Energetica India Magazine - September 2022

renewable energy portfolio. We are committed to participating in India’s transition into a greener future and aim to provide clean, efficient, and sus - tainable energy. Currently, 47% of our total installed capacity is renewable-en - ergy-led, and we are working towards strengthening it further with strategic investments. Q How will you fund the capacity ad- dition? Malcolm Wrigley: Depending on the various fields, the company’s total in - vestment outlay will be approximately Rs 5,000 crore a year. This will be dis - tributed across generation, transmis - sion, and other non-carbon opportuni - ties in electricity. These investments will be funded with a combination of debt and equity from our own resources, with ~70 to 80% debt and a balance of ~20- 30% equity. Q Are you looking at any particular acquisitions in the near future? Malcolm Wrigley: We are open to all ac- quisition opportunities that are aligned with our overall strategy. Broadening the horizon to explore non-generation opportunities, we plan to further ex - pand our power transmission business and pursue possibilities in electricity distribution. As the power sector gets privatized, the company will proactively focus on further forays into low-carbon, customer-focused energy businesses. Q What is your outlook for the off- shore wind sector? Are there any challenges you would like the Govern- ment to address in this space? Malcolm Wrigley: India has a coastline of ~7,600KM and massive offshore energetica INDIA- September_2022 29 INTERVIEW wind potential that can be tapped to meet both the energy demand as well as India’s sustainability targets. While onshore development of wind projects has been streamlined, the availability and accessibility of land will increas - ingly challenge this potential from the perspective of commercial and techni- cal viability. To balance this, offshore wind, with an average utilization factor of ~50%, can help India in mitigating climate change. In comparison with on - shore renewable energy, offshore wind projects will remain marginally more expensive and could potentially also be utilized for targeted coastline-based de - mand plug-ins, such as for desalination plants, hydrogen recovery plants, and the cooling requirements of large data centers. This will reduce the overall cost and improve efficiencies. Among the potential measures that the Government could consider are devel- oping initial projects at feed-in tariff rather than through auctions; capacity awards in the range of 1GW+ to justify initial investments; enabling mechanism for new elements of supply chain – tur - bines, evacuation, and logistics; a ready package of permits and approvals; pro- viding adequate time for execution; and a payment security mechanism for ini- tial higher tariffs. A significant initial capacity development with reasonable de-risking will attract investments and kickstart the development of this indus- try. Q What is your perspective on the capital inflow in the renewable sec - tor? What are the growth prospects in this space? Malcolm Wrigley: India’s renewable sector has caught the attention of in- vestors worldwide due to its improved economics and the Indian government’s support. To meet India’s ambitious tar - get for increasing the non-fossil installed capacity, additions in solar, wind, stor - age and hybrid systems are the biggest opportunities. Bloomberg New Energy Finance (BNEF) has estimated a massive financ - ing requirement of USD 223 billion by 2030 just to meet the solar and wind ca - pacity targets and USD 175 billion for transmission and distribution network strengthening. Therefore, financing will be crucial for this energy transition. Availability of competitive, long-term financing through multiple channels would be key to achieving this target. Bond markets for the renewable ener - gy space need to evolve further with better frameworks/safeguards, which would allow long-term investors such as insurance companies, and provident & pension funds to invest in this sector. The energy PPAs are ideal investments for long-term investors as most of them are long-term. Any increase in their participation will help deepen the bond markets and provide the much-required long-term liquidity to developers. Further, as power tariffs are fixed for the entire PPA life, it becomes crucial for developers to have certainty on the interest obligations. Fixed interest rates (through long-term bonds) will help provide the much-required certainty to developers and deepen the invest- ment potential for this sector. Many green/ESG funds are coming up global - ly which India can seek to tap once the bond markets deepen further, and this will further give an impetus to new in - vestments.