Wind At Its Back

Like every year, the searing heatwave sweeping across much of India this summer has left the nation sweating, thanks to woefully frequent power cuts.

The National Electricity Policy, which seeks to ameliorate the situation, aims to boost locally produced energy and alleviate energy poverty by focusing on alternative sources like nuclear, solar, and wind energy. Of the 596 GW of renewable energy (RE) installed capacity that is targeted by 2032, 125 GW is specifically earmarked for wind energy.

In fact, India's wind capacity commissioning increased to 3.3 GW in FY24, reaching a cumulative installed capacity of 46 GW, up from 1.1 GW and 2.3 GW in FY22 and FY23 respectively. FY25 projections indicate an addition of 5-6 GW.    

This focus on wind energy spells rising opportunities for key renewable players like INOXGFL Group. To begin with, INOXGFL has lined up several plans.

It is expected to launch a renewables platform along with leading private equity players very soon. This new renewable energy platform is expected to produce over 1.5 GW of wind and solar power.

The venture is expected to be launched within the next 180 days, with the likely backing of a clutch of marquee overseas investors, according to market insiders.

Talking to BW Businessworld, Devansh Jain, Executive Director, INOXGFL Group said: "There is a lucrative opportunity from the third party commercial and industrial (C&I) power market.

The company currently has an operational RE capacity of >100MW and is targeting to reach an installed RE capacity of 1.5 GW in the next 4-5 years, leveraging the wind and solar sector expertise within the group.

The power generated from these projects will be partly tied up through PPAs with group companies and third-party C&I customers and balance will be sold on the power exchanges."

The Legacy

Boasting a rich legacy of 100 years, INOXGFL today operates in two verticals -- chemicals and renewables.

The group is also a forerunner in diversified business segments comprising fluoropolymers, fluorochemicals, solar, green hydrogen and wind energy. Its flagship company, Gujarat Fluorochemicals (GFL), with over 35 years of experience, has a proven track record of adhering to stringent purity specifications at an industrial scale, which is a crucial requirement for customers in the electric vehicles (EV)/energy storage systems (ESS) industries.

"Fuelled by our extensive experience and deep understanding of the standards, we made the strategic decision to venture into the EV space through GFCL EV Products (GFCL EV), a wholly owned subsidiary of GFL," Jain adds. With GFCL EV, the group aims to seize global opportunities in this growing market. It wants to become a trusted partner to battery manufacturers for EV and ESS.

In a recent report, ratings agency Icrs says it expects the share of generation from the renewable energy capacity, including large hydro, to increase to close to 40 per cent of the all-India electricity generation by FY30 from less than 25 per cent currently, driven by the large capacity addition under way.

"Achieving such a high level of RE share would require development of ESS to manage the intermittency associated with wind and solar power. The ESS is currently mainly driven by the battery energy storage systems (BESS) and pumped hydro storage projects (PSP). The recent appreciable decline in battery costs is encouraging," it said, adding that it was expecting a much quicker adoption of BESS projects.

Jain projects a 25-30 per cent CAGR in the demand for battery materials over the next five to six years. These include LiPF6 electrolyte salt, LFP cathode active material, and PVDF cathode binders.

"Being one of the first movers, outside of China, we aim to capitalise on the demand opportunities from the US, European and Indian market," he adds.

It recently announced a cumulative capex outlay of Rs 6,000 crore over the next 4-5 years in its battery chemicals business, through GFCL EV, of which Rs 3,200 crore will be invested by FY26.

"This investment will be used to ramp up the production of materials like electrolyte salts (such as LiPF6), additives and electrolyte formulations, cathode active materials like LFP and binders for the cathodes (like PVDF and PTFE). Additionally, we're developing products like NaPF6 for sodium-ion batteries," said Jain.

Leveraging Wind Power

The wind energy business of INOXGFL Group is a vital component of its overall growth. What is it planning?

The original equipment manufacturers (OEMs) in India are making advancements in technology leading to larger-capacity turbine platforms, which are more efficient than the existing fleet, thereby aiding in lowering the levelised cost of energy (LCoE) and improving returns. Inox Wind (IWL) has also scaled up supplies of its state-of-the-art 3 MW platform, which can reach up to 3.3 MW with boosters, informed Jain.

This turbine has been designed for Indian conditions and offers one of the lowest LCoE for any turbine in its class, he said. But none of this was possible without the support at the group level. There was a significant capital infusion in IWL by its promoters.

That helped the company to substantially deleverage and strengthen its balance sheet. With this, IWL is now on course towards its objective of becoming net debt-free by H1 of FY25, and its credit ratings have also been upgraded, Jain informed.

"We also increased our operational capacity and ensured that our supply chain was ready to support gigawatt-scale annual execution," he said.  

IWL reported consolidated revenue of more than Rs 1,200 crore in 9MFY24, an increase of 121 per cent, from last year. Additionally, it also raised around Rs 1,500 crore from marquee global investors, which helped to strengthen its balance sheet.

Going Green

Another significant milestone for INOXGFL recently was the listing of Inox Green Energy Services (IGESL). It became the first listed wind O&M company globally. 

What does it mean for the group? IGESL’s robust business model ensures stable annuity cash flows on the back of long-term O&M contracts averaging 5-20 years.

Moreover, the company, enjoys synergistic benefits with IWL. Being a subsidiary, IGESL draws benefits from the wind turbine order execution of IWL as the post commissioning O&M contract.

In the last 10 years, IGESL has rapidly expanded its portfolio, currently managing assets totalling 3.5 GW. Notably in 9MFY24 the company reported consolidated revenue of Rs 177 crore. IGESL is poised for substantial growth and aims to reach 10 GW of asset portfolio in next 2-3 years, says Jain.

The company’s future growth strategy encompasses both organic and inorganic expansion avenues. Organically, the execution of orders by IWL will significantly contribute to augmenting IGESL's existing O&M fleet.