Global investors back ReNew Power’s ambitious effort to scale ’round-the-clock’ renewable energy
The wind and solar industries have long been vexed by a simple question: What happens when the sun doesn’t shine and the wind doesn’t blow?
Despite recent advances, most renewable energy sources are subject to the vagaries of nature. But this year, ReNew Power, India’s largest renewable energy provider, made headlines when it won a tender to supply 400 megawatts of 24/7 wind and solar power—a feat that, although attempted, has not yet been accomplished at that scale anywhere in the world. If ReNew’s founder and CMD, Sumant Sinha, can deliver on the company’s promise, it will be a step towards solving the issue of reliability in renewables.
Evidence of the financial community’s faith in Sinha’s mission came in the form of funding from Goldman Sachs, which invested in ReNew soon after the company’s founding in 2011. Goldman’s vote of confidence represented the biggest investment in India’s renewable sector thus far and offered a green light for other major investors to take an interest in the company.
If India cannot reduce its carbon footprint, there is no chance the world will meet the Paris Agreement carbon targets by 2050.
With a population of nearly 1.4 billion people and one of the planet’s fastest-growing economies, India’s power demands are colossal. Although its green energy sector currently supplies only 9% of the country’s total power output, it is growing fast. And it must: If India cannot reduce its carbon footprint, there is no chance the world will meet the Paris Agreement carbon targets by 2050.
Thus, ReNew is poised to be a key climate player, not only in India but in the world.
Who is Sumant Sinha?
Sinha, 54, is the founder of ReNew and its driving force. Born into an affluent family that is part of India’s technocratic elite—his father was India’s finance minister not once, but twice, Sinha spent his childhood in New Delhi, attending the city’s prestigious all-boys St. Columba’s School. He attended two universities in India before finishing his studies in the United States at Columbia University. After graduation, he went to work as an investment banker at Citibank in New York.
It was in 2008, at the height of the financial crisis, that Sinha first ventured into the field of renewables, joining the wind turbine manufacturing giant Suzlon as chief operating officer.
“Even back then it was apparent to me that climate change would become a bigger and much more important issue for humanity going forward,” Sinha says. “It wasn’t a sector just to make money. It was a sector where you actually felt like you were contributing to the future.”
He was especially interested in the efforts the Indian government was making to encourage power companies to focus on renewable energy.
“I felt that there was an incredible opportunity here, and also an incredible need,” he says. “I also saw that a lot of people with really no understanding of renewable energy were coming into the sector and trying to start-up businesses in this area.”
“I also saw that a lot of people with really no understanding of renewable energy were coming into the sector and trying to start up businesses in this area.”
Sinha hired a small team and began the hunt for outside funding. He learned that Goldman Sachs’ Merchant Banking Division was looking to invest in the Indian renewable energy sector, and less than a year after ReNew opened its doors, Sinha managed to obtain more than $150 million in early-stage funding from Goldman—the largest investment in India’s renewable sector at the time, which allowed ReNew to set up its first large scale wind energy project (with a capacity of 25.2 megawatts) in Jasdan, Gujarat. Goldman then added more than $300 million in various tranches in 2013-2019, equaling close to half a billion dollars over eight years, and would also be a lead underwriter on three green bonds totaling $1.1 billion.
This milestone was followed by a string of other investments from the Asian Development Bank, the Global Environment Fund, the Abu Dhabi Investment Authority, the Canada Pension Plan Investment Board, and Japanese power company JERA.
But although ReNew has now raised close to $1.4 billion, Sinha says funding will always be an issue. “Ours is a capital-intensive business,” he explains. “It was difficult then, and it is difficult today.”
The challenge of round-the-clock renewable
ReNew owns and operates more than 100 utility-scale power plants across India—from sprawling solar farms in the arid deserts of Rajasthan, to vast wind-powered plants in Maharashtra. The tender from the Indian government demands 400 megawatts supplied to New Delhi and also a territory in western India called Dadra and Nagar Haveli and Daman and Diu. ReNew’s power plants will be required to provide an average of 80% of their installed capacity (that is, 400 megawatts) annually—a previously unheard-of target in the sector.
For reference, 400 megawatts is about 5% of the power used by the city of New Delhi at the height of summer. It’s a tall order, but Sinha is confident that he can deliver. He explains that ReNew will combine wind and solar power and battery technology to hit those targets.
Right now, ReNew generates 1% of India’s power, a huge number for a nine-year-old renewable energy company. But in order to meet the ambitious goals required by the government tender, ReNew will have to ramp up its output — considerably. And the mission of achieving round-the-clock energy will be impossible to attain without a storage mechanism in place.
“I don’t think that we have to go into generating power from other non-clean sources at all.”
The issue of storage has plagued the renewables sector for years, but Sinha thinks he has the answers. He is determined to make India’s sunny climate work for him and to use batteries as the means of storage. An abundance of sunshine means excess power capacity during the day. Batteries can store that excess energy and then draw on it at times when there is no sun or wind, and plants are not able to meet power demand.
Thus, ReNew aims to completely avoid any fossil fuel sources at all. “I would say that we’d rather use storage, some battery-based storage or something like that, to make renewable energy consistent and reliable,” says Sinha. “I don’t think that we have to go into generating power from other non-clean sources at all.”
Bye bye, coal
India seems to be on the cusp of a renewable energy investment boom that may continue into the coming decade. Renewables accounted for 3% of India’s total foreign direct investment between April 2000 and December 2019, and the country ranked sixth among those that invested most heavily in clean energy. Since green energy is now the cheapest form of new power, it presents great possibilities for future growth. India’s renewable industry is one of the fastest-growing in the world, and because the country’s per capita energy consumption is very low, the potential market is extremely large.
Sinha intends to capitalize on this fast-changing energy landscape.
“India has to add about 360,000 megawatts more capacity just in renewables in the next 10 years. Which is equal to the scale of the entire installed capacity of all of the country’s power generation,” he explains. “It’s one of the biggest investment opportunities in infrastructure in India. It is going to require close to half a trillion dollars worth of investments over the next 10 years.”
By 2050, India will obtain as much as 55% of its total power supply from clean energy.
Estimates say that by 2050, India will obtain as much as 55% of its total power supply from clean energy. (By comparison, the U.S. is forecast to obtain only 35% of its total power from renewable energy by the same year.)
And in the competition between renewable energy and coal, renewables are gaining. During the coronavirus pandemic, with power usage down 25% in India, renewables have fared better than coal. “During the last two months,” Sinha explains, “most of the reduction in power supply came from thermal projects, which was mostly coal. Renewable energy did not suffer any reduction in sales.”
Poster child of international finance
The significance of the 400-megawatt tender cannot be overestimated, not only for the renewable sector but for the global financial world as well. First, it is a showcase deal for Goldman Sachs and the other investors backing ReNew with both capital and expertise.
But most of all, it is a powerful example of how renewable energy can scale and become commercially viable. The rise of ReNew is the story of what happens when an ambitious entrepreneur with an audacious vision team up with the elite of global finance to try to bring to fruition what could be the holy grail of climate change: the ability to generate limitless power 24 hours a day without the use of fossil fuel.
If successful, ReNew will set a new standard for economically sustainable green power.
Photos by ReNew