Tata Power plans to forego thermal power capacity expansion in favour of renewable sources, according to a report. The company’s plan till 2025 is for 70% of capacity expansion to come from renewable energy, and the remaining 30% from the acquisition of coal plants rather than building new capacity.
“The company’s plan, ‘Strategic Intent 2025’, calls for up to 70% of new capacity additions to come from solar, wind and hydro through to 2025,” a report by the Institute for Energy Economics and Financial Analysis said.
Ongoing shift
“By then, Tata Power’s power capacity composition will have significantly transitioned, mirroring the transition encapsulated in the Government of India’s National Electricity Plan (NEP 2018).” The plan for 2025 comes on top of an ongoing shift in the company’s strategy towards renewable energy.
Since the end of financial year 2012-13, 87% of all net power capacity additions have come from solar and wind installations, with most of the rest made up of hydro power additions (11%), the report said.
“As it stands, Tata Power’s generation capacity is dominated by thermal [mostly coal-fired] power — majority of which is financially unviable,” the report said. “In addition, it now has a significant renewable energy capacity that has been acquired or commissioned in recent years.”
More than 46% of Tata Power’s 7,715 MW thermal power generation comes from the Mundra plant in Gujarat, run by its subsidiary Coastal Gujarat Power Ltd. (CGPL).
The plant is fuelled by imported coal and due to higher-than-expected prices for imported coal, incurred significant continuous yearly financial losses.
By the end of financial year 2017-18, CGPL had incurred total losses in excess of $1.2 billion, and had a further loss of $191 mn over the first three quarters of financial year 2018-19, the report said. The unviability of thermal power and the increasing affordability of renewable energy are two major driving points for Tata Power’s shift towards renewables.
“Although Tata Power is intending to add some thermal capacity during the period to 2025, it is intending to do this via acquisition of existing plants at firesale prices rather than constructing new ones,” the report said.
“According to its ‘Strategic Intent’, Tata Power will invest in up to 11 GW of renewables and hydro up to 2025, and it has been indicated by CEO Praveer Sinha that the bulk of this will be in solar.”
