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a Vineet Mittal’s
Avaada powers
ahead in
renewables race
Despite being a late entrant to the
clean energy sector, the six-year-old
firm has scored several wins recently
to emerge as a leading solar project
developer.

Azman Usmani
 Mumbai
May,

Unlocked story

T
Vineet Mittal’s
Avaada powers
he man who helped build what was once India’s largest solar developer is back for another crack at the market.
ahead in
renewables race
Save Over a decade ago, Vineet Mittal led Welspun Energy’s foray into renewables when the solar market in India was
almost non-existent. After selling the business to the Tata group in , he embarked on another entrepreneurial journey.
Share:
Six years after it was founded, Mittal’s Avaada Energy has emerged among the top five large-scale solar developers by
capacity. With a healthy pipeline of projects and marquee investors on board, he has now set his sights on becoming a
mainstay in India’s energy transition story.

Even though India’s solar capacity growth slowed over the past year, Avaada continued to add projects and became a regular
feature at auctions. Last year, it boasted an . % market share in the . gigawatt grid-connected solar projects that were
commissioned, third largest after state-run NTPC and Adani Green Energy. Tenders for these projects are awarded by
government agencies, and buyers are state distribution firms. In the open-access category—with commercial and industrial
buyers—Avaada was the leading developer.

And it seems the company has no plans of hitting the brakes.

In the first two weeks of April alone, Avaada managed to win more pure-play solar capacity than sector behemoths ReNew,
NTPC and Adani Green Energy (a noted absentee from auctions recently), according to JMK Research & Analytics, a
Gurugram-based consultancy firm. To be sure, ReNew and NTPC won more renewable capacity overall, but that includes
wind-solar hybrid projects.

These wins were followed by big money. Late last month, Avaada Ventures, the group’s parent company, closed a deal with
Canada-based Brookfield Renewable Partners to raise up to $ billion—India’s largest round of green financing. Further, a
fund infusion by existing investor Global Power Synergy Public Co. was announced. The company also said advanced talks
were underway to raise another $ million.

Avaada now wants to expand its portfolio. A plan to set up a green ammonia facility in Rajasthan with a million tonne
production capacity is already in the works. In March, it also bagged a grant worth Rs crore to set up solar modules with
a capacity of gigawatts under the government’s production-linked incentive scheme.The company is aiming to make its
manufacturing line operational this year. It also has ambitions to develop green hydrogen projects.
Avaada’s rise over the past year points to the opportunities in India’s renewables market as the country aims to hit a target
of gigawatts in non-fossil fuel capacity by the end of this decade. Industry executives and observers we spoke with see
Avaada as a serious contender in the energy transition space.

“Despite being a relatively late entrant, Avaada has emerged as one of the top five players in solar,” says Vinay Rustagi,
managing director of renewable consulting and research firm Bridge To India. “The company has strong execution
capability and has also been very successful in raising capital, a key differentiator in the sector.”

Part of it has to do with the track record of its top brass.

The dream team

Mittal’s presence at the helm is key to the group’s ability to drive expansion and win tenders.

A Harvard Business School alumnus who has been described as a “pioneer and evangelist” of sustainable energy by the
World Economic Forum, Mittal built a reputation of being bullish on India’s renewables sector even before climate change
triggered urgency for an energy transition.

“He was a torchbearer for renewables even before Avaada,” says an industry executive, who asked not to be named. “Not
only did he build a large solar business, he also managed to get a successful exit when industry consolidation started, and
that is seen as a rarity. That he’s been at it for so long adds to the company’s credibility.”

In , Mittal co-founded Welspun Renewables Energy along with group chairman Balkrishan Goenka. The company
housed the renewable assets of Welspun Energy, where Mittal served as managing director. Under him, Welspun amassed .
gigawatts of renewable capacity, becoming India’s largest solar developer by . According to India Ratings and Research,
the company was efficient in implementing projects without any cost or time overruns.

During Mittal’s time at Welspun Energy, the company attracted investments from General Electric’s financial services arm
and the Asian Development Bank, which has since also invested in Avaada. In , the Tata group acquired Welspun
Renewables for Rs , crore—the largest green energy deal in India at the time.

Mittal refused to be interviewed for this story.

In , he founded Avaada, which saw its first major win when it bagged a megawatt solar project in a megawatt
auction by the Gujarat government. Winning bids followed in Uttar Pradesh and Karnataka, setting the wheels in motion for
the fledgling solar developer.

Avaada’s reputation is also bolstered by power sector veteran T.R. Kishor Nair, the company’s chief executive. His over-
three-decade-long career includes stints at NTPC, US-based Bechtel Corporation and Reliance Power. He also served as a
director at a unit of Welspun Energy. Nair’s “vast experience, his strong association with industry lobbies and
communication lines in various governments are seen as strong points,” says an energy sector analyst, asking not to be
named.

While Avaada has been helped by industry heavyweights running the show, what really separates the wheat from the chaff
when it comes to solar projects in India is the availability of funds.

Raking it in
Avaada’s $ billion fundraise from Brookfield isn’t its first major one. The company cracked a transformative deal a couple of
years ago.

Initially, there were doubts about Avaada’s ability to execute projects. In , Care Ratings gave a “negative” outlook to the
group’s debt facilities, citing unfinished projects.

Those worries were alleviated when, in , Avaada sold a . % stake to Global Power Synergy, a subsidiary of Thailand’s
state-owned conglomerate PTT Group. The $ million fund infusion was used to pay off outstanding debt and fund the
projects under execution.

Fast forward to , Care Ratings changed the outlook to “positive”.

PTT’s backing of Avaada also illustrates the synergy between global investors who are hungry for ESG assets and Indian
renewable energy firms. Fund flows in the country are far short of what is required to meet the renewable energy targets by
the end of the decade. S&P Global says around $ billion will have to be invested by to achieve the goal. As of financial
year - , the average annual green finance flow was around $ billion, according to the Climate Policy Initiative—
that’s nearly a quarter of what’s needed to meet the pledge of having % of the country’s power come from non-
fossil fuel sources. That’s where global investors like PTT come in.

Before PTT, a handful of other foreign investors had stepped in too. In , Avaada raised around $ million as equity
infusion from the Asian Development Bank, German development finance institution DEG and Dutch development bank FMO.
The same year, it also announced a $ million investment from France-based Proparco. In , DEG invested another $
million, while ADB agreed to put in $ million. Their stakes have been bought back by Mittal’s family office since. This year,
along with Brookfield, Global Power Synergy invested an additional $ million in Avaada Energy.
Avaada has also been active in channeling funds through the bond market. Last year, Avaada Energy issued the largest
tranche of green bonds by an Indian solar developer by raising Rs , crore.

In fact, accessing global financiers has become a “hallmark” of companies that Mittal has run over the years, says a second
industry executive, asking not to be named. And Avaada is keen on expanding further. But controlling costs remains a
challenge.

The cost imperative

Rising costs are the biggest hurdle for solar developers in India right now. But what’s behind it?

Last year, the government imposed a % basic customs duty on imported solar modules in an attempt to boost
domestic manufacturing (nearly % of solar modules in India were imported). Domestic manufacturers lack the
capacity to meet the growing demand.
The prices of raw materials like glass, backsheets and aluminum frames rose significantly since the COVID-
pandemic hit.
Freight rates have also increased.

The cost of a typical solar power project has gone up - %, according to ratings agency Crisil. This has pushed solar
developers to venture into other areas. “The last few years have been financially very tough, with sharp increases in costs
and execution delays,” says Rustagi from Bridge to India. “We see many developers trying to diversify the business with
forays into new consumer segments, or new business activities like manufacturing, transmission, power distribution, smart
meters and hydrogen.”

While Avaada managed to sidestep some of the impact of high costs by importing . gigawatts of solar modules before the
basic customs duty kicked in, its operating margins still narrowed, according to India Ratings and Research. Filings with the
Ministry of Corporate Affairs show that Avaada Energy reported a loss of Rs crore in - and Rs crore the
following fiscal. The losses were due to a change in the fair value of its convertible debentures.
Getting a hold over costs is crucial for developers. “Renewable energy is a game of controlling costs,” says Shantanu
Srivastava, an energy finance analyst at the US-based Institute for Energy Economics and Financial Analysis. “Any player
that can manage its costs will have an edge in securing low-cost financing.”

According to Srivastava, interest on loans alone forms - % of the total cost of solar projects. By controlling the entire
supply chain, developers can ensure that margins are less impacted by external factors and the estimated rate of return
assumed for a project can be met. “Many big developers are able to do that. Take NTPC, Adani or Tata—they are able to
control their biggest costs,” he says.

Keeping costs down is also important if Mittal wants to take Avaada to the next level.

A ‘sand-to-molecule’ operation
Mittal wants to develop Avaada into what he calls a “sand-to-molecule” business. The group plans to have gigawatts of
installed renewable capacity by , nearly x its current operational capacity.

In an interview to Moneycontrol last year, he laid bare the company’s plans for the future. It involves all of its businesses
being housed under Avaada Ventures. The flagship Avaada Energy will be the engineering, procurement and construction
arm for executing solar and wind projects. Avaada Green Hydrogen will work on producing green ammonia, green methanol
and sustainable aviation fuel. Further, it wants to build manufacturing lines for solar panels, electrolyzers and renewable
energy storage.

“We don’t want to be dependent on others and be at their mercy for supplies, solar cells and modules,” Mittal was quoted as
saying.
The job’s far from finished. Avaada has a long way to go before it can maintain a consistent track record of carrying out
projects and raising capital. India Ratings and Research estimates that Avaada Energy’s order book size is twice its expected
revenue for - . This, according to the ratings agency, highlights that adding new projects to Avaada’s pipeline is
critical for healthy margins and stable revenue visibility.

Luckily for Avaada, the Indian government is finally scaling up solar auctioning this year after new tenders dried up last year.
The Ministry of New and Renewable Energy has announced a plan to invite bids for gigawatts of grid-connected
renewable capacity every year till - .

But Avaada
Lead won’t be Rajat
illustrations: the only contender.
Baran/The The topContext
Morning players in the sector
Graphics: will continue
Ahmed to dominate
Raza Khan/The the solar
Morning market, says
Context
JMK Research founder Jyoti Gulia. Also, new private equity-backed companies are likely to enter the fray, deepening
Avaada
competition.
Bridge to India
Climate
climate change
As Mittal said in the Moneycontrol interview: “The cake is too big; there is space for multiple people to build multi-billion
ESG
Green Ammonia
dollar businesses.”
Green Hydrogen
JMK Research & Analytics
PLI
Renewable Energy
Solar modules
Solar PLI
Solar Power
Vineet Mittal
Welspun
About the author
Azman Usmani
Azman writes on climate change, ESG, and how a warming world impacts businesses and people alike. Prior to The Morning Context, he led climate
coverage at BloombergQuint, where he started his career as a desk writer.

Disclaimers: The Morning Context has raised money from a clutch of investors, entirely in their personal capacity.
It is quite likely that some of them may be directly or indirectly involved in a competing line of business similar to
the companies we write about. Our full list of investors is here

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