Renewable Stocks

Can stocks renew themselves by their own?? The answer is “Yes”, if they are related to renewable energy sector, they can renew their price too. The renewable energy sector includes Green hydrogen, Solar Energy, Thermal Energy, Hydropower and Wind energy.

Since last few years’ countries across the world have been actively integrating different forms of Renewable Energy sources in order to reduce the carbon footprints and make Earth a better place to live.

Mostly, the renewable energy resources such as solar power, wind energy, tidal energy are used as an alternative source to Coal and Fossil fuels in order to generate electrical energy which can be used later on whenever or wherever needed.

Figure 1 Comparison of Power generated using Renewable energy

Government of India has been aggressively implementing new strategies and PLI schemes to boost use of renewable energy resources. Till now more than US$ 42 billion has been invested in India’s renewable energy sector since 2014, New investment in clean energy in the country reached US$ 11.1 billion in 2018. According to the analytics firm British Business Energy, India ranked 3rd globally in terms of its renewable energy investments and plans in 2020. In March 2021, India and the US agreed to restructure their strategic energy partnership to concentrate on cleaner energy sectors including biofuels and hydrogen production. The Solar Energy Corporation of India (SECI) implemented large-scale central auctions for solar parks and has awarded contracts for 47 parks with over 25 GW of combined capacity.

Figure 2 Contribution of states so far in Renewable Energy Sources

Companies related Renewable energy resources are:

1. Reliance Industries Limited

Recently, Reliance New Energy Solar Ltd. (RNESL) announced two acquisitions i.e., REC Solar Holdings AS (REC Group), a Norway-based firm, and Sterling & Wilson Solar, based in India – exceeded US$ 1 billion which are expected to contribute to Reliance’s target of achieving the capacity of 100 GW of solar energy at Jamnagar by 2030. Reliance is also pursuing the target of bringing down the cost of making green hydrogen to under USD 2 per kg initially and ultimately to bring it down to under USD 1 per kg in a decade. For more details on this refer to our article “Green Stocks”.

2. Tata Power

Tata Power has one of India's largest renewable energy businesses with an operating capacity of 2.6 GW comprising wind and solar in a 32:68 ratio spread across 11 states. Tata Power targets to set up renewable capacity of 15 and 25 GW by FY25 and FY30, respectively. Tata Power is in advanced talks with investors, including Canadian Pension Plan Investment Board (CPPIB) as well as Singaporean sovereign fund Temasek Holdings and private equity firm General Atlantic to raise as much as $600-700 million (Rs 4478 crore - 5225 crore) for the renewable energy business at an equity valuation of around $6-7 billion. Recently its subsidiary, Tata Power Solar secured a contract worth Rs. 686 crore (US$ 93.58 million) from the NTPC to build 210 MW projects in Gujarat. Tata power is also invested in setting up EV charging infrastructures across the nation which will lead it to set up more solar power stations which in turn will increase country’s solar generation capacity.

3. Adani Green energy limited (AGEL)

Adani Green Energy Ltd. (AGEL) has total renewable portfolio of 14,865 MW. Recently it acquired a 100% stake in SkyPower Global's 50 MW solar power project in Telangana. AGEL will invest $70 billion over the next decade with an aim to become the world's largest renewable energy company and produce the cheapest hydrogen on the Earth. The company is targeting 45 gigawatts of renewable energy capacity by 2030 and will invest USD 20 billion to develop a 2 GW per year solar manufacturing capacity by 2022-23. Adani Green Energy acquired 250 MW solar power project in the northern state of Rajasthan (commissioned by Hero Future Energies).Adani Enterprises signed a non-binding Memorandum of Understanding (MoU) with Ballard Power Systems for the commercialization of hydrogen fuel cells in various mobility and industrial applications in India. Adani Green Energy Ltd. (AGEL) also acquired SB Energy India for US$ 3.5 billion to strengthen its position in the renewable energy sector in India.

4. Suzlon Energy

Suzlon forayed in the solar energy sector in 2016 and has successfully installed and commissioned 340 MW across various states. Suzlon has also registered 1500 MW wind-solar hybrid park in the state of Rajasthan. Recently it secured a contract for 252 MW wind power project from CLP India. The project is expected to be commissioned in 2022.

5. NTPC

NTPC current total installed capacity of stands at 66 Gw out of which thermal (coal + gas) is 61 Gw, hydro 3.7 Gw, solar is 1 Gw, and the balance is wind. NTPC recently won 1.9 GW solar power project contract from Indian Renewable Energy Development Agency which now totals 4.32 gigawatt (GW) of renewable energy bids since till FY2022. The company has set aim sof 60 GW renewable energy capacity by 2032 from capacity. It also plans to invest ₹1 trillion between 2019 and 2024 to become a 130GW power producer by 2032. The NTPC will setup India's largest floating SPV plant of 100 MW capacity at NTPC Ramagundam in Telangana. Along with domestic spread, NTPC has also secured projects in Cuba, Niger and Malawi to set up solar parks in these countries. NTPC is also eyeing similar opportunities in other ISA member countries in Africa. Along with solar, wind, hydro and thermal energies NTPC is one of the key players in GREEN HYDROGEN mission flagged by GOI. For more details on this refer to our article “Green Stocks”.

6. Gail

GAIL (India) Ltd will invest about RS. 5,000 crores in renewable energy sector to reach the target of least 1 gigawatts of renewable energy.

The company is also setting up its first compressed biogas (CBG) plant in Ranchi at a cost of ₹200-300 crore which will produce five tons of CBG per day and approximately 25 tons of bio-manure using municipal waste.

GAIL (India) is planning to build India’s largest green hydrogen plant which will have capacity of producing 10 MW Hydrogen, which is largest in the country till date. For more details on this refer to our article “Green Stocks”.

7. IOCL

IOCL will invest Rs 25,000 crore in green energy projects, including solar and wind power plants, bio-fuels plants, and solar panels at filling stations. The company is working aggressively to move into horizon technologies like 2G & 3G (second and third generation) ethanol, biofuels, coal gasification, hydrogen-CNG, hydrogen fuel cells, battery technologies. Indian Oil plans to scale up its solar and wind power portfolio to 260 MW which includes 167 MW of wind and 49 MW of solar. Out of the total 27,800 fuel stations, 14,173 are solar-operated and company aims to convert it to 100%. The company is also planning to build Green hydrogen plant in Mathura refinery Uttar Pradesh which will have a capacity of producing 160,000 hydrogen gas barrels per day. For more details on this refer to our article “Green Stocks”.

8. L&T

L&T aims to be net zero emissions by 2040, out of which 90% of it includes switching over to renewable energy, green hydrogen and biodiesel while other 10% includes creation of carbon sinks. The engineering major L&T has also entered the green hydrogen revolution with an announcement of setting up a green hydrogen plant at Hazira complex probably in this financial year.

9. KPI Global

KPI global has successfully commissioned 92 MW solar energy so far and has an aim of achieving 1000MW by 2030. KPI global will setup solar power project of 2.50 MWde capacity and 1.80 MWdc (DC (peak) megawatt) capacity from 2 private companies in Surat under 'Captive Power Producer (CPP)' segment of the company. The company also signed Power Purchase Agreement (PPA) with GHCL, Bhilad for sale of 1.25 MW solar power for a period of 20 years under Independent Power Producer (IPP) business vertical.

10. Websol Energy System

Websol Energy System is a leading manufacturer of solar PV cells and modules. The company has one of the largest integrated cell and module manufacturing facilities (250 MW) in India and the company is looking forward to double its capacity soon to 500MW. Websol relies on multi crystalline technology to manufacture solar cells and modules. The company plans to transit over to Passivated Emitter and Rear Cell (PERC) mono technology which is an advanced form of technology and these Solar cells are 5% more efficient than those developed using multi crystalline technology. The global demand for mono PERC module production increased significantly from less than 1 GW in 2014 to 64 GW in 2018. It's expected to reach 168 GW and even further in upcoming years. In the financial year 2021, the company reported a growth of 1,550% in its profits on a YoY basis and expects to grow more considering the PLI schemes offered by the GOI.

11. NHPC

NHPC has an installed capacity of 7071.2 MW till now. The company has signed MOUs for execution of 5 projects with total installed capacity of 4134 MW. NHPC has also recently formed a joint venture company -- Ratle Hydroelectric Power Corporation Ltd -- for the implementation of strategic 850-megawatt (MW) Ratle hydroelectric project in Jammu and Kashmir. The company recently signed Letter of Intent (LoI) with Rajasthan Renewable Energy Corporation Ltd (RRECL) to develop 10,000 MW renewable energy projects in Rajasthan. Recently NHPC board formed subsidiary for renewable energy business under the name Jalpower Corporation Ltd. and also allocated Rs 5 crore as an equity investment.

12. BHEL

Bharat Heavy Electricals (BHEL) is one of the largest power generation equipment manufacturers and has crossed the one GW mark in the solar photovoltaic portfolio. The company grabbed two major orders with a cumulative capacity of 200 MW and so far, it has commissioned 500MW out of total portfolio of 1000MW. The company will manufacture space-grade solar panels using high efficiency cells and space-grade battery at its Electronics Systems Division in Bengaluru, Karnataka. BHEL will set up a solar photovoltaic power unit near Sambhar Lake in Rajasthan which will have a capacity to generate 1,000 MW solar energy. The company also plans to set up a total 4,000 MW solar photovoltaic power unit which will be implemented in phases.

13. Thermax

Thermax has so for installed capacity of 72 MW and it also offers a new model for green energy power plants that run on process heat/process waste/biomass/solar energy and hybrids in order to reduce carbon footprints. Thermax will invest of up to ₹6 crore in First Energy Pvt Ltd (FE), an alternative energy solutions company in which Thermax owns 30% of the stake. The company had initiated a solar project at a village in Chakan near Pune, in association with the Department of Science and Technology to provide electricity using an indigenously developed solar-cum-biomass fueled technology.

Indian renewable energy sector is the 4^th most attractive renewable energy market in the world. India was ranked 4^th in wind power, 5^th in solar power and 4^th in renewable power installed capacity, as of 2020.

Figure 3 Breakout of Renerwable Energy target

The Government of India is aiming to achieve 227 GW of renewable energy capacity (including 114 GW of solar capacity addition and 67 GW of wind power capacity) by 2022, more than its 175 GW target as per the Paris Agreement. The government plans to establish renewable energy capacity of 523 GW (including 73 GW from Hydro) by 2030.

Recommendation:

Considering the push by the GOI and many companies are working on the path of making Earth a livable place by switching over to renewable energy. Renewable energy sector related stocks will be key players in upcoming years in Stock Market and investors can have them in their portfolio to gain amazing returns in future.

-  Het Zaveri​

info@smartinvestment.in

(Disclosures : At the time of writing this article, author, his clients & dependent family members may have positions in the stocks mentioned above. The author, his firm, his clients or any of his dependent family members may make purchases or sale of the securities mentioned in website. Author may have positions in above stocks so have vested interest obviously in their going up or down as the case may be.

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