Clean is in: GIB likely to invest in Lightsource India

In a sign of growing overseas investor interest in the Indian clean energy space, UK Green Investment Bank Plc (GIB) plans to become an anchor investor in the Indian operations of UK-based Lightsource Renewable Energy.

This comes in the backdrop of a Macquarie-led consortium agreed to acquire GIB from the UK government for £2.3 billion last week. Lightsource Renewable Energy is among the largest global solar photo voltaic (PV) power project developers and announced its plans to develop 1,000 megawatt (MW) capacity in India.

“The talks are on. Lightsource has a proven business model,” said a person aware of the development, requesting anonymity.

There has been a growing interest in India’s clean energy space from global development finance agencies, sovereign wealth funds and pension funds. Established in 2012, GIB invests through five funds, including a dedicated £200 million (₹1,650 crore) fund for India and African nations.

“Macquarie is committed to the Green Investment Bank’s newly established target of £3 billion of new investment in green energy projects over the next three years, either directly or by arranging capital from other investors,” Macquarie said in an April 20 statement.

This also comes at a time of growing collaboration between India and the UK, with Greg Clark, the UK’s secretary of state for business, energy and industrial strategy visiting India earlier this month. CDC Group Plc., the UK government’s development finance institution, is planning to set up its own renewable energy platform focussed on east India and neighbouring countries such as Bangladesh, Nepal and Myanmar, Mint had reported.

The Indian solar power space has become intensely competitive with electricity tariffs set to fall below those of coal-fuelled power stations. This is based on an expected cost of below ₹3 per unit for solar power from projects at Bhadla in Rajasthan. Analysts believe the space will become more competitive.

“Coming in the wake of intensely competitive bidding in Rewa and Kadappa tenders, the signs are that competition for new projects is getting fiercer, particularly as the supply of new projects has slowed down in the last 12 months,” consulting firm Bridge to India wrote in an April 24 note.

A Macquarie spokesperson in an email said, “I understand GIB communication team is responding to you on this request”. Spokespersons for GIB and Lightsource declined to comment.

India, the world’s third-largest energy consumer after the US and China, plans to set up 175GW of renewable energy capacity by 2022 as part of its global climate change commitments. Of this, 100GW is to come from solar.

Lighthouse Renewable had recently hired Rupesh Agarwal, who had earlier worked at consulting firms EY and BDO, as managing director for the Indian operations. I personally believe that this quarter’s show in BFSI (banking, financial services and insurance), manufacturing and retail and energy is sustainable. Now I get the confidence from the six themes which I had first laid out. So, one of the pillars was client mining. We are seeing good traction.

Another theme is digital. Digital deals sizes are going up, and once you become a digital partner to a client, you can easily do the downstream I won’t call it a pain. We are in transition times. I have already outlined and shared in detail my six-pillar strategy. Now, we have said that