Interview: RE Mastertalk with Karim Megherbi

I had the pleasure to be interviewed by my friend Amit Vats for his YouTube Channel RE Master Talks.

I shared my views on the following questions:

1/ How are projects typically financed in India and do you see the PPA tariff decreasing further in the future?

2/ What are the main challenges to get your project finance and the challenges you see in the Indian market.

3/ Do you see India as an attractive market for international investors?

4/ What the next steps for Orisun Invest (my company) in India?

During this 19min discussion, I tried to cover the main topics I had in mind. Certainly I missed a few, some I can add here.

1. One of the key challenges is the cashflow situation of some of the Discos. Several projects see major payment delays, to a point that even leading players already consider them as distressed assets in their portfolio. There is an urgent need to find a solution. These are Discos in the very States which need energy the most to develop their economies and improve the life of millions of citizen. Although Covid lowered their revenues, the future is still unclear for some of them. Many investors are fine with developing/acquiring assets in these States, SECI and NTPC are not the only development strategy followed by large players. So money is there, but they wait to see how the situation will be resolved.

2. I mentioned hydrogen in the interview as indeed, since it takes time to develop grids and you see already technical constraints in some locations, feeding an electrolyzer and sell the subsequent product to an offtaker looks like an interesting model, with higher margins. The economics still present some challenges to be addressed:

- On export (e-fuel/ammonia), the competition will be fierce: Chili, MENA, Australia, have very good wind and solar resources, and electricity prices (as reflected in the PPAs) are much lower

- Decarbonizing the local industry, like steel, is a very important topic in India (especially as India is mostly using industrial coal and has little gas infrastructure). However, the capacity to pay a green premium in the early stage of the development has to be addressed. Same question for green ammonia.

- Anything else need to be carefully assessed. India has to electrify everything while managing its energy demand as much as possible. Total and Adani going big on green hydrogen is excellent news if they prioritize H2 applications which makes the most sense - the market will tell soon what they are and have already answered for some. The government in parallel has to make sure that the RE capacities to produce this hydrogen will be on the top of existing RE targets.

We believe at Orisun that the Indian M&A scene will be one of the most active of the decade and we are on our way to be one of the fair players: we closed 34MW, have 162MW in due diligence, and 800MW in discussion. Soon we will be launching our digital platform, creating a new way to source transactions in India.