Founder & CEO Sumant Sinha Outlines Why Clean Energy Sector Holds Enormous Potential For Entrepreneurs
For former Wall Street banker Sumant Sinha, who headed the retail business for the Aditya Birla Group at the beginning of his career in India, ReNew is all about renewing his commitment to a cleaner, greener future, every single day.
It was more than 15 years ago that Sinha had the foresight that Climate Change would impact one and all. And, that it would be a business opportunity as well. After a stint with Suzlon Energy, post Aditya Birla Group term, thus was born ReNew Power, now rebranded as ReNew, a leading decarbonisation company.
In an interview with BW Businessworld, Sumant Sinha, Founder, Chairman and CEO, ReNew, opened up on the group’s future plans, the road ahead and the challenges.
“Today, we have about eight Giga Watt (GW) commissioned capacity, and another six GW in the pipeline. Over the next five to 10 years, we expect to grow our portfolio manifold in alignment with government’s target,” said Sinha.
ReNew is projected to become a 30 GW firm in the next ten years or so, if it continues with the current growth momentum.
“ReNew has planned a capex of almost Rs 30,000 cr in this fiscal,” making it “one of the top 10 asset creating companies in India”.
With around 4,000 MW of wind capacity, ReNew is the largest company in wind energy in India. In terms of commissioned capacity, ReNew is India’s largest renewable energy company with capacity of about 8 GW. The company says it is likely to go up to 14 GW in the next two years. Currently, ReNew has around 10 per cent market share in India’s renewable sector. It generates more than 1 per cent of India's capacity electricity. ReNew operates more than 150 utility scale projects spread across 18 states in India. Its revenues grew to Rs 69,195 million in FY22, registering a 27% jump over last year.
Sinha is working towards new milestones. “Renew has a prominent role in figuring out how to make renewables more acceptable to the grid. We've come up with pioneering solutions like round-the-clock power and peak power projects and so on. We will have to consider market development in those product areas,” said Sinha.
He further explained: “In the overall renewable energy paradigm, ReNew sees itself as a leading company that will help corporates in decarbonizing their energy baskets. Of the capacity that we would have in the next five to seven years, at least 20-25 per cent will come from directly dealing with the corporate sector.” ReNew now aspires to be the “decarbonization partner of choice for governments and corporates alike”.
The company is developing a 210 MW solar energy project for Amazon as part of its first utility-scale renewable energy project in India. It has also signed an agreement with Microsoft India to produce 150 MW of clean energy.
With the government announcing the Green Hydrogen Mission early this year, ReNew is exploring to tap opportunities in the emerging sector. It has signed a framework agreement for setting up a Green Hydrogen production facility in Suez Canal area in Egypt.
While ReNew sees itself aligned with national agenda like the 2030 target of 500 GW electricity capacity from non-fossil fuel, the road ahead is not without challenges.
For India to meet the 2030 target of 500 GW of clean energy, “Industry will have to scale up”. Said Sinha: “To reach the 500 GW milestone, we have to go at the rate of 50 GW a year. In other words, three times the current pace. While the public sector will also contribute, a bulk of the investment will have to come from the private sector… There is sufficient capital available, but we have to make sure that the capital is able to get the right kind of returns with the right kind of risk”.
ReNew last month raised $400 million through green bonds, which received strong demand from investors in the US, Europe and Asia as it opened the high-yield issuance out of India after a broad market hiatus of more than a year. The order book was oversubscribed about 4 times with a total investor demand aggregating in excess of $1.5 billion.
There are other bottlenecks “that need to be addressed”. Explained Sinha: “We also have to look at the constraints on the ground. For example, the issues around land acquisition and transmission infrastructure, equipment supply and so on”.
“The goal set by the Prime Minister is ambitious, but it is absolutely achievable. The only constraints could be volatile global supply chains -- we are highly dependent on imports for solar cells and modules, wind turbines etc -- a problem that we at ReNew are proactively trying to solve for,” added Sinha.
The ReNew CEO, however, is convinced that the government thrust on clean energy and thus the policy orientation has been a big boost for Industry. “The Indian Government has been remarkably supportive over the nine years. I think a lot of that is coming directly from Prime Minister Narendra Modi. I think he has a very strong recognition of the fact that Climate Change is a very critical issue for us,” said Sinha.
Among the milestones in ReNew’s journey, Sinha said getting Goldman Sachs as the first investor with an investment of $ 250 million was important. It got its first wind farm in Gujarat inaugurated by Prime Minister Modi, who was Chief Minister of Gujarat then. ReNew was the first Indian renewable energy producer to be listed on Nasdaq.
Now, with a manufacturing facility in Rajasthan, the company hopes to double its 2500-strong workforce in FY 24. It has also set up an academy “to enable skill upgradation of its workforce”.
Talking about the “enormous potential” that the clean energy sector holds, Sinha said: “This sector needs $ 500 to 600 billion of investments in the next eight to ten years. To give a perspective, the total amount of investments by corporate India every year is about $ 100 billion investments”.
In his book “Fossil Free: Reimagining Clean Energy In A Carbon Constrained World,” Sinha writes in the “Introduction”: “The story that we are about to embark on, the future that we need to embrace, the vision that we have to unveil, needs similar epoch-defining discoveries. Energy will be the fulcrum around which the human race will continue to evolve and we have to find ways of making this journey cleaner, greener and cheaper. Some of the technological solutions are at hand, many more will evolve with time, and we must create the proper enabling environment where such changes can easily be adopted in a commercial and climate-friendly manner”.
There are plenty of learnings from Sinha’s own entrepreneurial journey. In his BW Businessworld interview, he listed a few of them: “First of all, you have to take risks; without taking risks, nothing happens. But you have to be smart about how you take that risk. Two, you need to ensure that you don’t overextend yourself in any area, whether it's on the financing side or in any other area. Three, it's very important to build a good organization if you really want to scale up”.