Greenko successfully carving its own trail

15 October 2020 |

Last month, Greenko announced acquisition of 873 MW of operational wind assets from ORIX, Japan, who also agreed to invest USD 980 million into the company for a minimum 20% stake. It is one of the largest in-bound investments into the renewable sector so far and provides a double shot in the arm for Greenko: simultaneously boosting its operational portfolio size, now up to 5.1 GW, and also providing it with substantive growth capital.

  • Greenko is the only major renewable developer to have consciously stayed away from all project auctions (other than recent hybrid tenders);
  • It is diversified across renewable technologies and has been proactively developing a portfolio of pumped hydro projects to meet growing need for 24×7 despatchable renewable power;
  • By maintain a steady financial and operational strategy, and staying patient, Greenko has successfully differentiated itself in a highly commoditised sector;

Greenko has taken on a very different path to growth in comparison to its peers, first eschewing project auctions, and then focusing on developing despatchable power projects rather than standalone renewable projects. Remarkably, Greenko is the only company in the sector that has consciously stayed away from all project auctions – other than the two recent hybrid tenders – believing that the market is overly competitive with risk-adjusted returns being consistently below cost of capital. Instead, the company has made substantial acquisitions after the assets have been built and derisked. Over the years, the company has acquired a total of 2,000 MW of assets making some substantial acquisitions including Orange (1,000 MW), Skeiron (385 MW) and SunEdison India (587 MW).

There are other fundamental ways in which Greenko has differentiated itself. Its portfolio is more diversified across technologies with a growing share of hydro power. Most of the debt funding comes from offshore green bonds and the company has more financial headroom in comparison to other developers (see table below).

Figure: Portfolio size and make up of Greenko and its peers.

Source: BRIDGE TO INDIA research
Notes: Pipeline includes all projects successfully awarded to developers in completed auctions including instances where PPA execution and/ or regulatory approval are pending. For hybrid projects, we have estimated solar and wind capacities based on industry norms. Adani’s operational capacity includes 2.1 GW of solar projects carved out in a separate JV with Total.

Table: High level comparison of Greenko with its peers

Source: BRIDGE TO INDIA research

Greenko says that it is developing a further 8 GW/ 40 GWh capacity in five states. Main focus is combination of hydro, solar and wind power to provide 24×7 schedulable, on-demand renewable power during peak hours to meet DISCOM demand. There are also news reports of the company trying to acquire US-based NEC, a battery storage systems integrator.

The ORIX deal validates Greenko’s unique strategy in the Indian renewable sector. It is an isolated example of a company successfully differentiating itself in a highly commoditised and competitive sector. The company has built a strong competitive barrier by patiently developing a portfolio of pumped hydro projects in anticipation of changing market needs.

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