Hong Kong's CLP Seeks acquisitions to expand in India

Hong Kong’s largest power utility CLP Holdings Ltd. is scouting for more renewable power projects in India at a time when conventional generators are coping with stranded projects and under utilization.

CLP India Pvt. is eyeing run-of-the-river hydro power projects, solar and wind capacities as well as efficient coal-based power generation units located near coal mines, which helps to lower costs, according to company executives.

“We have a global climate commitment and our ability to increase emissions is pretty limited,” said Amarthaluru Subba Rao, executive director for finance and strategy at CLP India. “So we would keep looking at opportunities within our policy framework.”

CLP India’s focus on cleaner generation reflects the parent’s commitment to reduce emissions as well as an increasingly competitive power market in India. A rapid decline in renewable power prices has made clean energy more attractive to state retailers looking to lower costs. CLP Holdings’ Indian unit accounted for less than 5 percent of its revenues in 2016, according to data compiled by Bloomberg.

The local unit is looking to buy hydro power projects of 50-200 megawatts in size, that are either completed or nearing completion as it wouldn’t like to build one itself, said Naveen Munjal, commercial director at CLP India.

Power Transmission

The company is also planning to enter the electricity transmission business. Last month, it bid for a 200 kilometer (124 mile) power-transmission project connecting the northern and western grids in India, Munjal said. After adding generation capacity at a rapid pace over the past few years, India is focusing on transmission and distribution projects to ensure electricity reaches users.

An added attraction is safety of revenue, as the federal government ensures payment protection for its transmission projects. “Transmission is an area where we are very keen to open an account,” Munjal said.

CLP India’s portfolio includes a 1,320 megawatt coal-fired plant, a 655 megawatt gas-based combined-cycle power plant, more than 925 megawatts of wind power and a 100 megawatt solar farm. The company is targeting a higher presence in renewable capacity in line with the group’s aim to generate 30 percent of its electricity capacity from sources such as wind, solar and nuclear by 2020.

“We expect mainland China and India to remain our growth markets in the medium to long term, especially in renewable energy, as both countries seek to reduce their reliance on fossil fuels,” CLP Holdings Chairman Michael Kadoorie said in the company’s interim report, published in August. 
 

“Going forward, we will also explore growth opportunities along the energy supply chain in these markets.”

India has found 34 coal-fired projects stressed and in need of financial restructuring to make them viable. The country’s coal plants idled an average 40 percent of their capacity, while 25-gigawatts of gas-fired power plants used less than a quarter of their capability during the five months ended August.