Sembcorp Expands Renewable Energy Portfolio in India, Plans 30% CAGR
In line with Sembcorp Industries’ global plan to “turn its portfolio from brown to green”, the global energy major will drive its growth in renewables from India.
Sembcorp said last month it aims to increase the profit contribution of its sustainable solutions portfolio to 70 percent, from 40 percent by 2025. It plans to achieve a compound annual growth rate (CAGR) 30 percent and its portfolio of integrated urban solutions. a 10 percent CAGR.
Sembcorp is targeting gross installed renewable energy capacity of 10 Gw by 2025. Its current installed renewable energy capacity (including wind, solar and energy storage) is 2.6 Gw. The company is banking on India, China and Southeast Asia to drive growth.
Speaking to Business Standard, Vipul Tuli, CEO of South Asia, Sembcorp Industries said they did not have a specific number for projects to be done in India, but the country would have a significant contribution.
“India accounts for two-thirds of global demand today. In the future, three markets will grow: India, China and Southeast Asia. Although India’s percentage share may decrease, in absolute terms it will increase dramatically, ”says Tuli.
He also said the offerings and acquisitions will drive growth in India. Sembcorp did not make any acquisitions after buying the assets of Green Infra in 2015.
Tuli said the market, and the company has now matured to make acquisitions. At the same time, several assets are now available in the market due to consolidation. “We believe that valuations are reaching a point where they are attractive. Second, we are more confident in our capabilities. Third, we want to have complementary growth between offers and acquisitions,” said Tuli.
The company would review projects where the potential buyer’s credit risk is “manageable” and projects with power purchase agreements. (PPA). To finance new acquisitions, Tuli said there was enough free space at the group level to raise debt. “We recently cleaned up the global balance sheet, separated maritime activities, and so on. Two weeks ago, we raised our first green bond to 2.54% for 10 years. We will increase more. There are internal regularizations at the group and Indian level. Plus, we can still do project funding, ”he said.
Earlier this week, Sembcorp announced its inaugural S $ 400 million green bond offering. In a public statement, the company said, “With the completion of this offering, Sembcorp will have successfully issued the first green bond certified under the Climate Bonds standard by a Singapore-based energy company. Net proceeds from the issuance of green bonds (after deduction of issuance costs) will be used to finance or refinance, in whole or in part, new or existing projects that fall within the list of eligible green projects under the green funding from Sembcorp and that meet the Climate Bonds Initiative (CBI) sector – specific technical criteria.
Sembcorp has an energy portfolio of over 12,800 Mw, with 3,300 Mw of renewable energy capacity including solar, wind and energy storage on a global scale.