Brookfield, a Canadian investor, has agreed to invest $1 billion in Avaada Ventures, considered India’s largest clean energy investment. The founder of Avaada Ventures, Vineet Mittal and Brookfield, signed the agreement, and Brookfield disbursed the first tranche of $400 million. It will distribute the remaining $600 million based on performance-linked milestones as the projects scale up. Avaada Group will use the funds raised to scale up its renewable energy generation capacity and solar cell/module manufacturing. The Avaada Group is also in negotiations with PTT, an existing investor, to invest another $300 million.
A clean energy company’s largest capital raise
If the company successfully completes the $1.3 billion capital raise, it will set a new record for a clean energy company’s largest-ever single capital raise. In March 2021, Orix Corp., a Japanese company, invested $961 million in Greenko Energy Holdings, which GIC backed, acquiring a 21.8% stake. The merged entity also had an equity infusion of roughly $1.2 billion. It resulted from the SPAC merger and overseas listing of Renew Power in August 2021. Nevertheless, the company is still processing shareholder approvals and clearances before it can formally announce fundraising.
Brookfield’s Clean Energy Investments in India
When investments in renewable and energy transition are becoming more significant for private equity investors, Brookfield’s $1 billion investment in Avaada is timely. Brookfield, a global asset management company, has actively invested in renewable power and climate transition assets. Thus, making it one of the largest investors in this sector. As of September 2022, Brookfield has around 24,000 MW of generating capacity worldwide. It manages $1 billion in renewable assets in India. Senior management from Brookfield stated they wanted to triple or quadruple their current 4 GW renewable energy generation portfolio in India within the next decade. Therefore, Brookfield aims to help corporates decarbonize and invest in building a large-scale supply chain.
Avaada Group’s Plans
Avaada Group aims to utilize the capital raised from Brookfield to bolster its renewable energy generation capabilities. It also aims to bolster its solar cell/module manufacturing and green ammonia plans. As of April 30, 2022, Avada Energy successfully commissioned solar projects with a total capacity of 2,937 MW and had a pipeline of 1,526 MW. Avaada Energy plans to construct a high-tech facility with a yearly production capacity of 5 GW for cell/module manufacturing. It has scheduled the facility to commence operations in 2023.
By 2030, Avaada aims to expand its capacity to 10 GW and integrate backwards into polysilicon, ingots, and wafers. In August 2022, Avaada signed an MoU with the Rajasthan Department of Industries and Commerce.
They did this to set up a green ammonia facility and a renewable energy power plant in Kota. This involved an investment of ₹40,000 crores. However, the project is expected to generate direct employment opportunities for roughly 3,500 individuals and indirect jobs for over 10,500. This is according to the company’s statements.
Avaada Ventures leads the renewable energy sector in India. The partnership between Brookfield and Avaada Energy will strengthen India’s clean energy sector. The investment will enable Avaada Ventures to accelerate its manufacturing capabilities and scale up its renewable energy generation capacity. Thus, ultimately contributing towards the country’s climate goals.
India has set ambitious targets to reach 450 GW of renewable energy capacity by 2030. Therefore, the government is taking various steps to promote clean energy generation and adoption. Also, the country has been attracting significant investments in the renewable energy sector. It has a particular focus on solar energy.
With its extensive experience and expertise in renewable energy investments, Brookfield’s investment in Avaada Ventures will significantly boost India’s clean energy transition. Thus, the partnership is expected to create jobs, boost local economies, and help India achieve its renewable energy targets.
Moreover, Brookfield’s investment in Avaada Ventures is a testament to the growing interest of global investors in India’s renewable energy sector. The country’s renewable energy market has seen a significant investment uptick in recent years. Favourable policies are driving this trend. For instance, falling tariffs and vast growth potential. Experts expect this trend to continue, with India emerging as a significant global renewable energy market player.