Delivering India’s First Round-the-Clock Renewable Energy Project

Challenge

India wants clean power sources to provide half of its electricity by 2030. At COP26, Prime Minister Modi announced that India plans to reduce emissions intensity over 45% by 2030 vs 2005 levels.^[1] To achieve this target, he called for increasing non-fossil fuel power capacity to 500GW—more than triple its capacity of 158GW as of end-2021.

Wind and solar projects alone cannot meet baseload demand. The wind doesn’t always blow, and the sun doesn’t shine at night. To overcome intermittency challenges, the nation’s Independent Power Producers (IPPs) need to build hybrid power projects. Therein lies a challenge: Hybrid projects face challenges in raising debt as they are not tried and tested. Lenders prefer a high degree of certainty in debt serviceability.

Impact

ReNew Power—one of India’s largest IPPs—recently tapped a consortium of international lenders to fund its 1,300MW Round-the-Clock (RTC) battery-enabled project. It secured a $1 billion loan for its RTC project—the largest project finance facility for a single Indian renewable energy project.^[2]

The RTC project will consist of three wind farms and one solar-plus-battery-storage farm with up to 100 MWh storage capacity across three states. Together, they will provide 400 MW electricity to SECI, an Indian central government-owned entity.^[3]

“RTC projects are important for India because power demand is accelerating,” says Kailash Vaswani, Head of Corporate Finance, ReNew Power. “Renewable energy is the cheapest form of new energy in the country. You can either meet demand with a conventional renewable energy project, which has low plant load factor, or you can do these RTC bids that overcome that problem.”

Takeaway

DBS Bank India was among the lenders, providing a full array of syndicated finance facilities, trade issuances, FX hedging and LC facilities. As the pace of wind, solar and battery installations in India grows,^[4] banks like DBS will play a pivotal role.

“Our partnership with ReNew demonstrates DBS’s commitment to provide capital for green and sustainable financing,” says Niraj Mittal, MD & Country Head, Institutional Banking Group, DBS Bank India. “DBS continues to work with players in wind energy, solar energy and battery storage to help develop solutions for uninterrupted renewable power.”

“The RTC project was our first with DBS,” Vaswani adds. “Clearly, they have a lot of appetite, and we’re the largest renewable energy company in India. So, I see this relationship growing.”

Sources:

[1] BloombergNEF  [2] ReNew Power  [3] ReNew Power  [4] BloombergNEF