?We are looking at coal assets in Indonesia and Africa?

Tata power, a top power producer in the private sector, has drawn up an aggressive programme of capacity addition in generation, especially in the renewable space. The company is looking for opportunities both in India and overseas to pursue its capacity addition targets. Further, the private player is also scouting for opportunities to produce electricity from bio-mass and increase its profile in distributed power generation. In an interview, Tata Power managing director Anil Sardana discusses his company?s business plans with FE?s Noor Mohammad. Excerpts:

What is your capacity addition programme for renewable power during the 12th Plan? Does the company have a vision of the share of renewables (excluding hydro and nuclear energy projects) in its power mix?

Tata Power is India?s largest integrated power company with an installed generation capacity of 5300 MW and a presence in all areas of the power value chain (generation?conventional and non-conventional?transmission, distribution, trading, and fuel & logistics). Tata Power has a strong renewable portfolio comprising 25% of generation from clean energy sources, and we intend to continue to have 20-25% of our generation portfolio from ?clean power sources?, such as hydro, solar, wind, and geothermal. We expect to have 300 MW solar-based capacity over the next four-five years. We also aim to add about 100 MW of wind capacity every year till 2017. We are developing a 240 MW geothermal project in Indonesia with consortium partners and 115 MW of hydro project in Dagacchu Bhutan and 240 MW Dugar project in Himachal Pradesh.

We have recently commissioned a 25 MW solar photovoltaic (PV) power project at Mithapur, Gujarat, and a 3 MW project at Mulshi, Maharashtra. Our subsidiary Tata Power Delhi Distribution Ltd has also commissioned a 1 MW grid-connected rooftop solar plant in Delhi. Tata Power has partnered with Sunengy, Australia, to build the first floating solar plant in India by the end of FY13.

The company has initiated the process of identifying opportunities and developing DG models. Distributed generation (DG) projects based on biomass as fuel are also being explored. Also, cost reductions of gasifier-based projects are being explored to make small size-based DG plants feasible based on the feed-in-tariff.

Further, the company is also in the process of evaluating different business models for distributed power generation and supply to rural areas. Tata Power has joined hands with different national institutes like the Indian Institute of Technology and Mumbai University of Chemical Technology in developing pilot and demonstration projects in the renewable space.

What is the implementation status of your hydropower projects (of 25 MW and above)?

The company has an installed hydro capacity of 447 MW in Maharashtra. Tata Power and Norway-based SN Power entered into an exclusive partnership to develop hydropower projects in India and Nepal. This consortium has bagged the ?240 MW Dugar Hydro Electric Project? in Chenab Valley in Himachal Pradesh. Its route survey, geological mapping and contour mapping of the site are done. Currently, the project is being optimised for 500 MW.

Tata Power also has a joint venture with the Royal Government of Bhutan under which it is implementing 114 MW of the Dagachhu Hydro Project with Druk Green Power Company. All efforts are being made to commission the unit by 2013. The company is also looking at other opportunities to bid in the near future.

What is Tata Power?s capacity addition programme for the 12th Five-Year Plan?

Tata Power?s strategic intent is to be a 26,000 MW company with 50 million tonnes per annum of energy resources by 2020. Tata Power is exploring increasingly weightier ambitions to fuel its multi-fold growth across the power value chain.

What is Tata Power?s strategy to secure fuel supplies for its power plants, given the stagnation in domestic production and volatility in the global market?

Most of our domestic coal-based plants under implementation have secured coal linkages. For our imported coal-based plants we are looking at coal assets in Indonesia and Africa.

What is the loss per unit of electricity generation at the Mundra UMPP? What are you doing to soften the impact of high fuel prices on the plant?s bottom-line?

As you know, the issue of the cost of imported coal is not related specifically to Mundra but all imported coal-based projects that are being developed. Please note that CERC had predicted a 3.46% annual increase in coal cost, as a trend, but the increase has been more than 130% against what would have been 17% as per CERC guidelines for the intervening period.

While it is not important to share the fuel price details, we would like to emphasise that Tata Power had contracted coal from Indonesia on terms which mirrored the bid tariff. However, since the Indonesian government has changed the export norms for coal, Tata Power cannot get imported coal at the contracted terms. We are in talks with procurers and the central government for the resolution of this issue.

The company has commenced trials of blending low grade imported coal. Initial reports have been encouraging and suggest that 50% blending is possible.

How hopeful are you about the sector at the state level? What do you think can be done to encourage states on the reforms path?

Power sector reforms are critical for providing the impetus to economic growth. The way forward for the power sector is to accelerate distribution reforms as this would have a direct impact on the sector?s commercial viability and would ultimately benefit the consumers and generators. The distribution franchisee model is a good route to bring private investments into the distribution business. The sector has been plagued by high distribution losses (as high as 35-40%) and low billing recovery, which has resulted in poor the financial health of utilities.

We believe at least 25% financial savings can be accrued by reducing distribution losses. This can partly offset the increase in fuel and energy costs. Reduction of transmission and distribution (T&D) losses should be attempted through metering, feeder separation, introduction of HVDS, metering of distribution transformers and strict anti-theft measures. Distribution PPP/franchising and ESCO-based structures should be considered for efficiency improvement. Unbundling has to be done on priority and open access to transmission strengthened. A nominal tariff increase will also be a significant step. Alternate models of distribution, particularly decentralised generation using renewable energy sources, could be effectively used to address the needs of the country?s rural and semi-rural communities.

Do you have plans to bid for more UMPPs?

Yes, we will be bidding for more UMPPs based on captive coal when they are offered for bidding.