'Carbon trading will exist irrespective of mandatory regimes and defined markets'

Updated: Jun 24 2008, 03:26am hrs
Anil Kumar Chalamalasetty, 33, is in a hurry. He started his career in information technology in1996 and moved on to the business of environment in 2004, co-founding Greenko along with Mahesh Kolli. The company was incorporated in 2006 and listed at the Alternative Investment Market of London Stock Exchange in 2007. Greenko owns, develops and operates clean energy and greenhouse gas emission reduction assets. He spoke to FEs Rajiv Tikoo about the company and the future of green energy business in India in a changing global climate change regime. Excerpts:

You were in IT. What prompted you to venture into clean energy

We ventured into clean energy because we saw it as a sustainable business that is well positioned to deliver better results. We saw big opportunity in it right from technology services to practices.

After the dotcom era, we observed macro trends that led to the creation of regulatory drives and market mechanisms for environmental commodities like carbon credits. It also led us to get into seeding a business platform across both sectors. We started CO2 advisory and trade platform in 2004 and developed an asset-based platform in 2005. This gave us the first mover advantage in clean energy. We did 2 million CERs worth 20 million euros of revenue in 2005.

What is your portfolio like

As of now, our operational portfolio comprises six biomass and two small hydro plants, which generate 90 mw. These are 100% owned by Greenko. We are in the process of developing capacities to generate another 400 mw by 2011. These will be mostly small hydro projects.

How would it translate into carbon emission reduction

Our operational capacity has the potential to generate 1.2 million tonne of CERs in the first crediting period of Kyoto. New capacities would generate 1.5 million tonne per annum.

Most of the alternative energy leaders in India looked at wind energy in the first place. Why havent you

We evolved in alternative energy sector through research and analysis of several technologies and business models including coal mine methane, offshore and onshore wind, biomass and small hydros. The touch points were the result of risk/return profiles. There are two types of opportunities in wind energy.

The first type of opportunity is for technology service providers and the second type of opportunity is for producers of wind energy. Technology services are dominated by a few major equipment manufacturers. Wind energy generation is being done to avail tax benefits rather than returns as independent power producers (IPPs) because the best of investment hardly makes a return of 7-8%. While in non-wind segment, our interest is to look at it as an IPP and make close to 20%.

Solar energy seems to be the new favourite. Are you looking at it

Currently, the solar market is heavily depending on subsidies and capacity building in countries like Germany and Spain. We are exploring opportunities in Punjab, Madhya Pradesh and Rajasthan to set up 2 mw applications.

How do you look at your asset class

I bet 80% on things that have clarity and 20% on new opportunities, which we can leverage as part of our value chain. We have a short-term vision to generate 500 mw by 2011 and a medium-term vision to generate 1,000 mw by 2013. Out of a total of 500 mw we may end up with close to 70% in hydro, 20% in biomass and 10% in a mix including solar and geothermal energy.

How was the response to your listing at the Alternative Investment Market (AIM) last year

We were the first 100% renewable energy company with Indian assets to be listed at AIM in November 2007. We have been capped as a company of Rs 400 crore or 65 million euros. We sit decently on cash as of now. Besides, institutions like IFC are showing interest in co-investing with us.

What is your reveue break up

In this financial year we will make 80% of our revenues from energy generation and 20% from retail platforms. From the current capacities of the business, we have the potential to generate revenues of over Rs 180 crore.

Are you spreading yourself too thin from clean power generation to trading in carbon emission reductions

We are working with proven technologies and practices. At the group level we are keen to leverage the asset class with our positioning so that we get a better value for our end products.

You said you invest mostly in secure businesses. Why are you continuing in carbon trading when there is still uncertainty over post-Kyoto climate change treaty

We have complete faith that there will be a post-Kyoto climate change regime beyond 2012. This is the way to go forward. This commodity (carbon) will exist irrespective of mandatory regimes and defined market places.