New Delhi: Spain’s Zelestra plans to invest $5 billion in India to build 10GW of wind and solar power capacity by the end of the decade, a top executive said, doubling its previous target of achieving 5GW by 2026. The company, backed by private equity firm EQT, may also enter India’s lucrative commercial and industrial sector as part of the expanded plan, chief executive officer Leo Moreno said in an interview.
Typically, renewable energy projects raise 30% equity and 70% project finance, but given the strong backing from EQT, Zelestra won’t need to raise any external equity, Moreno said. “We put our own equity to do all the development, and we invest our own equity when we build the projects. So, that creates an advantage for us in terms of the cycle and how much we can spend early to build,” he said.
Zelestra will look to achieve an equal mix of solar and wind projects in India in the long run, Moreno said. Solar and wind combined, the cost of setting up these projects would be $550,000 per megawatt.
The company is dreaming bigger for India at a time when the country is eyeing 500GW of renewable power capacity by 2030. The green transition is also aided by several schemes and regulations such as green open access norms, schemes for solar parks and rooftop solar and production-linked incentive programmes for solar modules and viability gap funding for battery energy storage systems.
Moreno said about 5GW capacity is already in the pipeline. This includes operational capacity 140MW and another 450MW under construction in Rajasthan, while power purchase agreements (PPAs) have been signed for another 450MW and construction for that capacity would start soon. Recently, it signed a 25-year PPA for the 450 MW solar project in Rajasthan with NTPC.
Building battery energy
Zelestra would also consider building battery energy storage facilities for its customers. Globally its, pipeline for batteries is about 4GW and construction on the same would start soon.
“Now, what we’re seeing is that for the future, the majority of our new projects will have batteries attached to them because it’s significantly better to have a supply for 16 hours. For future, I would say a very high percentage may be at 80%, while for the historical (projects), it may represent 15% of the pipeline,” he said.
Energy storage in the form of grid-scale batteries or pumped hydro projects is critical for renewable power, which is intermittent due to changing wind patterns and sunshine. Several Indian companies, including Tata Power, Adani Group, Reliance Industries and JSW Energy are already planning such storage projects.
Zelestra, which operates in countries such as the US, Germany, Colombia, Chile, and Peru, believes India’s renewable energy market holds potential. “We’re now talking about going to 10GW by 2030. And it (India) is a market that can support this type of bold, ambitious growth and multi-technologies. We already have PPAs awarded in winning storage combination of wind, solar, and storage. So, it really represents the strategy of the company.”
Zelestra is not alone in tapping into the Indian opportunity. Some major global clean energy firms and investors currently operating in India include Sembcorp, Gentari, Brookfield Renewables, BlackRock, and Mubadala.
Global growth eyed
Moreno noted that globally, Zelestra plans to take its installed capacity to 45GW by 2026, with countries such as India and the US playing a key role. He said that apart from India and the US, it would focus on Latin America, Southern Europe and Germany.
Speaking on the regulatory concerns globally over supply chain diversification for solar modules to limit the dominance of China, he said that such moves may have a short-term impact, but would be beneficial in the longer run.
Moreno said India has passed certain laws to support the domestic solar industry, at a time when Chinese companies command 95% of the global wafering capacity. The US had also done the same as India, he said, adding the supply chain will normalize as local entities build capacity over time. Such measures are a path to have more security of supply, Moreno said, calling it “a period of instability that leads to a future of more prosperity.
The combination of enormous demand, government targets, the ease and speed to grow, and the appetite of investors make India compelling place to invest, Moreno said. “Today international investors have a pretty positive view about India, and expect future stability of the market. So, that is appealing,” he said.