Sembcorp to Grow its Renewables Portfolio in India

The company currently has a renewable capacity of over 3 GW


Sembcorp India is a leading renewables player, with generation assets across 13 states and presence across 18 states. Sembcorp Green Infra, the company’s renewable energy subsidiary has a portfolio of more than 3 GW of wind and solar energy – with one of the highest wind capacities under self-operation among independent power producers in India.

In November, Sembcorp Green Infra agreed with India Infrastructure Fund II, managed by Global Infrastructure Partners, to acquire 100% of Vector Green in a ₹27.8 billion ($335.78 million) deal.

In an exclusive interview with Mercom India, A. Nithyanand, Business Head – Renewables, Sembcorp India, talked about the market conditions over the past few years and the company’s plans for future growth in India.

Here are the excerpts from the interview: 

Looking back at 2022, what were the key challenges and promising policy measures?

The volatility of module prices, the rising cost of ancillary products, and inflationary pressures affected the capital costs of projects. Adverse changes in regulations and their retrospective application to already commissioned projects threatened their viability and started to dent investor confidence.

The recent announcement of exemption from the Approved List of Models and Manufacturers program is expected to provide a welcome relief for renewable energy developers and investors. Aimed at addressing the demand-supply mismatch of high-quality modules for many utility projects that have been bid out and must be completed soon, the move can potentially reduce the cost of solar projects in the current environment of rising interest rates and price softening. Together with the Central Electricity Regulatory Commission’s decision to relax the deviation settlement norms, these are positive moves that can drive future growth of renewables in India.

Also, introducing Late Payment Surcharge rules in 2022 was a true watershed moment. It is helping equalize the status of all players in the value chain by improving liquidity and creating and maintaining the payment security mechanism. It has reassured the power sector and brought back financial viability.

How has the sector recovered fully over the past couple of years after the pandemic caused disruptions?

The global supply chain has been significantly altered in recent years, and India’s renewable energy sector is no exception. Although COVID-19 created short-term obstacles such as delayed construction progressions, escalating costs, and stalled operations, investors have not shied away from stable deals with long-term contracts, which remain immune to fluctuations in consumer consumption. Wind and solar consequently continue to be attractive investment opportunities for various stakeholders. The government has been highly responsive and continued to extend necessary support regarding extensions in project completion timelines wherever construction was affected by the pandemic.

What is your take on the removal of reverse auctions for wind projects?

Removing the reverse auction process will significantly improve the viability of projects and spur the capacity addition of wind assets. The new renewable purchase obligation for wind should help sign more power purchase agreements. Over time, an increased footprint of wind power assets can begin to offset the higher share of solar in the grids of distribution companies (DISCOMs) and address some integration issues.

Wind turbine generator exports have declined in the last couple of years, whereas the demand for wind power has risen. How do you see the market managing the demand-supply gap?

In 2022 many original equipment manufacturers (OEM) began moving their mix of wind turbine product offerings from a 2X platform to a 3X one. This transition has been a time taking one for them. The demand for old platform-based products has been reducing in the global market, leading to reduced exports. In this scenario, OEMs have focused on managing their transition and ramping up their capacities to meet domestic demand. We can expect 2023 to be a year when the domestic demand-supply equation balances further.

How does Sembcorp as an organization promote innovation?

Sembcorp continues to invest in innovation, R&D, and deployment of advanced technologies to drive business performance and tackle resource challenges. We have been actively developing in-house technologies focusing on remote monitoring, predictive asset management, analytics, and energy forecasting to maximize the efficiency of our assets across renewables and sustainable urban solutions. Digital analytics for wind and solar assets have helped in better resource management and energy forecasting, designing more efficient generating units that bring down operational costs while maximizing energy availability. Drones have proven useful for our inspection regime. They can cut down a vast amount of time for inspecting a system and, through technology, can identify hotspots within the system.  As an early investor in technology, our investments have helped us achieve significant cost efficiency improvements and savings in O&M and positioned us to transform a crisis into opportunities.

Having acquired Vector Green, what will Sembcorp’s growth strategy be in the region in 2023?

The acquisition balances our portfolio – complementing our wind presence with high-quality solar assets. It strengthens our presence across India and positions us well for more green growth in the country. In addition to bringing significant utility-scale solar capacity to our business and complementing our existing wind portfolio, this move further boosts our in-house technical capabilities and expertise. Now that we have completed the acquisition, I can confirm that bringing Vector Green was a very hard-fought and genuinely collective effort. As we advance, we will focus on further improving the operations and maintenance of these newly acquired assets and driving generation from this portfolio. As an organization, we will continue exploring opportunities to expand our footprint further.