Sinha said in the last few years, the expectation on returns has gone down due to a steep fall in renewable energy tariffs, but they must rise to make the business more sustainable.

The renewable energy sector in India is on the road to consolidation and players with smaller portfolios are looking at exiting the market as returns are shrinking in the face of lower tariffs and uncertainty on the policy front, Sumant Sinha, chairman and CEO of ReNew Power, has said.

“With tariffs dipping and some uncertainty coming in on the policy front, project developers with a relatively lower appetite for growth or risk, are exiting the business at fair valuation of their assets,” Sinha told ETin an interview.
ReNew Power, backed by big-ticket investors like Goldman Sachs, Asian Development Bank and Abu Dhabi Investment Authority among others, has a total capacity of 3,500 MW of wind and solar projects, both operational and under construction. Sinha declined comment on the company’s acquisition plans but said ReNew is open to inorganic growth in wind and solar businesses.

The sector has seen a wave of M&A deals by various companies including ReNew Power in the past two years.

These include Tata Power’s buyout of Welspun Energy’s renewable portfolio of 1140 MW for Rs 9,249 crore in June 2016; Greenko Energies takeover of the Indian assets of around 500 MW of US-based SunEdison for $392 million in October 2016, after the latter went bankrupt. In June last year, CLP India, a wholly-owned subsidiary of Hong Kong-based CLP Holdings, bought a 49% stake in Suzlon’s solar subsidiary SE Solar for Rs 73.5 crore. In July, Vector Green Energy, the renewable energy arm of IDFC Alternatives, acquired 190 MW of solar assets from US-based First Solar for an undisclosed amount.

While companies with small portfolios are looking for buyers, those with longterm outlook are looking at making more acquisitions, as clean energy business is capital-intensive and not everyone can raise that kind of capital in the long run, he said.