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LNJ Bhilwara Group appoints Yes Bank for wind energy portfolio sale

According to reports, in an indication of growing consolidation in the Indian wind energy sector, Ravi Jhunjhunwala’s LNJ Bhilwara Group has put up its wind energy portfolio for sale and hired Yes Bank Ltd to run the process.

According to the 2015-16 annual report of Bhilwara Energy Ltd (BEL), the holding company for the group’s power businesses, the company has a wind power project portfolio of 103.5 megawatts (MW).

“LNJ Bhilwara Group plans to sell its entire wind project portfolio and has appointed Yes Bank for running the process,” a person aware of the development said, requesting anonymity.

Queries emailed to Ravi Jhunjhunwala, chairman of BEL; Riju Jhunjhunwala, managing director, BEL; and an external spokesperson for the LNJ Bhilwara Group on Friday remained unanswered as of press time.

In response to a specific query about the transaction, a Yes Bank spokesperson declined to comment in an emailed response.

In India, the biggest greenhouse gas emitter after the US and China, renewable energy currently accounts for 15%, or 45,917MW, of the total installed capacity of 310,005MW. Of this wind energy projects alone account for 28,083MW, ranking India fourth, behind China, the US and Germany.

According to experts, the recent record low tariff bid of below Rs3 for the Rewa solar power project in Madhya Pradesh will have its bearings on other energy sources such as wind.

“Investors without strategic long-term interests in the renewable sector, having achieved short-term returns, and confronted with change of preferred renewable source and discovery of low prices in recent bids, would be keen to sell their portfolios/PPAs (power purchase agreements) if offered the right value,” according to Sambitosh Mohapatra, partner (energy) at PwC India.

This comes at a time when the record low winning bids of Rs2.97 per kilowatt-hour to build the 750MW solar power project at Rewa has put the onus on other electricity sources such as wind to become a more competitive energy source.

With effective levelized tariff—the value financially equivalent to different annual tariffs over the 25-year period of the PPA—of around Rs3.30 per unit, power from the sun has become an alternative in the Indian energy mix.

“The market is likely to see more and more consolidation in the operational renewable projects space. However, till now, most acquisitions are being done by existing renewable players. This is because it enables the incumbents to add capacity at a relatively faster pace and without compromising on returns expected from self-developed projects. For such transactions to attract newer pools of capital like yield investors (who will also have lower return benchmarks), the transactions will need to be structured well,” said Srishti Ahuja, director at consulting firm, EY.

The wind energy sector is, meanwhile, grappling with issues such as squatters encroaching on good wind potential sites, inordinate delays in signing of PPAs and untimely payments.

Power distribution companies are also shying away from procuring electricity generated from wind energy projects.

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