After consolidating its position in India’s green energy sector, Sembcorp Energy India Ltd (SEIL), the Indian arm of Singapore- based Sembcorp Industries (Sembcorp), has worked out a more focused strategy for its renewable energy portfolio here which is in line with its global 2025 10 GW target of which India will be a significant play. The company, with 4.8-GW RE portfolio in India comprising approximately 2.64 GW of thermal and remaining renewable, mainly wind, is now looking at acquisitions.

It has won projects under Solar Energy Corporation of India Ltd (SECI) bids at the Central grid, State SECI as well as feed-in-tariff. “We want to balance our portfolio mix with focus on solar, look at Central and State bids as well as acquisition of projects in the segment,” Vipul Tuli, South Asia CEO, Sembcorp Industries and Managing Director, SEIL, told BusinessLine .

“We are studying various projects for both organic and inorganic growth,” Tuli said adding “we are looking at acquisitions because the size of our growth ambition is quite large. The acquisitions can be in the form of new projects which the developers do not want to continue with, or even those who have worked half way and want to exit. We are open to all prepositions.”

Payment security

SEIL will take only those projects that have a clear payment security, he said when asked about why after three rounds of SECI projects, some State projects and PPAs, the company has lied low in the recent bids. “We take SECI projects, and projects that have three-tiered payment security in terms of LC, revolving fund, and State government guarantee. Even if these conditions are met, we are still very selective. We have projects in seven States, so we know which States to touch and which not to touch,” he added.

Elaborating, he said, about 60-70 per cent of the company’s portfolio is in States with better credit risk capacity. “As we grow further, it will become 80-90 per cent of our portfolio,” he said adding “We are looking to acquire both solar and wind assets in a wide range from the PPA stage to operational projects. Since we have 36 project sites already, we are looking at assets that are adjacent to those sites. We are also looking at assets that have equipment we know very well and thus can improve the performance.”

For the financial year 2021 the company reported a net profit of ₹843 crore, up from ₹308 crore in FY2020, a period impacted by the pandemic.

According to Tuli, it is a misnomer that because renewable tariffs have come down the developers’ revenue will also be down. “Because of better cost management and in-house operations and maintenance capability the company has been able to strike a proper balance,” he said. For example, today 35 per cent of its wind capacity is under self-operation and maintenance.

While the company itself is not going into manufacturing or distribution in India as yet, on the domestic content requirement for solar modules, he said, “The domestic manufacturing industry is very small and has very little experience. The solar module is a high-tech product. Indian manufacturers are only assembling the modules and have only dipped their toes. The transition period will mean high costs and low efficiency of panels. This is where the performance linked incentive scheme of the government becomes important to push the manufacturers to make high-efficiency products.”