Sembcorp to expand its renewable portfolio in India, eyes 30% CAGR

The firm is aiming to have a gross installed renewable energy capacity of 10 Gw by 2025

In line with the global plan of Sembcorp Industries to "transform its portfolio from brown to green", the global energy major will drive its renewable energy growth from India.

Sembcorp said last month that it aims to grow the profit contribution from its sustainable solutions portfolio to 70 per cent from 40 per cent by 2025. It plans to achieve a compounded annual growth rate (CAGR) of 30 per cent and its integrated urban solutions portfolio a CAGR of 10 per cent.

Sembcorp is aiming to have a gross installed renewable energy capacity of 10 Gw by 2025. Its current installed renewable energy capacity (comprising wind, solar and energy storage) is 2.6 Gw. The company is placing its bet on India, along with China and SouthEast Asia to drive the growth.

Speaking with Business Standard, Vipul Tuli, CEO-South Asia, Sembcorp Industries said they do not have a specific number for projects to be done in India but the country would have a significant contribution.

"India is two-third of the global renewable portfolio today. There will be three markets that will grow - India, China, and Southeast Asia. While the percentage share of India might decline, in absolute numbers, it will grow substantially," said Tuli.

He also said both bidding and acquisition would drive the growth in India. Sembcorp has not made any acquisitions after it took over assets of Green Infra in 2015.

Tuli said the market, and the company has matured now to go for acquisitions. At the same time, there are several assets which are now available in the market due to consolidation. "We feel that valuations are getting to a point where they are attractive. Secondly, we are more confident in our capabilities. Thirdly, we want to have complimentary growth between bidding and acquisitions," said Tuli.

The company would be looking at projects where eventual credit risk of the offtaker is "manageable" and the projects with power purchase agreements. (PPA). For funding further acquisitions, Tuli said there was enough headspace at the group level for raising debt. "We recently cleaned up the global balance sheet, separated the marine business etc. Two weeks ago we raised our first green bond at 2.54 per cent for 10 years. We will be raising more. There are internal accruals at group level and India. Additionally, we can always do project financing," he said.  

Earlier this week, Sembcorp announced its inaugural S$400 million green bond offering. In a public statement, the company said, "With the completion of this offering, Sembcorp will have successfully issued the first Certified green bond under the Climate Bonds Standard by a Singapore-based energy company. Net proceeds arising from the issue of the Green Bonds (after deducting issue expenses) will be used to finance or refinance, in whole or in part, new or existing projects which fall in the list of Eligible Green Projects in the Sembcorp Green Financing Framework and that meet Climate Bonds Initiative (CBI) sector-specific technical criteria."

Sembcorp has an energy portfolio of over 12,800 Mw, with 3,300 Mw of renewable energy capacity comprising solar, wind and energy storage globally.