Serentica Renewables aims to add 2 GW capacity in FY25

Serentica Renewables, part of Vedanta Group, plans to add close to 2 giga watt (GW) capacity in FY25 with its capex target set at Rs 15,000 crore for the fiscal year. The company currently has 4 GW capacity under construction and aims to sign power purchase agreements for another 4 GW capacity in the next two quarters,  CEO Akshay Hiranandani told Arunima Bharadwaj in an interview. Serentica is  seeking  a tie-up for an energy storage project and intends to enter the green hydrogen segment in some time. With  Rs 5,000 crore to be arranged from a private equity investor and around Rs 18,000-20,000 crore by way of bank debt, the company is confident of financing the Rs 25,000 crore Capex for the 4 GW capacity under execution. On the plan to raise an additional $300 million via sale of minority stake, Hiranandani said this would be done at the right time.

Edited Excerpts:

How do you plan to diversify the business and what are the upcoming projects?

Serentica aims to achieve 17-20 GW in the next 5-6 years i.e., by 2030, either operational or at different stages of execution. We are currently operating close to 500 MW; with an additional 3.5 GW under various stages of construction, totalling around 4 GW under execution. By the end of the financial year, we expect to have anywhere between 1.7 to 1.8 GW being fully operational. The C&I segment itself has a massive opportunity of close to 150 – 200 GW. Some of our assets will go into servicing the government contracts.

What would be the company’s investment strategy going forward?

We received a significant equity investment from KKR, a large private equity fund, with a commitment of Rs 5,000 crores. A substantial portion of our investment is funded through non-recourse bank debt, covering 75-80% of our Capex. This combination, along with operating cash from commissioned projects and refinancing, keeps our engine running for the foreseeable future.

Our shareholders are open to raising more capital. We are in ongoing deliberations, and given the attraction of marquee names, we believe we can secure additional capital when needed. So far, we have Rs 5,000 crores from the private equity investor and around Rs 18,000 to Rs 20,000 crores from bank debt. This is how we plan to finance the ₹25,000 crore Capex for the 4 GW we currently have in hand. For this financial year, we will be consuming close to ₹15,000 crore.

The company was planning to sell a minority stake to raise $300 million. What is the update on the same?

We keep deliberating on how to raise additional capital but we haven’t made any concrete decisions on that. We continuously explore whether we should raise our next round of funding and at what stage. The more operating capacity we get, the less we need to dilute to raise the same amount of money. So, we are trying to determine the right time to raise an additional $300 million.

What is the current status of power delivery agreements in terms of capacity, and how much additional capacity is planned to be added?

Everything we are constructing is tied to a specific Power Purchase Agreement (PPA) /Power Delivery Agreement (PDA) that we sign. The entire 4 GW are contracted under various PPA’s /PDA’s. In the next quarter or two, we expect to sign PPA/PDA for an additional 4 GW. This aligns with our plan for 17 GW scaling up. Our current visibility includes 4 GW already contracted and another 4 GW in PPA /PDAs that we should sign soon.

These PPAs will involve various industrial and commercial customers. Approximately 25% of them will be with government entities such as SECI, NHPC, SJVN and NTPC. So, we are looking at about 1 GW of these PPAs being with such entities – participating through the tender route.

Does the company plan to foray into the green hydrogen business?

The company plans to have a long-term vision for anything related to sustainability, including green molecules like green hydrogen and green ammonia. It’s not something we are immediately exploring, but it is something we plan to get into.

Are there any new ventures or associations with other companies that Serentica is looking for?

We are continuously seeking technology partnerships and we are looking for the best systems in energy storage. Currently, we are engaged in ongoing discussions with various industry players. Specifically, Serentica is definitely seeking an association in the energy storage aspect.

Do you plan to list the company anytime soon? 

As a principle, we don’t rule out any form of capital raise, or there is a compulsion to remain either a private company or to become a publicly listed company. If the timing is right and we are in the favourable cycle of equity markets, we could consider going public. However, we have no apprehension about continuing as a private company and raising capital from private sources if that remains the best option.

Are you in any discussions with financial institutions to raise capital?

We are well-capitalized on the equity side and have good access to the debt providers, including both banks and financial institutions, both international and domestic. A significant portion of our debt comes from international sources as well.

In terms of debt, we have a mix of both domestic and foreign institutions. We have foreign lenders such as Rabobank, MUFG, SocGen etc, and domestically with PFC, REC, Yes Bank and Axis Bank, for working capital. We have a solid suite of both domestic and international institutions and banks. 

On the equity side, we have KKR, and as and when we decide to raise additional capital, we are receiving enough inbound interest coming to us. We are not pushing it. We will wait for the right time to proceed.