Shell Plc is looking to sell a stake in the operational assets of Sprng Energy Group, a renewable assets platform it acquired in 2022 from Actis Llp at an enterprise value of $1.55 billion, said two people aware of the development.
Sprng Energy had around 2.1 gigawatts (GW) of operational renewable energy projects, 0.8 GW contracted capacity and 7.5GW in the pipeline at the time of the Shell-Actis deal. Mint couldn’t immediately ascertain its current capacity.
“There is no strategic review of the Sprng Energy Group,” said a Shell spokesperson in an emailed response to Mint’s queries. “As stated at Capital Markets Day in June, we are working to grow our renewables portfolio as part of an integrated power business in the key market of India. we continue to develop new projects while exploring partnering opportunities with investors who want to deploy capital on de-risked operational assets, with Shell retaining a stake in such assets. This focus on capital discipline will enable Shell to further accelerate the growth of our renewables portfolio.”
Other large green energy companies in India, including ReNew Energy Global Plc, have adopted a similar capital recycling strategy.
Shell, like other energy majors such as Malaysia’s state-run oil and gas company Petroliam Nasional Bhd (Petronas), Total and Thailand’s PTT Group, wants to play a big part in India’s energy transition trajectory. The country plans to meet 50% of its energy requirements from renewable assets by 2030 and increase non-fossil fuel power generation capacity to 500GW by the end of this decade.
Shell currently runs a liquefied natural gas (LNG) terminal at Hazira on India’s west coast. In its goal to become a profitable net-zero emissions energy business by 2050, the company has invested in new energy companies in India, such as Husk Power, d.light, Orb Energy and Cleantech Solar. It was earlier also in talks with state-run Convergence Energy Services Ltd to invest $500 million in its decentralized solar business.
The Sprng Energy purchase from Actis was by far its biggest in India. At that time, five firms—Shell, the Canada Pension Plan Investment Board (CPPIB), Singapore’s Sembcorp Industries Ltd, ArcelorMittal and the Adani Group—conducted due diligence after the first stage of the process that saw non-binding bids by 17 firms. Then, Sprng’s suitor list included BlackRock Inc., the JSW Group, Brookfield Asset Management Inc., KKR, Macquarie Group, CDPQ, Ontario Municipal Employees’ Retirement System and Ontario Teachers’ Pension Plan.
India’s green energy space has seen tremendous interest, given the country’s ever-increasing demand for power. The country recently set a new record, with peak power demand reaching 239.9GW on 1 September, exceeding the Central Electricity Authority’s projections of 230GW. India has an installed renewable energy capacity of 172GW, with an additional 128GW either under development or bid out.
There are several other green energy deals in play, as reported by Mint. Malaysia’s state-run Gentari Sdn Bhd, Edelweiss Infrastructure Yield Plus Fund’s Sekura Energy Ltd and Actis are in the fray to acquire 350 megawatt (MW) of solar projects from European alternative asset manager EQT and Temasek-promoted O2 Power.
State-run Oil and Natural Gas Corp. Ltd, Gentari, Edelweiss and Actis are in the race to buy 185MW solar projects from Finnish state-run power utility Fortum Oyj.
India’s National Investment and Infrastructure Fund Ltd and Actis are among the four contenders vying to acquire Macquarie Asset Management’s Green Investment Group platform Vibrant Energy.
