NSL Renewable raises $90 million
With $90 million in funding raised over the last week, NSL Renewable Power (NRPPL) is looking to leverage the falling costs of producing power from renewable sources. It currently has 185 megawatts of installed capacity across wind, solar, bio-mass and hydropower, and plans to more than double its capacity over the next 18 months.
Tariffs for solar-generated electricity have fallen from INR15 to INR7-8 per kilowatt-hour, while the cost of wind power can vary between INR3 and INR5 per kWh. At the same time, coal prices are on their way up due to shortage at thermal power plants.
Investors in NRPPL include German Investment Corporation (DEG), PROPARCO, Asia Clean Energy, GS Power, FE Clean Energy, the International Finance Corporation (IFC) and the Asian Development Bank (ADB). According to Martin Lemoine, ADB's senior investment specialist, difficulties in conventional power generation in India will encourage investment in renewables.
"If you look at wind or even solar, they can be quick to commission," he says. "With the price of setting up decreasing, I think wind and solar have huge potential in India for investment."
NRPPL, which is part of the NSL Group, will use the proceeds to support its growth in wind and hydropower sectors. Capital is required for the 100 MW Tidong run-of-river hydropower project in Himachal Pradesh, and the 75 MW Chilarewadi wind project in Maharashtra. These projects are expected to be commissioned by 2015 and then generate 530 gigawatt-hours of power every year.
ADB was won over by NRPPL's long experience and its more than 200 MW of wind energy projects under construction. Lemoine notes that the company has a strong portfolio and also a strong pipeline of wind assets that it can develop rapidly. ADB is putting in $30 million, its first equity investment in an Indian private sector renewable power generation company.
"We found that in the wind and hydro sectors Indian banks are quite comfortable lending to projects so the financing market is quite developed," Lemoine adds. "The gap was more on the equity side where we have been approached by many renewable energy developers."
NRPPL is targeting 1,000 MW or 1 GW of operational assets by 2016 and ADB expects an IPO once the company has reached that level. "In the event of an IPO we would want to make around 30% return, which is the target. I've done equity investments in India before and we made around 30% IRR in the power sector," says Lemoine.
This is the third deal in India's renewables sector this year, after Greenko Group raised $154 million from the Government of Singapore Investment Corp. in March and Bharat Light & Power received $37.18 million from a consortium including Draper Fisher Jurvetson India, UTI capital, and VenturEast Fund Advisors.
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