While coal-based thermal power continues to be the mainstay of the country’s power generation, the share of renewable energy in the generation mix of power companies is rising rapidly. These include leading companies in the sector like Tata Power, JSW Energy and NTPC.
With the government targetting to reach 500GW renewable energy capacity by 2030 , power companies also moving in that direction, analysts said.
For instance, Tata Power’s share of renewable energy in its generation mix stood at 37% in FY23 which it aims to increase to 60% over the next five years, said the company’s managing director and chief executive Dr Praveer Sinha in the latest annual report. The current share of renewable energy is estimated to be about 40%.
“In FY23, we earmarked a capex of over Rs 7,000 crore in FY23 across generation, transmission and distribution with major allocation towards augmenting renewable capacity. For FY24, we are looking at a capex of over Rs 12,000 crore, to be funded primarily from internal accruals,” Sinha said.
He said the company has expanded our renewables business significantly across EPC, utility-scale, group captive and rooftop, solidifying our leadership further. It had an order book in excess of Rs 17,000 crore in the EPC business in FY23. Its solar rooftop and group captive business delivered multi-fold growth, having a combined order book in excess of Rs 1,900 crore.
“We believe that the Rs 4,000 crore capital infusion into our renewables business by the external investors – BlackRock and Mubadala will fuel the next level of growth,” he said.
He said greenfield 4 GW manufacturing facility for cells and modules is on track and would get operational in FY24.
With latest additions, the total renewables capacity of Tata Power Renewable Energy, the RE arm of Tata Power reaches 7.9 GW including 3.7 GW projects under various stages of implementation, and its operational capacity is 4.1 GW MW, which includes 3.1 GW solar and 1 GW wind, the company said recently.
JSW Energy, which started predominately as a thermal power producer, and over the past few years has also built a sizeable RE portfolio. The company currently has a total operational installed capacity of 6.7 GW of which 3.2GW is thermal (48%) and the balance capacity is renewable (52%), said Pritesh Vinay, director-finance, JSW Energy.
Additionally, it has another 3.1 GW of projects under construction (of which 700 MW is thermal and the balance 2.4 GW is RE), all of which will progressively complete, in phases, by next year ie. FY2025. Upon completion of all these projects, which will take its operational capacity to ~ 10GW, about 39% will be thermal and 61% will be RE, Vinay said.
“By 2030, we will enhance our total capacity to 20 GW. Of this incremental growth post-2025 – the incremental capacity will be largely RE-led. So the share of RE mix in our total capacity mix will progressively increase from 61% to higher levels,” he added.
Even NTPC is focusing on renewable energy in a big way.
“NTPC group has a strong commitment towards renewable energy. We have already commissioned 3314 MW of RE projects. Presently, 7258 MW of RE projects are under construction,” said Jaikumar Srinivasan, director-finance at NTPC at the company s recent analyst call.
The company has secured tenders and bilateral tie-ups for another 10 GW of renewable capacity, creating a visible pipeline of more than 20 GW in the near term, Srinivsan said. It company is also working on unlocking the value in the RE arm through IPO or stake sale.
“We will be working on that (IPO or stake sale) and by year and a half or two years there should be a substantial capacity on ground, but when we reach a certain critical mass, we will time it. So, right now we are working towards that, but we will be exploring the market, looking at the conditions and deciding on the timing,” he said
Analysts said the companies are working on RE due to government policies and overall demand for it. “Since the country has taken a pledge to become carbon neutral by 2070 and giving a huge push on renewables , power companies are also moving in that direction, “ said an analyst who did not want to be quoted.
The analyst said even power distribution companies are now become technology agnostic and require round the clock power.” Given the surge in power demand experienced by the country in the last couple of months, the rise of RE would help meet power requirements,” he said.