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Greenko Group plans to increase capacity to 5,000MW by 2020

Livemint:  March 25, 2015

Hyderabad: Greenko Group Plc, a Hyderabad-based clean energy company that is listed on the London Stock Exchange’s Alternative Investment Market (AIM), said it was scouting for hydropower assets, with plans to increase power generation capacity by five times to 5,000 megawatts (MW) by 2020.

“We are looking at hydropower assets in the range of 50-100MW,” said Anil Kumar Chalamalasetty, chief executive officer of Greenko, in a recent interview.

“It should fit into our cluster model,” Chalamalasetty added. Greenko operates a clutch of small and mid-size hydropower assets concentrated along single run-of-the-river—a cluster model.

“In addition to operational ease, the cluster approach gives us better understanding on geographical, environmental and social aspects of the river system,” Chalamalasetty said.

Greenko has an operational capacity of 715MW, of which 235 MW is hydropower and 400MW comes from wind. Nearly half of the hydropower capacity was added through a series of acquisitions.

In February last year, the company bought the 70MW Budhil hydropower project along with two smaller power plants of 5MW each in Himachal Pradesh from Lanco Infratech Ltd for a total of Rs.650 crore, making it Greenko’s biggest ever acquisition.

Several hydropower assets in Himachal Pradesh, Uttarakand, Sikkim and Arunachal Pradesh are up for sale, as many independent power producers that have taken up hydropower projects are facing execution risks, delays in environmental and forest clearances, mounting debt and liquidity issues.

Currently Greenko has six hydropower projects under construction, with a total capacity of 188.6MW. The largest of these is the 96MW Dikchu project in Sikkim, which is about 80% complete and is on schedule to start commercial operations at the start of the 2015 hydropower generation season, which lasts from June to August.

The company said it has licences to develop another 600MW of hydropower assets in the next five years.

Greenko is also aggressively expanding into the wind energy generation space with plans to add 200MW by June and projects of 1,350MW at various stages of development.

“By monsoon this year, we will be able to reach 1,000MW capacity,” Chalamalasetty said.

Greenko has raised around $500 million in equity and deployed capital worth $1.5 billion in various projects under implementation.

Chalamalasetty said the company has set itself a target of achieving 5,000MW capacity across wind, hydro and solar portfolios by 2020, which would need an equity infusion of $750 million.

“We have a history of raising such capital and a track record of project deliverables; so raising capital isn’t going to be a problem,” Chalamasetty said.

He said the company is contemplating migrating from AIM to a mainstream exchange, such as the London Stock Exchange, as and when the company hits operational capacity of 1,000MW.

“AIM helped us as a growth company, but we became bigger for an AIM exchange,” Chalamalasetty said.

Greenko was started in 2006 by two first-generation expatriate Indian entrepreneurs—Chalamalasetty and Mahesh Kolli—with a business plan to acquire, build and operate a portfolio of small and clean energy assets such as hydro, wind and biomass projects, and earn revenue from the sale of power to state electricity boards through 15-20 year power purchase agreements as well as through the sale of carbon credits.

The Union government has made renewable energy a high-priority sector and announced incentives such as renewable purchase obligation, accelerated depreciation, generation-based incentive, feed-in-tariff and viability gap funding, as well as allowing 100% foreign direct investment under the automatic route.

The government aims to have 100,000MW of renewable energy capacity by 2022. Renewable energy contributes only about 6.5% of India’s total generation capacity. The government plans to increase it by 12% in the next three years.

India’s renewable energy industry is likely to generate business opportunities worth $160 billion in the next five years, a bulk of it is expected from the private sector, according to the latest Economic Survey.

“There are a lot of foreign funds which are evaluating to invest in India whether from an ‘Make in India’ perspective or a developer perspective,” said Arvind Mahajan, a partner and head of infrastructure and government services at KPMG India.

They are waiting for more clarity on long-term finance and land acquisition, Mahajan said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.