According to reports, in perhaps the first such deal in India’s mini-grid space, Japan’s Mitsui and Co. will acquire a stake in OMC Power Pvt. Ltd, two people aware of the development said.
The 1 billion Japanese yen (about Rs59 crore) investment is also a first by one of Japan’s largest companies in India’s renewable energy sector.
Mint couldn’t ascertain the size of Mitsui’s stake in OMC.
Mitsui has been present in India in sectors such as steel, agri-processing and pharma.
OMC, formerly Omnigrid Micropower Co. Pvt. Ltd, was set up in 2011 and supplies electricity to telecom towers apart from operating solar power plants in rural areas and distributing the generated electricity through mini-grids.
Spokespersons for Mitsui and OMC in separate emailed responses confirmed the development and said, “Mitsui will acquire shares in OMC as a strategic investor but we cannot disclose the actual percentage.”
Mitsui will invest around 1 billion Japanese yen in OMC, the spokespersons said.
Mint reported about Mitsui looking at investments in India’s clean energy sector on 10 March. Given that large solar projects are facing uncertainties with some states looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff, there is a growing interest in the Indian solar off-grid energy segment.
For instance, French energy company Engie SA which is in talks with Delhi-based Applied Solar Technologies (AST) for a partnership to provide off-grid power to the telecom and banking sectors, Mint reported on 25 August.
“OMC is one of the largest mini grid supplier to the telecom towers. Japanese investments have traditionally been low risk and seek modest yields over time,” said a person aware of the development, requesting anonymity.
India can potentially generate 750 gigawatt (GW) solar power with an average solar radiation range of 4-7 per kilowatt-hour (kWh).
Mitsui’s investment follows JERA Co. Inc., an equal joint venture between Japan’s largest utility Tokyo Electric Power Co. and Chubu Electric Power Co. acquiring a 10% stake in ReNew Power Ventures Pvt. Ltd for $200 million in February.
Japan is among the top five sources of foreign direct investment in India, especially in automobile and pharmaceutical sectors.
“Increasingly, international businesses are looking at Indian players to build businesses in other overseas markets given the experiences here and the similarities,” said the first person cited above.
There is a growing traction for micro-grids with the government’s think tank Niti Aayog pitching for them. They can help provide off-grid solar energy solutions to around 304 million Indians who don’t have electricity access.