Fundraising

Abraaj to develop 1GW Indian solar power platform

The emerging market fund manager has teamed with Indian conglomerate Aditya Birla to co-invest $1bn in India’s renewables sector.

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The Abraaj Group and India-based Aditya Birla Group have set up a new 1-gigawatt (GW) renewable energy platform called Aditya Birla Renewables focused on developing solar power plants in India. 

Abraaj will invest in the platform through one of its funds, while the Aditya Birla Group will invest through its Aditya Birla Nuvo division. Aditya Birla will own 51 percent of the platform, with Abraaj holding the remaining 49 percent. 

Abraaj reckons the Indian government has created favourable regulatory policies to increase the use of renewable energy, including setting an explicit target to achieve 100GW of solar power capacity by 2022, while only 4GW has been installed to date.
“The Modi government has been taking a proactive approach to invite private sectors to play a role in developing solar power in the country,” Sev Vettivetpillai, a partner and global head of Abraaj’s thematic funds business, told Infrastructure Investor.
The government has selected 25 potential sites for solar power development across different states in the country, according to Vettivetpillai.

“As the government has helped with the site selection and related regulatory approvals, we just need to come in and build, operate and manage the solar plants.”

The new platform will bid for projects tendered at national and state auctions, with the intent to develop and operate utility-scale solar power plants that can provide clean and cost-effective electricity to the national grid across several key states. 
The first phase of platform development aims to build 500 megawatts (MW), with the rest to be achieved in the second phase.

Vettivetpillai said his firm pays particular attention to the payment schemes in the states where the investments are placed. “As a power operator, it is important for us that the state government can ensure the bills are paid on time,” he added. 

He also pointed out that other potential risks include recruiting high quality operators for the assets, and also the implementation capability of state governments.

Despite these factors, Vettivetpillai believes it is a good time to be part of the growth of the Indian renewable energy sector.

He commented: “Renewable energy is set for explosive growth thanks to technological advances, favourable policies and pricing structures that make it a competitive alternative to conventional power generation. We see significant opportunity in India, one of the world’s biggest energy consumption markets.”

The Abraaj Group, which has invested about $1 billion in the energy value chain across global growth markets, is also looking at potential solar projects in Africa.

Greenstone Energy Advisors, the Indian renewables-focused investment bank, advised on the partnership.