A group considered the world’s largest asset manager has joined with a United Arab Emirates (UAE) wealth management fund to support an investment in renewable energy development in India.
A consortium led by New York-based BlackRock, along with UAE sovereign wealth fund Mubadala Investment Co., on April 14 said it would pay $525 million for 10.53% stake in Tata Power Renewables, part of Tata Power, a leader in providing electricity to India since its founding in 1915.
BlackRock, with more than $10 trillion in assets under management, has made a concerted push into renewable energy. CEO Larry Fink in a conference call with analysts last week said the group will likely launch at least three infrastructure funds focused on renewable energy, in part due to rising concerns about energy supplies caused by the war in Ukraine.
“This [the conflict] may mean increasing production of traditional energy sources in the near term, but I believe recent events will accelerate the shift towards greener sources of energy and many parts of the world over the long term,” Fink told analysts in a call in which he discussed the company’s results.
Financing Projects for at Least Two Years
The first round of funding in the Tata deal is expected to be completed by June, with the total investment secured by year-end. Sanjeev Churiwala, Tata Power’s CFO, in a call with media said the funding will finance Tata Power renewables’ projects for at least two years.
Tata Power’s board last week also approved moving all its renewable energy businesses into its Tata Power Renewable Energy Limited (TPREL) division. Tata Power, which is India’s largest power generation conglomerate and has more than 13.5 GW of installed capacity, has said it wants to reduce its dependence on fossil fuels by expanding renewable energy, along with energy storage and green hydrogen production.
The companies in announcing the funding deal said the renewables platform will encompass all the clean energy-related businesses of Tata Power, including those in utility-scale solar; wind and hybrid generation assets; solar cell and module manufacturing; engineering, procurement and construction contracting; rooftop solar infrastructure; solar pumps; and electric vehicle charging infrastructure.
The companies said the broad-based portfolio of assets would ensure both diversified and stable revenue sources, including 25-year fixed-price power purchase agreements for grid-connected utility-scale projects.
“BlackRock Real Assets and Mubadala will invest by way of equity or compulsorily convertible instruments for the 10.53% stake in Tata Power Renewables,” a statement from the companies said, adding that the final shareholding will range from 9.76% to 11.43% on conversion.
“With one of the largest portfolios of solar and wind assets in the country and a very experienced management team, Tata Power Renewables is at the forefront of India’s ambition to secure greater energy stability for its citizens while positioning its economy for a low carbon future,” said Anne Valentine Andrews, BlackRock’s global head of real assets, in a statement. “India’s success in transitioning its energy economy will be crucial to the world’s ability to meet its climate goals.”
TPREL has about 4.9 GW of renewable energy assets in India, with plans to increase its portfolio to 20 GW as part of a focus on climate and environmental, social, and governance (ESG) goals. India’s Prime Minister Narendra Modi at the COP26 summit in Scotland in November of last year pledged to meet at least half of India’s electricity requirements from renewable energy by 2030. Modi also said his government pledged to cut India’s carbon emissions by 1 billion tonnes by 2030, and achieve net-zero carbon emissions by 2070.
‘Next Level of Growth’
“I am delighted to welcome BlackRock Real Assets and Mubadala to join us to take the renewables business to the next level of growth. The collaboration will support us to pursue exciting opportunities that lie ahead in the coming decades,” Praveer Sinha, CEO and managing director of Tata Power, said in a statement.
India is one of the world’s largest renewable energy markets. About 60% of new power generation capacity added in the country over the past four years has been from renewable resources.
Khaled Abdulla Al Qubaisi, CEO for Real Estate and Infrastructure Investments at Mubadala said, “As a responsible investor, Mubadala is focused on renewable energy in multiple markets, so we are delighted to invest in Tata Power Renewables to support energy transition efforts in India in partnership with Blackrock Real Assets. With a proven track record of green and clean energy generation and an experienced management team, Tata Power is one of India’s largest integrated power companies and is well positioned to support the country’s energy independence and transition. We are proud to show our ongoing commitment to India with this investment and look forward to working with Tata Power to capitalize on the growth opportunities ahead.”
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).