Ruia-family run Essar Power Ltd will foray into renewable energy, setting up a 90 MW solar plant in Madhya Pradesh at an investment of Rs 300 crore, CEO Kush Singh said Wednesday.
The entry into the renewable segment is part of a strategic decision to rebalance the power portfolio.
"The board of Essar Power Ltd, an investee company of Essar Global Fund (EGFL), has approved an investment of Rs 300 crore in a 90 megawatt (MW) PV Solar power plant in Madhya Pradesh, marking the fund’s foray into renewable energy,” he said.
The renewable energy venture comes close on the heels of EGFL investing in hydrogen power in the UK and coal gas in India.
The fund has overseen the completion of the deleveraging program of investee companies in the next two quarters.
It intends to repay the balance debt Rs 10,000 crore which is largely in the power portfolio.
"The strategic plan to rebalance our energy portfolio is in line with our move to an asset-light structure. In a series of calibrated steps, this shift will allow the company to bring down its debt from the current level of Rs 10,000 crore to Rs 3,000 crore through restructuring and monetisation of existing assets and further investments in this green portfolio,” Singh said.
Riding on success in unconventional energy generation such as coal-bed methane (CBM) and the hydrogen generation programme at its Stanlow refinery in the UK, Essar’s foray into renewable energy will also be a precursor to an exit from coal.
"Along with the ongoing hydrogen generation programme in our Stanlow refinery, UK, we have kicked off our transition to a new phase of investment-led growth, with the energy portfolio taking the lead,” said Singh.
"We have taken this step in line with the major thrust given by the Government of India in promoting and achieving the ambitious target of an installed capacity of 450 gigawatts of renewable energy by 2030.”
The proposed power plant is a solar photovoltaic project to be set up in Bhander, in the Datia district of Madhya Pradesh across 105 hectares of land and will be executed in two parts – 33.7 MW and 56.17 MW.
Electricity generated from this plant will be evacuated at 132 kV level and is proposed to be connected to the Bhander substation, which is located at approximately 5 km and will be supplied to industrial consumers within Madhya Pradesh.
The project is expected to be completed by June 2022. Essar Power has a current operating capacity is around 3,185 MW.
EGFL has invested about Rs 32,000 crore in the power portfolio including 12000 crore of equity. It has also invested in the transmission business by constructing a 465 km interstate transmission system, which spans three states.
The other two businesses of the fund’s energy portfolio are also making impressive progress both in India and the UK.
Essar Oil Exploration and Production Ltd (EOGEPL) is the country’s largest unconventional energy player.