Ayala, UPC Renewables JV to sell stake in 1 GW projects in $600 mn deal

New Delhi: The joint venture between the Philippines' Ayala Corporation-owned ACEN and UPC Renewables plans to sell a significant stake in its upcoming 1 gigawatt projects in India in a deal potentially valued at an enterprise value of around $600 million, said two people aware of the development.

The transaction involves offloading up to 74% stake in three utility-scale renewable energy projects in India, the people said on the condition of anonymity. EY is running the sale process for the deal with an equity value of around $200 million, they said.

“The next stage involves signing of non-disclosure agreements, sharing of financial model and information memorandum, followed by management discussions and submission of non-binding offers,” one of the people quoted earlier said. “Then the shortlisted bidders will be called to submit their binding bids.”

The projects include a 420 megawatt (MW) solar project in Barmer region of Rajasthan, a 100 MW wind project in Karnataka; and a 520 MW wind and solar hybrid project to be commissioned by 2027.

While ACEN has an operational 3.3 gigawatt (GW) portfolio and another 3.7 GW under development globally, UPC Renewables has 10 GW of installed capacity, with 7 GW of assets under development. Their joint venture India green energy platform—UPC Renewables India—has an operational capacity of 630 MW, comprising 420 MW Masaya Solar in Madhya Pradesh, 70 MW Paryapt Solar in Gujarat and 140 MW Sitara Solar in Rajasthan.

In an emailed response, an EY spokesperson said, “We cannot comment on company-specific matters.”

Queries emailed to the spokespersons of Ayala Corp., ACEN, UPC Renewables late on Wednesday night, and UPC Renewables India on Thursday morning remained unanswered till press time.

The JV platform has already started work on these upcoming projects.

“ACEN, in partnership with UPC Renewables, has commenced construction of two major renewable energy projects in India: a 420 MW solar farm in Rajasthan and a 120 MW wind farm in Karnataka,” the companies said in a statement on Wednesday.

“We are thrilled to kick off the second phase of growth for UPC India’s platform with the construction of these 500 MW+ solar and wind projects. The projects are part of a broader pipeline of 1 GWp+ RE projects, which we aim to deliver over the next two years and play a meaningful role in India’s green energy transition,” said Alok Nigam, CEO, UPC Renewables India, in the statement.

India’s green energy sector has witnessed tremendous interest, given the country’s clean energy transition trajectory.

The Central Electricity Authority (CEA) has projected a peak demand of 270 GW this year, up from an all-time high of 250 GW recorded on 30 May last year. India has an installed renewable energy capacity of 226.9 GW, of which solar and wind power account for 110.9 GW and 51.3 GW, respectively.

India targets to add 50 GW of green energy capacity annually to reach 500 GW by 2030.

Power demand, pricing challenges

However, the industry also faces emerging concerns. Solar energy tariffs fell, and power demand in India's top six industrialized states flattened in April and cooled in May. The sector also faces power transmission evacuation constraints, while states are not inking power purchase and supply agreements for awarded projects due to a drop in tariffs in the subsequent bids.

In May, power exchanges observed an unprecedented market bifurcation: spot prices for electricity during solar hours plummeted to ₹0/unit, while non-solar peak hour prices grazed the ₹10/unit ceiling, according an SBI Capital Markets Ltd’s May report. “This divergence highlights an extreme case for the economic viability and practical necessity of ESS (energy storage system). Recognising this, pure solar tenders <50% of RE tenders issued in FY25, a significant decrease from 78% in FY20. However, despite over 150 GWh of BESS tenders being floated to date, only a negligible portion has reached completion.”

Mint earlier reported that about renewable power capacity totalling nearly 30 GW has failed to find buyers; with a capacity of at least 15GW is yet to find PPAs, while at least 14GW is awaiting PSAs.

Ratings agency Icra had said that India's power demand in FY26 may grow 5-5.5%. While it’s higher than 4.2% in FY25, it would be slower than the 7-9% growth seen in the period FY22 to FY24, the period following the pandemic.

Storage, funding hurdles

Given that solar and wind are infirm sources of energy, a renewable capacity of 500 GW by 2030 without adequate storage can threaten the grid's stability in case of generation outages due to cloud cover, rain, or a drop in wind speed. The national power grid has been facing warnings due to the sudden dip in solar power generation, leading to several instances of grid frequency dropping. Any sudden change in the demand pattern impacts the grid frequency.

“On the transmission side, a long-term strategy for evacuation infrastructure is being implemented under the country's National Electric Plan. Any material delays could lead to bottlenecks and potential power curtailment,” Standard & Poor's Financial Services LLC wrote in a 4 June report.

“In renewable energy, to address the intermittency of power supply, there is a transition towards hybrid or storage-backed capacities, which facilitates scheduling of power round-the-clock with greater confidence. Of the ~75 GW capacity to be added in this and next fiscal, hybrids will account for ~37%,” wrote Crisil Ratings in a 9 June report.

“In renewables, the timely availability of evacuation infrastructure is critical. To be sure, a significant ramp-up in transmission capacity is underway with a total capital expenditure (capex) of ~ ₹1 lakh crore in this fiscal and next, twice of what was seen in the preceding two fiscals. These projects may face delays on account of right-of-way issues, delayed approvals or short supply of equipment such as transformers and high-voltage direct current components. Further, as renewable capacities typically take much less time to be set up, transmission capacity may fall short temporarily,” Crisil said.

Then there is the question of huge funding requirements in India’s green energy transition.

“India will require an estimated US$1.3 trillion in cumulative clean power investment by 2035 to meet its 2070 net-zero target. In 2024, renewables investment rose by 17% to US$33 bn and is expected to grow another 12% in 2025,” Kotak Institutional Equities research wrote in a 20 June report.