Adani Green Energy Limited, today signed share purchase agreements for the acquisition of 100% interest in SB Energy India from SoftBank Group (80%) and Bharti Group (20%). SB Energy India has a total renewable portfolio of 4,954 MW spread across four states in India, valuing it at an enterprise value of ~USD 3.5 billion.
The acquisition further affirms the trend of consolidation that is taking place in the renewable energy sector. The US-listed ReNew Power is also in the process of merging its business with RMG Acquisition Corp. II. The company has even formed a special purpose acquisition company for the same. The transaction is expected to be completed by the end of September.
Now, with Adani Greens acquiring assets from another global giant, the renewable industry is slowly shifting in the hands of organised players. It will further accelerate India’s growing renewables market.
The Sector With a Great Potential
As per the International Energy Agency (IEA), India is poised to overtake the European Union as the world's third-largest energy consumer by 2030. It will require heavy investment in setting up electricity generation capacity.
The role of renewable energy is going to be crucial in this mission. Citing the rising concerns over pollution, the Indian government has set a target of establishing 450 gigawatts of renewable energy capacity by 2030. The country has only 96 GW capacity installed as of March 2021. Hence, the opportunity is huge for renewables to grow in the future.
Currently, India has 382 GW of electricity generation capacity out of which thermal sources account for the bulk of the production with an installed capacity of 285 GWs. Solar's contribution is less than 4%. However, its share is bound to increase while usage of coal is expected to decline in the future.
Wind Energy Complements Solar
Solar energy offers great potential as it is available in great abundance. However, it has its limitations as electricity generation faces disruptions during the night and in monsoon season.
Wind energy complements solar in this regard and plays an important role in the overall mix due to the better distribution across the day.
Land of Opportunities but Not Without Hurdles
Despite the ambitious government targets and immense opportunities, India has been slow in adopting renewable energy sources. The execution has been really slow, with less than 10 GW of new solar energy installed over the last 3-4 years. Land acquisition is the major hurdle to set up solar parks apart from huge receivables pending from discoms.
However, with major players like Adani Green and ReNew increasing their capacity, the sector is moving in the hands of organised players. Further reforms in the utility sector, structural bidding and auction process, and clarity on land acquisition laws are required to speed up the adaptation of renewable sources of energy.