India’s Adani Green Energy Limited (AGEL) has secured a US$1.35 billion debt facility for a portfolio of under-construction renewable power projects in the country. The revolving senior facility will initially fund a 1.69GW hybrid portfolio of solar and wind projects to be set up in four special purpose vehicles in the northwestern state of Rajasthan. It is one of the largest revolving project financing deals to date in the renewables sector in Asia.
The participating banks are Standard Chartered Bank, Intesa Sanpaolo, MUFG Bank, Sumitomo Mitsui Banking Corporation, Rabobank, DBS Bank, Mizuho Bank, BNP Paribas, Barclays Bank, Deutsche Bank, Siemens Bank, and ING Bank.
According to a statement from AGEL, the facility is an important element of the company's overall capital management plan, and is key to fully funding its growth aspirations. It will be the first certified green hybrid project loan in India. The new pool of liquidity strengthens the company’s strategy to fully fund its under-construction assets, and will help it achieve its goal of scaling capacity to 25GW by 2025.
"We believe that establishing depth and diversity in our funding resources is critical for AGEL’s vision to become the largest renewable player in the world," says chief executive officer Vneet Jaain. "The banks that have committed to this strategic transaction are our key partners in ensuring seamless access to global capital for our underlying renewable asset portfolio. The facility will also ensure capital recycling needs of the banks, and make the same capital available for future projects of AGEL."
Standard Chartered Bank acted as lead underwriter, mandated lead arranger, bookrunner (MLAB), environmental due diligence adviser, co-documentation bank, and co-green loan coordinator for the facility. MUFG Bank played the role of MLAB, technical bank, and co-green loan coordinator.
BNP Paribas acted as MLAB and co-documentation bank, DBS Bank acted as MLAB and accounts bank, while Mizuho was MLAB and financial modelling bank. Intesa Sanpaolo, Sumitomo Mitsui Banking Corporation, Rabobank, Barclays Bank, Deutsche Bank, Siemens Bank and ING Bank acted as MLABs. Latham & Watkins and Luthra & Luthra were legal counsel to the borrowers, while the lenders were represented by Linklaters and Cyril Amarchand Mangaldas.
Tractebel Engineering Private Limited acted as the lenders’ technical adviser, UL as the lenders' energy yield assessment consultant, ERM as the lenders‘ environmental and social consultant, Arcadis as the lenders‘ environmental and social due diligence consultant, Deloitte as the financial model audit consultant, Marsh as the lenders’ insurance agent, and KPMG as independent assurance provider for the green loan.
AGEL has a large number of projects of all sizes in development across India. In January it received a letter of award to set up a 600MW wind-solar hybrid power project, after a tender issued by Solar Energy Corporation of India. With a fixed tariff for a period of 25 years, the project is expected to be commissioned in 18 months from the effective date of the power purchase agreement. In early March AGEL commissioned a 100MW wind power plant in Kutch, a district of Gujarat. With this project, AGEL’s total renewable energy project capacity reached 14,795MW, of which 3,345MW projects are operational and around 11,000MW projects are under implementation.
In February 2020, AGEL and Total Gas & Power Business Services entered into an arrangement for a US$510 million investment for the acquisition of a 50% stake in a joint venture company housing 2,148MWac of operating solar projects spread across 11 states in India.
Large-scale wind-solar hybrids are a particular focus of the company. Variability in solar and wind generation has emerged as a concern in the large-scale adoption of renewables, especially since they contribute a growing share in the energy mix.
Hybridization of wind and solar plants seeks to reduce this variability due to the complementary nature of their generation profile – solar generation is higher during the day while wind generation can be greater at night.
According to AGEL, hybrid projects also have much higher capacity utilization, thus removing the intermittency challenge. Such projects also enjoy the additional benefit of a reduction in costs associated with sharing transmission lines.
Peak balancing through gas and hydro generation shifting, demand management, smarter grids, as well as storage solutions including battery, pumped hydro and others, are expected to further help in smoothing out the variability of renewable energy supply.