Hero Future Energies, the renewable energy arm of Hero Group, has ambitious plans to expand its renewable energy capacity by 2.5 gigawatts (GW) annually, contingent on sector opportunities. The company currently operates 1.8 GW across solar, wind, and hybrid projects and has secured bids to develop an additional 2.6 GW, according to global Chief Executive Officer Srivatsan Iyer.
Considering that each GW of capacity requires approximately $1 billion in capital expenditure, Hero Future Energies would need to invest around $2.6 billion annually to meet its expansion goals. These projects will be financed through a combination of equity and debt, with typical debt-to-equity ratios ranging from 70:30 to 80:20, Iyer explained.
“We will focus on tenders from central government agencies such as SJVN, NHPC, NTPC, and others,” Iyer stated, highlighting the company’s strategic alignment with government initiatives to boost renewable energy capacity.
India added a record 18.48 GW of renewable energy capacity in FY24, a 21% increase from the 15.27 GW added in FY23, according to the Ministry of New & Renewable Energy. To meet the target of 500 GW of renewable energy by 2030, experts indicate that the country needs to add at least 50 GW annually over the next six years.
Currently, two-thirds of Hero Future Energies’ capacity is solar, with the remainder being wind. However, Iyer noted that future expansions will see a more balanced mix of solar and wind due to the wind components included in each tender.
In addition to its domestic projects, Hero Future Energies also has operations in Ukraine, the UK, and Bangladesh. Over the next five years, the company aims to enhance its equity valuation fivefold through the development of new value-added and technologically complex projects. “We are doing a business of $190-200 million every year,” Iyer said.
Despite previous reports suggesting a potential initial public offering (IPO), Iyer clarified that while an IPO is a possible avenue for raising equity, the company’s immediate focus is on securing and executing project bids. “We finished raising almost $450 million from KKR and the Hero Group a year and a half ago. Our short-term focus is on bidding for and executing projects,” he emphasized.
Regarding the future of thermal power, Iyer stated that the government aspires to have half of the country’s power requirements met by renewable energy by 2030. “By 2030, renewable energy will be available 24×7 through solar, wind, or battery storage. Thermal will be obsolete, with no need to set up any new plants,” he predicted.
Hero Future Energies’ aggressive expansion plans and strategic alignment with government policies underscore its commitment to driving India’s transition to a sustainable energy future.
