PES PLAN TO INVEST $1B IN CLEAN ENERGY FIRMS


GLOBAL venture capital and private equity companies will invest up to $1 billion by the end of the current fiscal in high – growth, incentive – driven renewable energy companies, according to industry estimates.
“A country like India, which has high energy demand, may see the maximum volume of investment owing to good growth prospects,” says Indian Venture Capital Association president Mahendra Swarup.

The sector has received nearly $200 million from fund houses over the past six months compared to %175 million in all of 2009. Companies like Moser Baer, London – based Swaraj Paul’s Caparo energy and state – owned companies are planning to raise funds for their clean energy projects. “The sector has enormous potential for investment on the supply side and large – sized projects are still to take shape, “says Kuljit Singh, partner, transaction advisory services of Ernst & young.

The International Finance Corporation (IFC), an arm of the World Bank, recently committed $10m in Azure Power India, a solar energy producer. IFC has been one of the most active investment firms this year, funding renewable energy projects of Bhilwara Energy, Auro Mira energy and IDFC. Others like Climate Change Capital, IDFC private equity and FE Clean Energy have created separate funds for clean energy.

Renewable energy projects and assets promise high returns on long – term predictable cash flows, as governments the world over sharpen their focus on green energy in the wake of rising global warming. Investment in clean energy typically brings in two to three times the returns over a six – to – seven – year horizon, said an injury official, who did not wish to be named.

“Grown and long – term returns are guaranteed in sectors where developers need huge investments and energy is in prime demand,: said Mr. Natarajan. The Indian government has proposed incentives of up to Rs. 12 per kilowatt hour for power plants, 10 – year tax holidays, electricity tariff exemptions ad other preferential tariffs. There are also subsidies for solar power systems and small hydro power projects.

India is the fifth largest wind energy producer the world with installed capacity of nearly 10,500 mw and a target to scale up capacity to 14,000mw by the end of 2011, according to the industry official quoted earlier. The government has targeted a 20,000mw capacity by 2020 under the National solar Mission.

Investors may und big projects of 200-500 mw following regulatory reforms, says Mr. singh of Ernst & Young. The new and renewable energy ministry is planning to bring out tax relief norms by September.