Greenko, AES Corp in fray to buy Massachusetts-based NEC Energy Solutions

New Delhi: Greenko Energy Holdings and US’ AES Corporation have emerged as the front runners to acquire Massachusetts-headquartered NEC Energy Solutions, in a deal potentially valued at around $300 million, said two people aware of the development.

Hyderabad-based Greenko’s interest in Japan’s NEC Corp-owned firm that holds the intellectual property rights for megawatt-scale lithium-ion batteries comes in the backdrop of Greeko investing in Silicon Valley-based Keracel, which makes solid state batteries with 3D printing technology.

Sovereign funds GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority (ADIA)-backed Greenko has been preparing to pivot towards battery storage. Mint reported on 13 September about Greenko’ plan to invest around $1 billion in a new battery storage business that also includes a plan to produce lithium-ion batteries in India for power grid-scale applications and electric vehicles (EVs).

An NEC Corporation spokesperson in an emailed response said, “I’m afraid we are not able to comment on market speculation on potential agreements.”

Queries emailed to the spokespersons of Greenko, AES Corp. and Keracel on Wednesday afternoon remained unanswered.

The Economic Times newspaper had earlier reported about Greenko looking to buy out NEC’ US battery unit.

“The due diligence on NEC Energy Solutions is taking place. AES and Greenko are the ones left in the race to acquire it, with the deal having an enterprise value of around $300 million. It shall be announced shortly,” said a person aware of the development cited above requesting anonymity.

The fresh capital for renewables 3.0 investment will be deployed by Greenko to acquire and develop lithium-ion battery technology, and for its manufacturing and application playbook. This comes against the backdrop of the single-largest foreign clean energy investment announcement in India made by Japan’s ORIX Corp. for $980 million in Greenko for a 17% stake.

“The Keracel investment was made to accelerate cost reduction and faster localisation of battery production for the EV market,” the person cited above added.

There is a growing interest in India’s battery storage manufacturing plans with the National Democratic Alliance (NDA) government readying a 18,000-crore production-linked incentive package for battery storage manufacturing. India also plans to issue tenders for setting up Tesla-style gigafactories for cell and battery manufacturing, Mint reported earlier.

Indian Oil Corporation Ltd (IOC), the country’s largest fuel retailer and refiner is also actively scouting the space, given India’s ambitious clean energy targets and the intermittent nature of electricity from clean energy sources. In such a situation, large grid-scale battery storages can help maintain spinning reserves to support round-the-clock demand for electricity. Also, there is a growing demand for EVs.

“With electric mobility gaining traction from a sustainability perspective, your company is focussing on value creation through collaborations in the EV space,” said Indian Oil chairman, S.M. Vaidya in his message to the state-run firm’s annual general meeting on Monday.

“We are also evaluating different advanced battery technologies and intend to set up a metal-air battery-manufacturing facility for EVs as well as for stationary applications,” Vaidya added.

The lithium-ion cell manufacturing value chain comprising of processing of raw materials and manufacturing of separators, cathodes, electrolytes, anodes, cells, and battery storage packs is dominated by China. Also, India does not have enough lithium reserves, with Chinese state firms have procured lithium mine concessions in Bolivia, Argentina and Chile.

India on its part plans to impose tariffs on imports of lithium-ion cells for as long as a decade and offer incentives to manufacturers such as 100% tax deduction on capital expenditure in the first year of operation under Section 35 AD, concessional financing options by giving companies deemed infrastructure status and waiver of minimum alternative tax.

“It’s a business to evolve and grow,” said the person cited above.

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