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Shell takes 49 per cent stake in S'pore solar energy developer

The Business Times by NG REN JYE

Singapore

ROYAL Dutch Shell has taken a 49 per cent stake in Cleantech Solar, a Singapore-based developer of solar energy systems, with the possibility to increase its position after 2021.

The sum was undisclosed, but in September 2018, Cleantech Solar had received a US$50 million equity investment from climate-focused investment manager Climate Fund Managers (CFM).

The latest deal is expected to close in January 2019 and gives Shell access to an established commercial and industrial platform in South-east Asia and India.

Mark Gainsborough, executive vice-president of Shell's New Energies division, shared the rationale for the deal, stating that it is a much quicker process than Shell starting from scratch. He said: "They've been going at this for four years, so we can buy into their experience and skillset."

In the past four years, Cleantech Solar has signed over 120 contracts with local and multinational corporations in the region. Its solar plants represent over 200 megawatts of projects, with the majority being in operation, and the rest under construction and development.

The solar photovoltaic (PV) system developer's primary market is in India. According to renewable energy consultancy Bridge To India, Cleantech Solar has a 20.2 per cent market share in the country.

Cleantech Solar also operates in numerous South-east Asian countries such as Cambodia, Indonesia and Vietnam.

Mr Gainsborough said that the solar company's business model centres around commercial and industrial customers, and it doesn't rely on government subsidies or voluntary procurement.

He added: "Cleantech Solar can offer renewables to commercial customers and give them a better deal than they're getting from their existing supplier.

"For us, that's a very successful model, and one we think has a lot of potential in this part of the world as corporate customers seek to decarbonise their operations."

Cleantech Solar chairman and founder Raju Shukla said: "I'm very excited by what this agreement with Shell means for our company's mission. From the day Cleantech Solar was founded, we wanted it to become the most trusted provider of solar power for the leading corporations of Asia.

"This partnership with Shell, a global energy company, brings their resources and capabilities as they build a global renewable power business and it gives us a tremendous boost in our home region."

Since the establishment of its New Energies division in 2016, Shell has increased its efforts in new energies within Asia as part of a global strategy to shift new energies from "emerging opportunities" to becoming a driver of growth by 2020.

In 2017, it had also invested in Sunseap, another Singapore solar developer. While Sunseap and Cleantech Solar have their similarities, Mr Gainsborough sees them as complementary. He said the markets that Sunseap targets are slightly different to the ones that Cleantech Solar have typically been in.

In all, Shell looks to invest US$1-2 billion a year in new energies globally, out of its total annual investment budget of US$25 billion.

Separate from renewables, Mr Gainsborough said Shell is also looking at the potential of liquefied natural gas in shipping in Singapore. The energy giant is in discussions with PSA Singapore about bunkering facilities and sees Singapore as a possible lead location.