Headquartered in Guernsey and incorporated in 2007, Indian Energy Ltd is a focused long-term owner and operator of wind assets. IEL, which commissioned its first wind power project in Karnataka, aspires to be India's leading renewable energy independent power producer. Rupert Strachwitz, in an interaction with Venugopal Pillai, talks about his company and the Indian wind energy market.
Tell us about Indian Energy Ltd. Who are the main promoters and other equity shareholders? How much did IEL raise through its recent initial public offering?
Indian Energy is focused solely on owning and operating wind farm assets in India. The main promoters of the group are Rupert J. Strachwitz (Managing Director), Dr. Pankaj Agarwal (Director Technology) and James Pockney (Director). The company raised £9.75 million of new money at the IPO in September 2009 and the significant shareholders at that date were:
Name Percentag of holding
Utilico Emerging Markets Ltd 20.5
Premier Energy & Water Trust 8.9
Insight 5.9
RAB Special Situations (Master) Fund 4.3
Scottish Widows 3.9
Union Bancaire Privée 3.6
Axa 3.4
Ignis 3.4
RAB Octane Fund Ltd 3.3
Standard Life 3.0
Indian Energy, as we understand, currently has a 24.8-mw wind farm in Karnataka. Where is the plant located and when did commercial operations start?
The plant is located at Gadag Plains near Hubli in Karnataka. The project consists of 31 Enercon E-53 800-kW turbines and was fully commissioned on February 17, 2009. A 20-year power purchase agreement is in place with Bangalore Electricity Supply Company. The project is expected to produce 55.8 million kWh of electricity per year. The project is registered under the clean development mechanism under Kyoto Protocol and has pre-sold the project's CERs to 2016.
IEL has recently started work on a 49.5-mw project in Tamil Nadu. When is completion targeted?
Indian Energy has entered into an agreement with ReGen Powertech Pvt. Ltd for the construction of a 49.5-mw wind farm at Theni in Tamil Nadu.
The Theni project will be constructed and commissioned in two phases. Phase-I, for which Indian Energy has signed a turnkey construction contract with ReGen, consists of 11 turbines of 1.5 mw capacity each with a total generating capacity of 16.5 mw. The commissioning of phase-I is scheduled to be completed by June 2010. Phase- II, for which Indian Energy has signed an expansion option with ReGen, will consist of 22 turbines of 1.5 mw each and a total capacity of 33 mw, with construction scheduled to commence in Q2 2010 and plans to be fully commissioned by December 2010.
What is the wind power portfolio that IEL has envisaged in India? How do you propose to finance your future wind power projects?
The medium-term strategic aim of Indian Energy is to have 300 mw of installed generating capacity by Q1 2013. To achieve this, Indian Energy intends to acquire operational assets and construction ready projects where key permits are in place. The company will finance this using the appropriate markets available such as debt, project finance and equity.
Would acquisitions, apart from greenfield projects, form a part of your Indian strategy?
Indian Energy has and does consider acquisitions of existing operating assets
Which Indian states have you identified for your medium-term wind energy portfolio?
Indian Energy is investing in those states which have both the necessary wind capacity as well as the prerequisite regulatory environment to support wind projects. Examples of those states where we have or would invest are Tamil Nadu, Karnataka, Rajasthan, Gujarat and Maharashtra
India is the only country with a separate ministry for renewable energy, but it is widely felt that lack of comprehensive policy guidelines is a deterrent, mainly with respect to wind energy where the potential is highest. What is your view?
Yes, indeed India is one of the few countries in the world with a separate ministry for new and renewable energy. In fact, the MNRE minister is of cabinet rank which shows the importance that India gives to renewable energy. However, there is a lot that still needs to be done-a few key issues that need to be addressed like (a) uniform and comprehensive renewable energy law to be drafted and passed by Parliament, (b) renewable purchase obligation to be made mandatory across Indian states with clear targets and timelines, and (c) renewable energy certificates (REC) to be introduced to create a free market mechanism for sale and purchase of renewable energy.
Land acquisition for greenfield projects is a notorious hindrance in India. Given that wind power projects are highly land sensitive, what has been your experience so far?
Indian Energy intends to acquire operational assets and projects at an advanced stage of their development where key permits have been obtained and land secured.
India recently introduced a generation- based incentive (GBI) scheme for wind power projects. Some experts feel that this move is a good beginning but certainly not adequate. What is your view?
GBI is certainly a step in the right direction and will help true IPPs and wind developers like us. However, in our opinion it could have been better if the cap of Rs 62 lakh per mw had not been mandated. Most importantly, the sharing of CDM/CERs being mooted by the CERC is set to hurt RE developers/projects in India. In our opinion this goes against the financial additionality premise of CDM projects.
Apart from wind energy is IEL looking at other forms of renewable energy like biomass, small hydropower and solar power?
Indian Energy is solely focused on investing in wind power in India.
Given that wind energy (excluding large hydropower) has the largest potential (some 48 GW) in India's renewable energy sector, how do you rate the ease of doing business? What policy changes could you suggest to catalyse investment, and expedite clearance/ grounding of wind power projects?
India does offer a fairly transparent renewable energy market to conduct business. However, certain actions could make things more efficient and speed up the process-like making the state nodal agencies (state energy development agencies) more accountable and have them coordinate for all approvals/permits under a single window system. Also, the PPAs do not offer any flexibility on terms etc. and there is little or no recourse for delays in payment by the distribution utilities. Again except for one or two states there are no penalties for non-drawal of RE power. There should be clear and implementable penalties for not meeting RPO obligations.
If you were to name three factors that distinguish the Indian wind energy market from that in other emerging economies, what would they be?
Market size is significantly bigger than other emerging economies except China.
Reasonably developed and transparent market-policy and regulatory trajectory in the right path.
Huge scope for growth.
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