Group. Before venturing out into enterprise, Mr. Sinha became the Chief Finance Officer & Chief Operating Officer of Suzlon Energy, India’s largest and the world’s fifth-largest wind turbine manufacturer. During his tenure at the company (two years), Mr. Sinha played a key role in crisis management. Post the budgetary downturn of 2008, Suzlon found itself
in the center of an existential crisis with huge debts, tough operating environment, and quality issues. Mr. Sinha was instrumental in setting the organization’s accounts all together. He helped refinance its outstanding debt worth $3 billion, raised additional funds of about $800 million, and restructured convertible bonds worth $500 million.
Despite enormous success in the corporate sector, he had a persistent desire to start something on his own. And he got lots of confidence by working with Mr. Birla and Mr. Tulsi Tanti. He got the idea of running businesses. Also during his tenure at Suzlon, he got an understanding of the renewable energy industry, and also he realized the market changing from an accelerated depreciation market to a more IPP-based market.
Factors Worked Towards Renew Power’s Advantage
As the world comes to terms with the enormity of the threat posed by global climate change, India’s emergence as home to one of the world’s largest clean-energy expansion programmes is like a whiff of fresh air. A steady infusion of capital, falling prices & new technologies, India has witnessed an exponential growth in its renewable energy (RE) sector in the past five years. In 2015, the Govt. of India made its intentions to transition to a lower-emission electricity system clear by declaring an ambitious target of 175 GigaWatt from renewables by 2022. The message is pretty simple; wider and cheaper energy access but at a minimal cost to the environment.
India’s wind energy potential is about 302 GigaWatt — only 37.8 GigaWatt is installed on the ground. Though there are a very few players in the fray such as China Light and Power (CLP), Mytrah Energy, and Renew Power, there is not any large IPP in the business.
With the conventional energy sources like thermal and gas more expensive, state utilities are now willing to charge significantly higher tariffs—by as much as 40-50 percent. There is no recurring fuel cost because the wind is free, so the cost of generating electricity is now at par with a conventional source like coal. So, the price of wind power is competitive, more affordable.
Risks and challenges
Scaling up quickly is an instant challenge for Renew Power. Renewable energy like Wind energy is restricted in India (there are no Class A wind sites) and within the previous couple of years, the IPP space has attracted many new players. The speed at which Renew Power sets up MW on the ground will be significant in determining competitive advantage.
Setting up the wind farms involves two critical elements – land acquisition and access to capital. With Goldman Sachs behind it, Renew Power’s capital requirements are taken care of but land acquisition can face some turmoil.
As Mr. Sinha once said that “The current target is to become a 10 GigaWatt clean energy company, but I cannot control how many bids the government gets and how much people bid,” referring to the renewable projects that the govt. is auctioning and also the aggressive bidding that private players are taking part in. “Therefore our growth is driven by external factors. That’s a challenge for us.”
Finally, the Govt. policies have a major role to play in wind energy. It at the best of times is not predictable.
Future Road Ahead for ReNew Power
This renewables sector responded to the Govt’s initiative for climate-compatible growth by ramping up capacity at an annual rate of growth of 17.5% between 2014 & 2019. Today, with an installed capacity of 83 GigaWatt, plus 31 GigaWatt under development and an additional 35 GigaWatt out for tender, India is among the top-five clean-energy producers globally. India is well ahead of achieving its original target, eyeing 225 Gigawatt from renewables by 2022 and a target of 40% clean energy by 2030.
This growth has coincided with an exponential increase in investment in the renewables sector from both domestic and foreign sources. This renewables sector has seen an influx of $42 billion of investment since 2014 and around $7 billion of foreign direct investment (FDI) between April 2000 and June 2018. In 2017 – 18, total FDI in this renewables sector surpassed $ 1 billion for the first time, while in 2018-19, it grew more than 20% to $ 1.4 billion. Renew Power had arranged meetings with the investors in January 2020 because the company plans to raise at least $300million via dollar bond sales across the world later this month. The raised funding will be used to refinance the current obligation and to support the second tranche of projects the organization has bid for under the govt. planned Solar Energy Corp of India (SECI)’s the second tranche of green energy projects.