Emerging markets private equity investor Actis is committing $230 million to create a new Indian renewable energy platform, with a strong focus on wind, aiming to provide some 800MW of capacity by 2019.
Ostro Energy, as the platform is known, will be led by Ranjit Gupta, who has built several Indian renewable energy businesses. The platform’s first investment, a 50.4MW wind farm in Rajasthan, has already reached financial close and is currently under construction. Gupta said the team hopes “to bring the project to full capacity this year”.
In addition, head of Actis’ energy investments in Asia, Sanjiv Aggarwal, told sister title Low Carbon Energy Investor Ostro is already close to reaching financial close on a further 50MW of wind projects and hopes to implement some 200MW a year until it hits the 800MW target.
“India has got five key wind states and of these we are planning to target Madhya Pradesh, Andhra Pradesh and Rajasthan. There are other states – like Karnatek and Gujarat – that currently don’t have very attractive feed-in tariffs. Once those regimes improve, though, we would want to move there as well,” Aggarwal said.
“Take Gujarat, for example. Gujarat is actually a power-surplus state because it’s got substantial generating capacity based on coal and gas and also a very large renewable capacity. At the moment, it’s not able to consume all the power generated and therefore it is keeping tariffs for fresh capacity low because it doesn’t really need the power. Madhya Pradesh, Andhra Pradesh and Rajasthan are seriously power-short states and therefore have higher tariffs,” he added.
Aggarwal pointed out Ostro may branch out into solar, but stressed the platform will be primarily focused on wind power.
Ostro Energy is the fourth renewables platform created by Actis, joining Chile’s Aela Energía, Brazil’s Atlantic Renováveis and Mexico’s Zuma Energia. The private equity firm is also backing Central American energy platform Globeleq Meso America. As exclusively revealed by Low Carbon Energy Investor, Actis also plans to launch a fifth renewables energy platform, focusing on Africa.
Both the Indian and African platforms will be funded from its $1.15 billion Energy Fund III, which closed in December 2013. In a previous interview, investment director Lucy Heintz explained that almost the entirety of the $800 million or so the firm plans to invest in energy generation from Fund III – 70 percent of the portfolio – will probably be invested in renewable energy generation.
“Our focus is competitive generation for a particular country. At the moment, there’s a confluence of factors in our markets which means pretty much all of our generation platform investments in Fund III may be renewables. In previous funds, that hasn’t been the case. In Fund II we have gas and hydro assets,” Heintz explained.