ONGC-NTPC Green Energy (ONGPL), the joint venture formed by two of India's largest public sector units, Oil and Natural Gas Corporation (ONGC) and NTPC Ltd, has made headlines with its recent acquisition of Ayana Renewable Power for ₹19,500 crore (approximately $2.3 billion). This landmark deal is considered one of the biggest-ever transactions within India's rapidly growing renewable energy sector.
Announced at the India Energy Week held recently in New Delhi, this acquisition marks ONGPL's first strategic investment since its establishment. The joint venture is equally owned by ONGC Green Limited and NTPC Green Energy Limited, combining resources and expertise to accelerate India's clean energy targets.
Ayana Renewable Power is not just any player in the market but one with substantial operational and development assets, totaling around 4.1 gigawatts (GW) across several projects. This acquisition positions ONGPL to leverage Ayana’s existing platform for future expansions, aligning closely with the broader goals set forth by ONGC and NTPC.
Both ONGC and NTPC have ambitious renewable energy targets, with ONGC committing to build a 10 GW portfolio by 2030 and NTPC eyeing 60 GW by 2032. The deal is also significant as it contributes to ONGC and NTPC’s net-zero targets, set for 2038 and 2050 respectively. The combined efforts aim to support India’s commitment to achieving net-zero emissions by 2070 and developing 500 GW of renewable energy capacity by 2030.
"This acquisition propels us forward in accelerating India's transition to a low-carbon economy, leveraging our technical expertise, industry relationships, and financial strength," stated Sanjay Kumar Mazumder, CEO of ONGC Green Limited. His sentiment strongly reflects the strategic motivations behind the acquisition, demonstrating the role these public sector entities aspire to fulfill amid growing global emphasis on renewable energy.
The historical backdrop of this deal is noteworthy, marking it as the second-largest acquisition of renewable energy assets in India, following the Adani Group’s acquisition of SoftBank’s renewable assets for ₹26,000 crore two years prior. The share purchase agreement was finalized with key stakeholders including the National Investment and Infrastructure Fund (NIIF), British International Investment Plc (BII), and Eversource Capital.
With this acquisition, ONGPL is positioned to make significant strides not only within the renewable sector but also to meet the expectations of their shareholders consistently. Rajiv Gupta, CEO of NTPC Green Energy Limited, underscored this by stating, "This also aligns with our mission of achieving the ambitious target of 60 GW by FY32, moving forward to become one of the leading developers of utility-scale renewable energy projects." This ambition reflects the broader strategy of the joint venture to integrate more significant renewable capabilities effectively.
Ayana was originally founded by BII with the mission to catalyze India's renewable energy sector, securing investments from NIIF and Eversource Capital shortly after. Srini Nagarajan, managing director and head of Asia at BII, expressed pride over Ayana’s growth and the excitement for its future endeavors under ONGPL's leadership. The joint venture will explore more opportunities for expansion, enhancing its overall portfolio and market reach.
Notably, ONGPL has been diligent about assessing potential acquisition risks. The collaboration with NTPC was strategically chosen to mitigate these risks, especially as ONGC doesn't possess extensive experience within the renewable energy domain. By aligning with NTPC, it effectively combines the strengths of both entities, creating resource synergies beneficial to their collective growth.
Legal and financial advisory roles were pivotal during this transaction. Deloitte Touche Tohmatsu India LLP advised ONGPL, whereas Standard Chartered acted for the sellers, showcasing the structured nature of this high-stakes deal.
India's commitment to achieving ambitious environmental targets reflects the sentiment across the globe as nations aim to transition to cleaner energy sources. This acquisition serves not only as a catalyst for greater renewable energy developments within the country but also showcases the relative importance and urgency placed on such deals amid the continuing climate conversation.
Overall, this acquisition by ONGC and NTPC is just one of many steps being taken to bolster India’s renewable energy ambitions. With firms such as ONGPL leading the charge, the future looks promising for sustainable energy growth within India.