Two of India’s largest green energy firms, ReNew Power Ventures Pvt. Ltd and Greenko Energy Holdings, are among 10 companies that have shown an interest in buying out Chandigarh’s electricity distribution company (discom), said two people aware of the development.
Their interest in the discom business comes against the backdrop of their strategy to capture value across the electricity business chain. A case in point is sovereign funds GIC Holdings and ADIA-backed Greenko submitting non-binding offers to buy Reliance Infrastructure’s Delhi electricity distribution businesses earlier.
The others who have bought the request for proposals (RFP) document made available from 10 November for the Chandigarh discom are Tata Power, CESC Ltd, Torrent Power, Adani Group, NTPC Ltd, GMR Group, India Power Corporation Ltd, and Sterlite Power. These firms have been attracted by the robust per capita power consumption of these discoms.
The Chandigarh discom sale also marks the start of India’s efforts to privatize the electricity discoms of its Union territories as part of its next-generation power sector reforms.
A ReNew Power spokesperson chose not to comment.
Experts lauded the new playbook of clean energy firms. “The ultimate value in the power sector comes from the discom leg of the value chain, which currently of course is the weakest link,” said Rajesh Ivaturi, partner, power, and utilities at EY India consultants.
“Moreover, the green energy players today are dependent on discoms for the power purchase agreements (PPAs). If they move into the distribution sector themselves, they may not only be able to control their PPAs but also be able to increase the share of renewable energy in the overall procurement basket,” Ivaturi said.
Interest from private firms comes as state discoms have hesitated to sign contracts after large clean power projects were awarded, as they spot cheaper tariffs elsewhere. Solar and wind energy projects totaling 16.8 gigawatts (GW) worth a potential investment of around ₹60,000 crores are in limbo, as reported by Mint on 21 August.
“So, the entities, including renewable energy players, which control the customers could end up capturing the lion’s share of the value in the power sector,” Ivaturi said.
Goldman Sachs-backed ReNew Power generates 5.4GW of energy through solar and wind assets and has another 4.6GW under various stages of development throughout the country. Greenko is among India’s largest green energy developers with a 6.5GW operational clean energy portfolio and is building power storage projects with a total capacity of 7.2GW across six states in India.
“Greenko will look very aggressively at the Chandigarh Union territory discom opportunity,” said one of the two people mentioned above requesting anonymity.
A pre-bid meeting has been called on 1 December for the Chandigarh discom and the last date of bid submission is 30 December. It is expected to be awarded by 15 January.
The notice inviting tender floated by the electricity wing of the engineering department of Chandigarh is for “selection of bidder for the purchase of 100% shares in the distribution company responsible for distribution and retail supply of electricity and having distribution license in the Union Territory of Chandigarh”.
Queries emailed to the spokespersons of Deloitte, Greenko, Tata Power, CESC, Torrent Power, Adani Group, NTPC, GMR Group, India Power Corporation, and Sterlite Power on late Sunday night remained unanswered.
“Chandigarh electricity department or Chandigarh administration would be best suited to reply to the questions posed. However, I can confirm that Delloite is running the process as transaction advisor,” a power ministry spokesperson said in an emailed response.