Tata Power, the country\u2019s largest private integrated power producer, is likely to cease building new coal-based generation projects, shifting gears to renewable power sources, a study showed.<\/p>\n
A report by the US-based Institute for Energy Economics & Financial Analysis (IEEFA) titled \u2018Tata Power: Renewables to Power Growth\u2019 spells out the company\u2019s long-term strategy that will see renewable energy dominate its power capacity build-out going forward. <\/p>\n
Presently, thermal power accounts for around 70 per cent of Tata Power\u2019s portfolio. But the current energy mix is part of the company\u2019s long-term legacy before 2013 when renewable energy was pricier compared with competitive coal-fired power.<\/p>\n
\u201cThe company\u2019s plan, \u2018Strategic Intent 2025\u2019 calls for up to 70 per cent of new capacity additions to come from solar, wind and hydro through to 2025. This represents a significant departure from the accepted wisdom of just a few years ago that a major expansion of coal-fired power would be required to serve India\u2019s growing electricity demand\u201d, said Simon Nicholas, energy finance analyst at IEEFA.<\/p>\n
Tata Power\u2019s debt laden and stranded power asset at Mundra (Gujarat) is viewed as the trigger for the company to abjure fresh coal-fired capacities.<\/p>\n
\u201cThe Mundra plant is making consistent, significant losses that are dragging back the company\u2019s overall financial performance. Tata Power\u2019s experience at Mundra has helped convince the company to turn away from new coal-fired power\u201d, Nicolas said.<\/p>\n
Tata Power had not responded to Business Standard\u2019s questions sent by mail till the time this report was filed.<\/p>\n
Majority of Tata Power\u2019s thermal capacity is now centred on its 4150 Mw Mundra coal-fired power plant – one of the biggest power plants in India – which experienced losses reaching $191 million for the first three-quarters of FY 2019.<\/p>\n
Losses have accumulated due to higher than expected costs of sourcing imported coal. Though a bailout of the plant is in the works, it will enhance the tariff burden and realise a debt write-down for the creditors. The IEEFA report quoting an estimate by Tata Power\u2019s chief executive officer says the bailout will only halve the losses at Mundra.<\/p>\n
Since 2012-13, net thermal capacity addition by Tata Power is only 68 Mw, factoring in the decommissioning of vintage power units. Over the comparable period, the company added solar and wind power capacities in upwards of 2000 Mw. Tata Power acquired Welspun Energy\u2019s renewable portfolio of over 1 GW in 2016. In total, non-thermal power additions consist of 97 per cent of all additions over this period.<\/p>\n
Offering an antithesis to the company\u2019s loss making thermal generation business, Tata Power\u2019s renewables operations recorded earnings before interest, depreciation and amortisation (EBITDA) of $249 million in 2017-18, an EBITDA (earnings before interest, taxes, depreciation & amortisation) margin of 89 per cent and representing 13.9 per cent of assets deployed.<\/p>\n
Tim Buckley, IEEFA\u2019s director of energy finance studies notes that Tata Power\u2019s shift mirrors the transition underway within the Indian power sector as a whole, driven by least cost renewable energy.<\/p>\n
\u201cPeak coal-fired power capacity in India is on the horizon, and growing electricity demand will be served by current coal power capacity and rapidly growing renewable energy capacity. Tata Power encapsulates this rapid transition\u2019, Buckley added.<\/p>\n
According to the IEEFA report, the company\u2019s refocusing into clean power technology can be explained by the significant cost reductions of renewable energy technology in India and the financial stress within the India thermal power sector in recent years.<\/p>\n","protected":false},"excerpt":{"rendered":"
Tata Power, the country\u2019s largest private integrated power producer, is likely to cease building new coal-based generation projects, shifting gears to renewable power sources, a study showed. A report by the US-based Institute for Energy Economics & Financial Analysis (IEEFA) titled \u2018Tata Power: Renewables to Power Growth\u2019 spells out the company\u2019s long-term strategy that will see renewable energy dominate its power capacity build-out going forward. Presently, thermal power accounts for around 70 per cent of Tata Power\u2019s portfolio. But the current energy mix is part of the company\u2019s long-term legacy before 2013 when renewable energy was pricier compared with competitive […]<\/p>\n","protected":false},"author":39,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[132],"tags":[],"class_list":["post-270793","post","type-post","status-publish","format-standard","hentry","category-power"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/270793","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=270793"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/270793\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=270793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=270793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=270793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}