Davos 2023: Looking at ReNew Power more for decarbonising now rather than for making clean electricity, MD Sumant Sinha says

As of now, corporates are going for clean electricity as step one, but eventually there will be other opportunities to decarbonise their entire operations, said ReNew Power MD Sumant Sinha

Corporates across the world are increasingly under pressure from investors as well as the civil society now to go green and hence, a lot of them have started planning for decarbonisation, ReNew Power’s Managing Director Sumant Sinha told Moneycontrol on January 16.

“Corporates globally are feeling the pressure of going green. That is why a lot of the new power purchase agreements (PPAs) that we are signing are actually with corporate customers. So, we are only going to see more of this in the coming years. As of now, corporates are going for clean electricity as step one, but eventually there will be other opportunities to decarbonise their entire operations,” Sinha said on the sidelines of the World Economic Forum in Davos.

“Which is why, we are really beginning to see ourselves at ReNew Power more as a company for decarbonising rather than a company just to make clean electricity,” he said.

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When asked whether the incentives worth Rs 17,490 crore planned under the Green Hydrogen Mission in India will be enough to spur investments, Sinha said it might “not necessarily” do so.

“The reason is that green hydrogen is being seen as a terrific opportunity by several countries around the world. Every country is trying to incentivise green hydrogen. In the USA, the subsidies announced under the inflation reduction act is phenomenal. So, as an export destination for green hydrogen, USA will probably be number one. The European Union is also planning to give subsidies within the country to drive demand as well as to foster production. Others such as Egypt, Saudi Arabia, Oman, Morocco and so on may not be giving huge subsidies but they have the advantage of cheap land among others.”

“For India, I would say the green hydrogen mission is a good start that the government has made as it at least shows its inclination to encourage green hydrogen. But, I think eventually we will have to see if that (initial incentives) is going to be sufficient,” Sinha said.

The Indian government on January 13 released the blueprint for its ambitious National Green Hydrogen Mission with a total initial outlay of Rs 19,744 crore, which also includes Rs 1,466 crore for pilot projects, Rs 400 crore for research and development (R&D) and Rs 388 crore towards other mission components. The total outlay also includes the subsidy amount of Rs 17,490 crore.

Sinha said to address the domestic market of green hydrogen, ReNew Power has signed a joint venture with Indian Oil Corporation Limited and Larsen and Toubro. “But, green hydrogen will be a globally traded commodity. India itself is positioning itself to be an exporter of green hydrogen. Then there are many other countries which will offer opportunities to produce green hydrogen in a fairly cheap way. Egypt is one such country,” he said.

ReNew Power Private Limited, a subsidiary of leading renewable energy company ReNew Energy Global Plc, on November 15 last year signed a framework agreement with the Government of Egypt to set up a Green Hydrogen plant in the Suez Canal Economic Zone at an investment of $8 billion and a targeted annual production of 220,000 tonnes of green hydrogen.

Talking about the project in Egypt, Sinha said it is currently only a framework agreement as of now. “We are doing a lot of work in terms of studying the exact cost. We are doing feasibility studies. So, I think we are about 12-18 months away from taking a final investment decision. The numbers ($8 billion) might be a little down the road because we still have to do a lot of work before we actually make those investments,” he said.

When asked about his expectation from the Union Budget, Sinha said the government is already doing a lot for the sector outside of the budget. “But I would say the government should focus on taxation because that is something which can really spur capital investment.”