In a significant development for India's renewable energy sector, state-owned energy giants NTPC Limited and Oil and Natural Gas Corporation (ONGC) are reportedly considering a joint acquisition of Ayana Renewable Power Private Limited. The planned deal will mark a major step by two of India's largest public sector undertakings into the clean energy domain.

Ayana Renewable Power is co-owned by the National Investment and Infrastructure Fund (NIIF), British International Investment (BII), and EverSource Capital and is a key player in India's renewable energy sector. The company focus is largely on solar and wind energy projects.

ONGC recently emerged as the top bidder for Ayana, outpacing JSW Neo Energy. The company is currently negotiating a share purchase agreement with Ayana's primary shareholders. While ONGC initially led the bid, it is reported that NTPC may join forces with ONGC to consolidate the acquisition. The firms would execute the potential acquisition through their recently formed joint venture company, which is a 50:50 partnership. The partnership's vision extends to solar, wind (both onshore and offshore), and storage solutions, as well as innovative green molecules like hydrogen and ammonia.

However, the deal still can be challenged by JSW, as the bankers are encouraging JSW Neo to enhance the offer, according to an Economic Times report.

Broader Goals and Strategic Importance of the Acquisition

The acquisition of Ayana Renewable Power is viewed as a further step toward India's climate commitments under the Paris Agreement, as well as the nation's target of achieving 500 GW of non-fossil fuel capacity by 2030. If the deal is successful, ONGC and NTPC's green energy venture could become one of the leading companies in India's renewable energy sector.

This transaction, which is likely to be an all-cash deal, represents the growing trend among fossil fuel companies to diversify their operations by including renewable sources. It also highlights the collaborative approach of India's PSUs toward tackling climate challenges while ensuring energy security.

The partnership and the acquisition's anticipated success would also be a strong signal to investors regarding the growth potential in India's renewable energy sector. NTPC and ONGC's collaborative approach could set a precedent for other PSUs looking to balance traditional energy with renewable energy sources, thereby contributing to India's journey toward a sustainable future.