Shell is at the head of a trio of foreign giants competing to buy Indian renewables developer Sprng Energy, according to local reports.
The UK-based oil & gas supermajor has been shortlisted along with finance group Macquarie and Canadian pension fund CPPIB to acquire Sprng from private equity group Actis, said the Economic Times citing unnamed sources with knowledge of the process.
Shell’s $1.2bn non-binding offer is believed to exceed the others on the table, the report added, with the three now set to submit binding offers within eight weeks.
Pune-based Sprng has secured contracts to underpin a 2.6GW solar and wind build-out, 2.1GW of which is already operating with PV making up the lion’s share.
Shell is gradually expanding its global interests in renewables and other clean energy assets as part of a corporate energy transition strategy that currently earmarks $2-3bn annually for low-carbon investments.
The supermajor in December made a major swoop for Savion, a US-based solar and storage developer, and is also active in offshore wind – both fixed-bottom and floating – and the emerging green hydrogen sector.
Shell has not so far commented on the Economic Times report.
Indian investment magnet
India’s renewables sector has attracted the interest of large global players as the country gears up to pursue huge targets set by Prime Minister Narendra Modi – most notably the 500GW by 2030 ambition unveiled at last year’s COP26 summit.
Shell’s fellow European supermajor TotalEnergies has an alliance with Adani, while from the power sector the likes of Enel are active in the nation’s wind and solar sector.
CPPIB, said to be among the other contenders for Sprng, is already a backer of Indian renewables giant ReNew Power.
The scale of the challenge facing India was underlined on Monday by ratings agency ICRA, which said up to $500bn of investments could be needed to achieve Modi’s goals, once transmission infrastructure is factored in.
But ICRA also painted an upbeat picture of the trajectory of Indian renewables – led by solar – as it rebounds from the pandemic.
Its analysts expect 16GW of renewables to be installed in the 2023 fiscal year, up from 12.5GW in the current FY2022, itself an increase on the 7.4GW added in FY2021.
ICRA said the solar sector had so far managed to stay competitive even in the face of tax increases on its products, with a PV project bidding as low as 2.17 rupees/kWh ($0.029/kWh) as recently as December 2021.
“The ability of the developers to secure modules within their budgeted costs and cost of debt funding at less than 8.5% remains important to make these projects viable.
“On the other hand, the wind segment continues to witness subdued capacity addition owing to execution headwinds, financing challenges for few developers and weak financial profile of some of the OEMs leading to supply side constraints,” ICRA said.