Financial planning and Analysis is a crucial aspect for any organization, more so in the year of the pandemic. A strong internal structure to assess and mitigate risks, follow up due diligence, legal compliance and appropriate safeguards for credit has allowed Greenko to emerge unscathed during FY 2020-21.

Journey so far

Greenko has performed well in the current reporting period, by consistently developing and reinforcing financial strength in line with its strategic approaches viz., pursuing revenue growth, organic and inorganic growth, enhancing debt capacity, and access to capital.

In FY 20-21, Greenko has increased installed capacity to 7.5 GW, thus scaling up the installed generation portfolio. This scale of expansion was achieved by acquiring nearly 0.95 GW of the renewable assets in FY 20-21.

Currently, at the GKO 3.0 stage, Greenko anticipates significant investments in IRESPs to achieve RTC renewable energy. In this stage, the company has continued to focus on investments in the O&M of its assets through digitalization. In July 2020, Greenko and ONYX InSight signed an agreement to retrofit and modernize 500 wind turbines for efficient data collection and analysis. Greenko is also active in the open-access space (B2B segment). In 2020--21, the company sold 7.19% of the power generated through this route. Dealing with energy customers directly is a step towards transitioning to decentralization and is also the focus of GKO 4.0.

Be it organic and inorganic growth, diversification in sourcing finance and investments, new business strategies, and investment in IRESPs to diversify its project portfolio, Greenko has tried to evolve itself continuously and adapt to changing business dynamics. In FY 20-21, the Group’s growth has been affected by the ongoing Covid-19 pandemic and competition from the increasing number of players in the renewable energy sector. Despite these challenges, however, Greenko is still strongly positioned in the country’s renewable energy sector.

Diversified Source of Funds

Greenko has maintained a good credit rating and has thereby, remained highly attractive to potential investors. It has been able to tap diverse sources of funds and has positioned itself among the top three renewable energy generators in India. Greenko has a well-diversified source of revenue – diversified renewable generation technologies and diversified PPA structures, including (i) Feed-in tariffs, (ii) APPC Tariffs, and (iii) Third-party direct sales.

Diversified source and renewable technologies

Overview of Financial Performance

Greenko anticipates to achieve 50% EBITDA from the clean energy services and technology business solutions combined.

The Group has come up with a full build-out plan until FY 2024-25 which is presented below:

Greenko’s financial growth plan – FY 2024-25

Credit ratings

Sustainable Financing through Green Bonds

Green bonds are fixed-income financial instruments. The issuer of these bonds gets the capital to finance green projects while investors receive fixed income via interests. Green bonds raise funds for new and existing projects which deliver environmental benefits, and a more sustainable economy.

Greenko has so far raised around $4.5 billion through foreign and domestic green bond issues. The funds are diligently deployed as per the use of proceeds specified and follow the process for evaluation and selection. Greenko ensures that impact assessment and allocation reporting obligations are being fulfilled as required by the green bond framework.

Greenko is well aware of the importance of ESG factors when it comes to financing. The company believes in financing projects that respect certain environmental criteria.

• In November 2017, Greenko raised Rs 30 billion through the sale of onshore rupee- denominated bonds which will mature in 2027.

• In July 2019, Greenko Energy Holdings raised $950 million through green bonds. The issue was oversubscribed by over three times and was one of the largest green bond issues by a renewable energy company.

• In March 2020, Greenko has raised $940 million through the green bond issue priced at 3.85%. The bond was rated ‘Ba1’ by Moody’s Investors Service. The demand for the bond exceeded $2.5 billion and the proceeds from the bond sale are to be used for refinancing existing debt facilities.

Sustainable Financial Partnerships

Greenko believes sustainable development goals can only be achieved through partnerships. Greenko Energies Pvt Ltd (Greenko) and NVVN have entered into an MOU with an intent to explore the possibility of the development of Renewable Energy (RE) based RTC, flexible and dispatchable power supply offering based on the integration of RE sources and Pumped Storage projects.

In March 2019, Greenko signed an agreement with Siemens Financial Services (SFS), the financing arm of Siemens AG, for an equity investment in its 200 MW Poovani Wind Power project in Tamil Nadu. As per the agreement, SFS has agreed to take a 46 % equity stake.

Greenko has received equity from GIC and the Abu Dhabi Investment Authority, both key stakeholders in the company. In September 2020, ORIX invested $980 million in Greenko Energy Holdings. With this investment, ORIX has a 21.8 % stake in Greenko. ORIX has integrated its existing wind energy business with Greenko, which includes projects with a cumulative capacity of 873 MW.

Calibrated Inorganic Growth

Greenko’s inorganic growth is guided by getting the right stakeholders involved at the right time.

Circular and Regenerative Approach

The organization aims to harness overall organic and inorganic growth by embracing circular and regenerative thinking as a way of business.

Greenko’s Integrated Renewable Energy Project, which is designed to address the inherent infirmity of wind and solar energy by employing the innovative solutions of Pumped Storage Plant (PSP), is an important component of our circular approach. These projects are designed as sharing platforms of storage and other electricity system services.

Under the circularity and regenerative thinking approach, Greenko aspires to explore and employ innovative ideas and action plans, such as ‘invest-generate-and-Consume’, ‘harness increasing electrification’, ‘solutions to non-electric use sectors’. - which are adjacencies to the present business

Managing Climate Change Impacts – Risks and Opportunities

Greenko’s three pillars- Renewable Energy, Storage and Zero Carbon Molecules are building blocks of transition towards a low carbon economy and to meet the target of restricting the average global temperature rise to 2°C and further ambition Paris Climate Agreement to limit the global warming to 1.5 degrees, to minimize the catastrophic impacts of climate change . However, like every other sector, the renewable energy sector is also susceptible to the impacts of climate change as the entire supply chain of the renewable energy system is significantly vulnerable to climate variability.

Physical Climate Risks

Greenko’s assets face the physical risks of climate change such as extreme weather events which can range from droughts to tropical storms. The physical risks have the potential to directly damage the organization’s assets and indirectly disrupt the supply chain due to the impact on production facilities, sales, and workforce.

The electricity production potential of renewable energy is critically impacted by the physical risks of climate change, due to its dependence on climate conditions. A shift in climatic conditions resulting in temperature extremes, heat waves, extreme changes in precipitation leading to flooding and drought, sea-level rise, etc. have the potential to adversely affect the generation and transmission infrastructure of Greenko as well as the asset’s productivity.

Transition Climate Risks

The transition risks of climate change are the risks that could arise from the process of adjusting to a low carbon economy such as changes in policy, technology, market, and reputation.

Regulatory Risks

In the drive for deep decarbonization and tackling the adverse effects of climate change, India will have to reform the energy policy ecosystem and Greenko looks at these upcoming changes in public policy as an opportunity. To be on the top of these evolving policies, Greenko continuously engages with regulatory processes through proactive participation in discussions and public policy advocacy with both National and Local regulatory bodies viz., MoP, MNRE, MOEFCC, and CERC providing constructive feedback regarding policies and regulations.