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Tata Power's Ambitious Vision : Adding 2.5 GW of Renewable Energy Capacity Annually

The strategic focus on solar, wind, and pumped hydro energy sources, along with a keen focus on margin improvement, sets Tata Power onto a path to not only meet their internal requirements but also contribute significantly to India's clean energy objectives.

August 19, 2023. By Nivedita Ojha

Tata Power has set an ambitious target to add 2.5 GW of renewable power capacity annually. The company's CEO and Managing Director, Praveer Sinha, expressed confidence in the nation’s potential for substantial growth in renewable energy, during its latest investors call submitted to the Bombay Stock Exchange (BSE).
The conglomerate is strategically combining three renewable sources: solar, wind, and pumped hydro. Sinha explained that the company's approach to solar pumps is cautious due to delayed orders under the KUSUM program and historically low margins. They are awaiting revised KUSUM guidelines before the full-scale implementation. In contrast, the rooftop business has thrived, with improved margins and a substantial order backlog.
Tata Power is also focusing on enhancing margins in its EPC (Engineering, Procurement, and Construction) projects. While they anticipate benefits from lower cell and module prices in the coming quarters, the real improvements are expected in subsequent quarters.
The recent policy amendments in group captive and open access have opened up new opportunities for Tata Power. They plan to provide 100% renewable energy to various Tata Group ventures, including electronics, battery, semiconductor, and EV plants, as well as other group captive customers.
Highlighting the penetration of solar energy in rural India, Sinha mentioned the PM KUSUM program’s tangible impact. States like Maharashtra are planning to install 7,000 MW of solar generation in rural areas, supplying power to local consumers and for pumping purposes.
Discussing the timeline for renewable capacity addition, Sinha pointed out that projects awarded in FY24 and FY25 will primarily be those bid out in the previous years. He anticipates the full execution of these projects, as the Ministry of New and Renewable Energy (MNRE) has extended project deadlines.
Tata Power, known for its substantial presence in the solar and wind energy sectors, is now venturing into pumped hydro storage. This move will enable them to offer comprehensive renewable energy solutions with storage capabilities.
Regarding the strategy for renewable capacity addition, Tata Power plans to add around 2 GW to 2.5 GW of capacity annually. They prioritize meeting their internal requirements, primarily through group captive and utility-scale projects. Third-party opportunities will be pursued based on margin and return considerations, as stated during the investors call.
Additionally, Tata Power is expanding into electric vehicle (EV) charging infrastructure. They offer home chargers, bus chargers, and public chargers. While home and bus chargers provide guaranteed returns, the revenue from public chargers is fundamentally usage-dependent.
Tata Power's commitment to adding significant renewable energy capacity annually, coupled with their strategic focus on storage and EV charging infrastructure, positions them as a key player in India's transition to a sustainable energy future. With a meticulous approach to project selection and a strong emphasis on margin improvement, Tata Power is set to play a pivotal role in India's renewable energy landscape.
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