Shell Negotiates Sale of 300 MW Sprng Energy to Sekura

Key Takeaways

Shell Plc is in discussions to sell a 300-MW renewable energy portfolio from its India-based Sprng Energy platform to Sekura Energy.
The proposed deal could value the assets at ₹1,200 crore, part of Shell’s strategy to monetize parts of its Indian renewable portfolio.
Sprng Energy, with a total operational capacity of 2.3 GW, benefits from long-term power purchase agreements with strong creditworthy offtakers.

Shell’s Strategic Moves in India’s Renewable Sector

Shell Plc, the Anglo-Dutch oil company, is exploring a significant divestment in India’s renewable energy sector by negotiating the sale of a 300-MW portfolio from its subsidiary Sprng Energy to Sekura Energy, which operates under Edelweiss Alternatives. Sources indicate that this transaction could bring an enterprise value of approximately ₹1,200 crore.

Initially, Shell engaged HSBC to assist in the sale of its entire 1 GW portfolio but has since opted for direct negotiations with various investors. This approach seems to focus on selling smaller modules of its green energy assets, reflecting a strategic shift in asset management.

Sprng Energy, which is entirely owned by Mauritius-based Solenergi Power—a Shell Overseas Investment BV subsidiary—boasts operational renewable energy assets totaling 2.3 GW and has an additional pipeline of 5 GW. Most of the current sale discussions revolve around assets located in Rajasthan and Gujarat. In parallel, Shell is also in talks with ONGC to sell another 125 MW operational portfolio, further emphasizing its ongoing strategy to streamline its renewable energy investments in India.

Sekura Energy currently reports a renewable energy capacity of 813 MW. Notably, last September, it expanded its portfolio by acquiring 350 MW of operational assets from O2 Power related to the Rewa Ultra Mega Solar Park in Madhya Pradesh for an enterprise value of ₹2,000 crore. The previous year, Sekura Energy and Edelweiss Infrastructure Yield Plus also secured a 74% stake in solar assets from the Engie Group in India.

Despite these divestitures, Shell has no immediate plans to exit the renewable energy market in India. Rather, it seeks to partially monetize its assets while leveraging the robust demand for renewable energy in the region. A recent CARE Ratings report highlights that over 65% of Sprng Energy’s operational capacity is locked in long-term power purchase agreements (PPAs) with reputable offtakers, mitigating sales risk and ensuring stable returns.

Additionally, 77% of the operational portfolio has been in service for more than two years, bolstering confidence in the sustainability and profitability of these assets. The PPAs are set for 25 years at fixed tariffs, with notable offtakers like SECI, NTPC Limited, and Gujarat Urja Vikas Nigam Limited accounting for a significant portion of the capacity.

On a broader scale, Shell is reassessing its investments in offshore wind projects globally, evaluating future ventures against stringent profitability criteria. The company has divested several offshore wind projects recently, including stakes in ventures across the U.S., South Korea, and the Philippines.

India’s renewable energy landscape is expanding rapidly; as of October 2024, the total installed capacity surged to 203.18 GW, marking a 13.5% increase over the previous year. According to a Nomura report, the country’s energy transformation is poised to continue, with renewable sources estimated to generate 49% of electricity by 2040, positioning India as a key player in global renewable energy initiatives.

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