L&T to sell 99 MW hydropower project in Uttarakhand to ReNew for Rs 985 cr

ReNew also announced signing of agreements for 260 MW/330MWp solar projects in Telangana. The combined enterprise value of the acquisitions is around Rs 2,850 crore ($384 mn)

In a major move in the renewable energy space, Larsen & Toubro announced its 99 MW power plant in Rudraprayag in Uttarakhand to ReNew Power, marking the entry of Sumant Sinha-led company into hydropower space. The two companies announced signing of binding agreements for the acquisition.

Simultaneously, ReNew also announced signing of agreements for 260 MW/330MWp solar projects in Telangana. The combined enterprise value of the acquisitions is around Rs 2,850 crore ($384 million). The company that is also on its way to be merged with an American blank cheque company or special purpose acquisition company (SPAC) said these deals would bring Rs 380 – 400 crore ($50.7 – 53.4 million) of EBITDA on a full-year basis.

L&T Uttaranchal Hydropower Ltd., which owns the Singoli Bhatwari Hydroelectric Project (SBHEP), would be taken over by ReNew from L&T Power Development Ltd., a wholly-owned subsidiary of the engineering and construction company. As a part of the transaction, ReNew would add the project operations team of SBHEP to its team.

Hydropower meets the crucial balancing electricity requirement to tackle the intermittent nature of renewable power. The company would be looking at more hydropower purchases.

Besides the L&T project, ReNew has won bids for peak power project as well as round-the-clock (RTC) power project for which ReNew signed a power purchase agreement last week.

The addition of SBHEP, which has a significant pondage capacity of two to three hours, adds 200 – 300 MWhr of low-cost hydro storage to ReNew’s portfolio, said the company in a statement.

The transaction is subject to completion of customary closing conditions and closing is expected to take place before September 30, 2021. The sale consideration is Rs 985 crore. “This development is a significant step in our effort to unlock the value of some of our power development assets to streamline and allocate capital to create long term value for our shareholders,” said D K Sen, whole-time director, L&T, describing the sale of the asset. “It represents our strategic effort to increase focus on our core strengths and exit others to move towards becoming a more asset-light organization.”

Speaking about the acquisition, Sumant Sinha, founder, chairman, and CEO of ReNew Power, said, “Given that the asset is already operational, the acquisition is not only value accretive for us but also presents a lower level of risk.  It strengthens our ability to provide firm and round the clock power to the grid and compliments our solar and wind assets, filling up an important position in our portfolio.”