2024-12-02 12:50:32 :
EverSource Capital CEO Dhanpal Jhaveri said it has received equity commitments from the U.S. International Development Finance Corporation (DFC) for its second fund as the company prepares to launch a $1 billion second fund in 2025.
Jhaveri told Mint in an interview that DFC mainly provides debt investments and is expected to bring equity financing to EverSource Capital to establish the new fund. EverSource is a private equity firm focused on renewable energy infrastructure. It is a joint venture between Indian private equity firm Everstone Capital and UK-based Lightsource BP.
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In November, DFC made a $50 million debt investment in Northern Arc’s first climate fund, underscoring its interest in India’s renewable energy infrastructure. In September, DFC Deputy CEO Nisha Biswal highlighted the agency’s partnership with India during a visit to the country.
EverSource raised a $741 million maiden fund in 2022 from investors including the National Investment and Infrastructure Fund and UK International Investment Corporation.
Focus on energy storage
Jhaveri told Mint that with the new fund, it will focus on energy storage as the next big opportunity. He added that it would seek to support businesses dealing with the sector’s pressing challenge, namely grid instability caused by the growing share of solar and wind power.
“Today, about 10% of the grid is renewable. By 2030, it will be about 25%. By 2050, my sense is that 50-70% of the grid will be renewable. When the grid becomes When it comes to renewable energy, volatility increases,” he said. That’s because unlike traditional energy, renewables are variable – because sunlight and wind are intermittent – which poses a challenge to grid stability.
Storage is critical, Jhaveri said, and demand for battery capacity in the coming decades could reach tens or even hundreds of gigawatt hours. “That in itself represents hundreds of billions of dollars in potential investment,” he added.
The fund aims to support companies involved in static battery storage, mobile batteries for electric vehicles, and backup power solutions for commercial buildings and industry, especially in tier-2 and tier-3 cities with frequent loads.
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The electrification of public transport and commercial travel and the decarbonization of industry have also become key investment trends for the new fund, Jhaveri said.
According to Bloomberg, Jhaveri said in May that while India will remain the focus, EverSource also plans to diversify into countries such as Indonesia, the Philippines, Vietnam and Bangladesh.
EverSource’s new fund is expected to receive much of the support from international investors. Jhaveri said Indian investment pools tend to focus on short-term liquid assets such as venture capital and pre-IPO investments.
He told Mint that funds like EverSource require “purpose capital” and “patient capital” that are better suited to sustainable, long-term investing in areas such as renewable energy and climate change. Such capital remains relatively scarce in India, he said.
The Indian government has highlighted its focus on renewable energy in its latest budget.
About the Adani indictment
Separately, Jhaveri said the latest Adani controversy has shone a spotlight on the weakest link in the renewable energy supply chain – the link between the Solar Energy Corporation of India (SECI) and state-owned power distribution companies.
Also read: Why SECI is struggling to find buyers for its renewable energy tenders
“The developer has no role here. If you look at the process, the developer is not involved at all. SECI needs to sign a PSA (Purchase and Sale Agreement) because the developer signs a PPA (Power Purchase Agreement) with SECI, making SECI Become a counterparty,” Jhaveri said.
Jhaveri added that private developers have to take on greenfield risk and use leverage to build renewable energy projects, for which the government and SECI have introduced significant credit enhancements. “This mobilizes access to private debt and equity and enhances the construction capacity of the sector. Otherwise, as in the Five Year Plan, the sector was largely monopolized by public sector utilities, leaving it to the private sector It’s a small space,” he said.
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