Tokyo-based Orix Corporation has agreed to acquire a 20% stake in Indian renewables company Greenko Energy Holdings, as part of its strategy of investing in the fast-growing Asian market. Greenko was founded in 2004, and in 2013 brought in Singapore sovereign wealth fund GIC (which currently holds a 65.8% stake) as an investor, followed in 2016 by Abu Dhabi Investment Authority (16.5%).
In a September 11 announcement, Orix said that, in addition to acquiring some shares from the founders Anil Kumar Chalamalasetty and Mahesh Kolli, it will also integrate its entire 873MW wind power generation business in India into Greenko, in exchange for new Greenko shares. Orix will thus acquire more than 20% of Greenko’s issued shares at closing for around US$980 million.
The exact and ongoing shareholding and investment amount may change as a result of transaction adjustments, exchange rates and future capital infusions. Orix aims to execute definitive agreements and complete the transaction by the end of the year.
Greenko has long-term power purchase agreements (PPA) averaging over 20 years with India’s government-operated agencies, state-owned power companies, and other entities, establishing high-growth potential and a stable income base. It is one of India’s two major renewable energy operators. In addition to an existing total capacity of about 4.4 GW operating renewable portfolio in India – e.g., solar, wind, and hydro – Greenko recently announced a 1.2 GW hydro asset acquisition, and has additional capacity of over 8GW under construction and in development.
Greenko is also focused on building integrated renewable energy projects, which supply electricity from renewable sources that is not affected by the weather, at costs equivalent to thermal power stations and similar facilities.
This is achieved by combining renewable energy sources, such as solar and wind power, with pumping-storage hydro. High demand is expected from state-owned power companies which have high procurement needs for electricity originating from renewable energy as well as companies with a high level of environmental awareness such as those under RE100 or advocating net zero carbon.
The renewable energy market in India has reached grid parity, thanks to lower construction costs and favorable climate conditions, yielding cost advantages even when compared to thermal power. India’s government has set a renewable energy target of 175GW by 2022 against an expected renewable energy level of 113GW in 2020.
According to Orix, installed renewable capacity in 2030 may reach 389GW, and the international expansion of its renewable energy businesses remains an important strategy.
In 2016, Orix entered India’s wind power business (with a total facility capacity of 873MW) through a joint investment. The assets were fully acquired by Orix in 2019. Furthermore, in 2017, Orix acquired 21.5% of the shares in Ormat Technologies, a vertically integrated geothermal power company listed in the United States.
Within Japan, Orix is actively promoting its renewable businesses, such as solar, wind, geothermal, biomass, and biogas. Orix has a total capacity of approximately 1GW in its solar business. Going forward, the company said that it intends to expand its renewable energy business in and outside Japan, as well as business expansion in Asia.