Suzlon Acquires Renom, Algonquin Sells Non-Hydro Assets

Suzlon Energy will acquire a 76% stake in Renom Energy Services for $79 million. Algonquin Power & Utilities Corp has announced the sale of its non-hydro renewables business to LS Power. Haizea Wind Group has secured a €35 million green loan from the European Investment Bank.

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Allen Hall: I’m Allen Hall, president of Weather Guard Lightning Tech, and I’m here with the founder and CEO of IntelStor, Phil Totaro, and the chief commercial officer of Weather Guard, Joel Saxum. And this is your News Flash. News Flash is brought to you by our friends at IntelStor. If you want market intelligence that generates revenue, then book a demonstration of IntelStor at intelstor.com.

Suzlon Energy will acquire a 76 percent stake in Renom Energy Services. For 660 crore rupees or approximately 79 million U. S. dollars. This move is set to strengthen Suzlan’s position in the operations and maintenance sector. Renan Energy Services is currently the largest multi brand operations and maintenance service provider in India, managing assets totaling 1. 7 gigawatts in wind, 148 megawatts in solar and 572 megawatts in BOP. Phil, with the advent of G. E. Vernova and Siemens Gamesa leaving India slowly and leaving the maintenance up to other organizations, Is this a good move by Suzlon to try to fill that void?

Philip Totaro: It is. It’s a very interesting move as well because of how fragmented the Indian market is, just in general, both on the OEM side and on the maintenance side.

So, as you mentioned, there’s a couple of Western OEMs that are kind of pulling up stakes, and frankly, Vestas hasn’t been getting the same level of sales in the past that they have in India either. With the growth of Inox Wind. And the introduction of Adani’s turbine as well. So for, for Suzlon, this is an interesting move because, as you mentioned, it gives them access to a maintenance provider that is not only kind of the biggest ISP in the market, but they also have a multi brand portfolio that they are servicing, giving them access to a wide array of of different technologies.

As I mentioned, it’s a fragmented market. And so the reason why there isn’t. A big dominant player in operations and maintenance in the market is because you have some OEMs that are still kind of contractually obligated on certain projects, but they’ve pulled up stakes. Other OEMs that used to operate in the market don’t anymore.

And so you’ve got a particularly big market opportunity for. Susan and read on to step into here. The Indian market is now, I think, 46 gigawatts of onshore wind installed and another, I want to say, 80 something gigawatts of solar at this point. So, it’s a it’s there’s a lot more opportunity for growth in this segment.

Joel Saxum: Yeah, Allen and I actually were on a call this morning with some people from India that are a large developer over there and it seems like every time we’re on a call with anybody from India, they are a large developer or they have a large pipeline. One of these, one of these pipelines was two gigawatts in the next few years.

Another one we talked to a couple weeks ago was four gigawatts in the next four years. So there’s a lot of big plans for wind in India and Suzalon right now through this move is looking to capitalize on that. On ensuring or being in the position to ensure the wind energy sector in India remains strong, right?

They’re the largest wind energy OEM in India right now. Suzan, when you hear Suzan, India, right? So they’re, they, they had put on some bids when Siemens was pulling out, and they’re grabbing some other O& M activities. They’re building new wind farms. So, Suzlon looking to be a power player over there and they’ll, they’ll spread their wings in that sector as well.

Allen Hall: Moving over to Europe, Spanish wind turbine component manufacturer Hesia Wind Group has secured a 35 million euro green loan from the European Investment Bank. This funding will be used to implement advanced manufacturing technologies, automate and digitalize processes and advance R& D applied to large metal structures for wind turbines.

This includes towers, monopile, foundations, and offshore wind farm transition pieces. Now, Phil, with some recent elections over in Europe, there is a renewed effort to support local industries within the EU. Will we see more of this over the next year or so?

Philip Totaro: I think so, yes, because there’s been obviously a push from the European manufacturers to say, Look, support us, or we’re pulling up stakes and moving our manufacturing operations over to India or China.

And I guess who can blame them with a lower overhead cost and ample support that they would get being in those markets, employing local resources and receiving local tax breaks there. There are even companies in Europe. They’re looking at the United States particularly with renewable energy manufacturing in mind.

So this is kind of first steps at. A wider package. There’s been other money that’s recently been allocated as well that the European Commission or the European Investment Bank or other entities in Europe have committed to companies that are going to also commit themselves to domestic manufacturing.

So, I think it’s it might be a small amount at 35 million, but it is something that’s important for HESIA because they actually have I want to say something like above 50, probably around 55 percent market share for transition pieces in, in Europe, particularly for European offshore projects.

So. They’re a, they’re a big player and they will benefit from having this this level of support. You can expect it to hopefully propagate to other companies here and in the near future.

Joel Saxum: Let’s take 30 seconds to dive into this thing a little bit on a technical level. So Alvaro Quintana, the, the wind group finance director says this loan supports their goal of helping clients work towards a more sustainable economy.

That’s pretty cool. That’s word speak that everybody in the wind industry is going to use or anybody in the renewable energy. It doesn’t really mean that much. But when you dig into it, what they’re going to use these funds for is manufacturing technologies to automate digitalized processes, right? That is something that the wind industry needs to become.

More cost effective to become more competitive on a global basis. So if you can, if you can take this money and you can put it into automating, making better products faster, more efficiently with a higher quality, that’s what the wind industry needs. They’re talking about steel here because that’s what Haysia does.

And that’s great. So we’re going to get some, hopefully get some more research and development into automating some of these processes. The next thing I want to see one of these loans go for is. Freaking blades. That’s just my take.

Allen Hall: In a significant move in the renewable energy sector, Canada’s Algonquin Power and Utilities Corp.

has announced the sale of its non hydro renewables business to LS Power, a U. S. based power and infrastructure company. The deal, valued at up to 2. 5 billion U. S. dollars, marks a strategic shift for Algonquin towards becoming a pure play regulated utility. Under the terms of the agreement, LS Power will pay 2.

28 billion dollars in cash at closing With an additional potential earn out of up to 220 million dollars based on the performance of certain wind assets. Algonquin expects to receive approximately 1. 6 billion dollars in net proceeds after accounting for debt repayment, taxes, Phil, this is a huge deal, and we’ve seen a number of large operators get out of the non regulated business.

What is the push to do that?

Philip Totaro: Yeah, this, this is fascinating because, as you mentioned, Algonquin was really spending a lot of time with, between Algonquin Power and Utilities and their subsidiary companies like Liberty for those that are familiar. Yeah. They were spending a lot of time building up this portfolio with the rather, sizable chunk of, of wind and solar.

And they actually have a very, healthy portfolio of, of projects. In fact earlier this year, we identified at IntelStor the fact that Algonquin has the number one performing portfolio of wind projects in the United States right now. Based on comparison of their actual energy output versus.

Their predicted output so it’s no surprise to me that they were able to sell for, a price premium going back to the question of why are they doing this and pulling out and, and just focusing on the regulated utilities market. It’s because of profit margins. They would rather take some of the cash that they have and redeploy it towards the regulated utility business segment.

And as a result of that, they are going to, kind of Forgo the potential growth in, expansion of that, of that portfolio in favor of allowing LS power to to kind of capitalize and consolidate what they’re trying to build. So I think the reason that a lot of these utility companies or utility focused companies that also had a renewable development portfolio have pulled back and said, we’re going to focus on the regulated market.

Is because the fact that it’s a regulated market, it provides them more certainty, plus the additional cash that they now have from the sale of this kind of a renewable portfolio. We’ve again, as you mentioned, we’ve seen it before and this probably won’t be the last time either.

Joel Saxum: Allen and I actually in a road trip this week, we were sitting in the car together talking about the difference between unregulated and regulated assets and why companies are Keen to sell them, right?

So when you get to an unregulated asset, there’s a little bit more risk. There’s a possible higher return, but it makes budgeting and engineering decisions a little bit more difficult because you don’t know your budget could change throughout the year, right? So if you go, if you’re selling your unregulated assets, going back to just regulated assets, as Alconquin’s looking to do here, you end up stabilizing the business you have fixed PPAs.

You know what money’s going to, should be coming in. You know what money should be going out. It’s easier to make a little bit of engineering decisions and just less risky in general and these may be Some of these other moves we’ve seen like this in the market may be people looking for investment on the outside to do things it’s easier or not easier, but it’s Less it’s more risk averse for a company to look at someone that is only playing in regulated assets to invest in as well So when you’re talking about teachers pension funds and those kind of things deploying capital, this is a good way to do it