Sembcorp acquires Indian solar power project for S$246 million

[SINGAPORE] Sembcorp Industries on Friday (Dec 26) announced that it completed its acquisition of Indian solar power company ReNew Sun Bright, through its wholly owned subsidiary Sembcorp Green Infra.

This marks another step in the group’s pivot towards green energy.

The S$246 million deal brings the group closer to its target of achieving 25 gigawatts (GW) of gross installed renewable capacity by 2028, said Citi analyst Luis Hilado in October, when the deal was first announced.

Sembcorp also has a 2028 target of 0.15 tonne of carbon dioxide equivalent per megawatt hour of power generated, with recent projections putting its carbon emissions intensity on a downward trajectory – though it is now off track after its Alinta Energy acquisition.

ReNew Sun Bright owns and operates a 300 megawatt solar power asset in Rajasthan, India. This project started commercial operations in November 2021 and operates under a 25-year power purchase agreement with the Maharashtra State Electricity Distribution Company.

The acquisition was funded through a combination of internal cash resources and external borrowings, said Sembcorp.

“(Sembcorp) has indicated that the acquisition will contribute to the long-term return on equity of 10 per cent for renewables,” said Hilado in his October note.

He added that the company indicated that the expected returns aligned with its target range for investments in India, which was in the low-to-mid double digits.

Hilado noted that the renewables segment contributed 17 per cent of profit after tax and minority interest in the 2024 financial year, compared to gas and related services at 71 per cent, which he forecast to grow to about 23 per cent by 2028.

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Sembcorp’s gross renewable energy capacity installed and under development in India has now climbed to over 7.6 GW. Globally, its renewables portfolio stands at 20.2 GW – including the acquisition of Australia’s Alinta Energy.

The Alinta Energy acquisition was announced in December and will add about 3.4 GW to Sembcorp’s power generation capacity.

In October, Sembcorp also unveiled Singapore’s largest ground-mounted solar project on the island, the Jurong Island Solar Farm, with an installed capacity of 118 megawatt-peak.

Shares of Sembcorp fell 0.2 per cent or S$0.01 to close at S$5.99 on Friday.