Sucheta Dalal :Power Play
Sucheta Dalal

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Power Play  

September 16, 2009



Green Infra, a subsidiary of infrastructure-focused private equity investment manager IDFC Private Equity, is paying Rs650 crore to buy 100MW of wind power capacity of BP Plc's unit BP Energy India Pvt Ltd. Interestingly, this marks BP's exit from the renewable energy market in India. Is BP exiting because it got a very good deal? In which case, is IDFC overpaying?

"We have a very positive investment outlook on the power sector, particularly in renewable (energy),” said Satish Mandhana, managing director, IDFC PE. Well, that may be true but what about the cost? Over the past three years, wind power capacity in India has increased from 4500MW to 9000MW while the total investment has risen from Rs20,000 crore to Rs55,000 crore. Unfortunately, the picture of output does not match up to the investment size. Tata Power’s 159MW of wind power projects generated only 177 million units of energy in 2008-09. A coal power project of a similar size will generate nearly six times that. In Europe, a windmill of 159 MW will generate at least 550 million units. Can Green Infra produce wind energy at a cheaper rate or is it a pure market play?- Yogesh Sapkale [email protected]

-- Sucheta Dalal