Tata Power, one of India’s leading power generation and distribution companies, plans to aggressively participate in the recently announced ‘PM Surya Ghar: Muft Bijli Yojana', which aims to solarise one crore households in the country, the company’s Chief Executive Officer (CEO) Praveer Sinha said in an exclusive interview to Moneycontrol. Besides, the company is also going to start work on two of its maiden pumped storage projects in FY25.
Edited excerpts:
Tata Power declared a consolidated net profit of Rs 1,076.12 crore for the third quarter of FY23-24, registering an on-year growth of 2 percent over the consolidated profit of Rs 1,052.14 crore last year. Take us through the numbers and the reasons for the flat PAT.
First, this is the 17th consecutive quarter where the company’s profit has been higher than last year, same period. Second, the quality of profit has improved tremendously because nearly 70 percent of the profit in this quarter is from our core business, unlike last year, where it was just 40 percent (from the core business). A lot of profit came from our coal mining business in Q3 FY23, which is not there this year. So, I think the quality of profit has improved, and that has come from our existing generation, transmission, distribution, and renewables businesses.
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What this demonstrates is that going forward, there will be huge consistency in profit, and that will help us further enhance it to 80-90 percent in the next few years. This will bring a lot of consistency and improvement to the profit quality going forward.
Does Tata Power see any role for itself in the latest rooftop solar scheme announced by PM Modi, which was also mentioned by the Union finance minister in her budget speech on February 1?
Oh yes! The scheme that has been announced is a big one, and we are waiting for the details. Tata Power is the biggest player in rooftop solar, with an 18 percent market share. We have 500 channel partners in 400 cities. So we'll definitely be going big with this new scheme as a trusted vendor/distributor.
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Also, the timing of the revamped scheme could not have been better for us. The target of installing solar panels in one crore households under the scheme will need DCR (domestic content requirement) solar PV modules. Tata Power, with its new module manufacturing unit, will be in a good position to supply DCR modules for this scheme.
Our 4-GW module plant is already operational, and it will start supplying modules in the current quarter to our large utility-scale and EPC projects where domestic manufacturing of modules is required. The 4 gigawatts (GW) cell manufacturing unit will be operational by Q1 FY25.
With the government’s latest order on reimposing ALMM (Approved List of Models and Manufacturers) from April 1, domestic manufacturing of solar cells and modules will get a big boost.
Tata Power is now building green energy transmission corridors as the company won its first-ever project under the Tariff-Based Competitive Bidding (TBCB) process. Is this another sector where the company plans to aggressively do business?
We were in the transmission business, but we did not do much of it in the past decade. So, now we are focusing on renewable energy transmission projects. We already have two projects — Rajasthan Phase IV Part C (344 ckm), for which we have received the letter of agreement; and Jalpura Khurja Power Transmission Limited (80 ckm), where we are the lowest bidder (declared L1). The capex planned for both together is at least Rs 2,294 crore.
We will be bidding for more such projects, but when we bid, we will do it in such a way that our margins do not get eroded; we are very careful about that. So, we will bid for green energy corridor projects in a very mature and calibrated manner so that we get projects while keeping our margins intact.
We are in touch with a number of states for this. As you are aware, a huge capacity addition to renewable energy is taking place in the country. To evacuate that power, transmission line capacity has to increase both at the intra-state level and the inter-state level.
In January, Tata Power committed investments worth at least Rs 70,000 crore each in Tamil Nadu and Gujarat for renewable energy development. What is the overall capex planned for the RE portfolio in FY25, FY27, and FY30?
Yes, in Gujarat and Tamil Nadu, we said we’ll look at 10 GW of renewable capacity each. This will be over five to seven years. But, until 2027, we have planned a capex of Rs 60,000 crore. If we look purely at renewables, excluding pumped hydro, our capex in FY24 was about Rs 15,000 crore. In FY25, it will be around Rs 20,000 crore, Rs 22,000 crore in FY26, and Rs 23,000 crore in FY27.
The estimated capex by FY30 is still under discussion.
Tata Power has decided that 45 percent of its capex will be spent on renewables between FY24-27.
Is Tata Power going to start work on its maiden pumped storage projects (PSPs) soon?
Yes. Our two upcoming PSPs will support 24x7 renewable power from FY28 onward.
One is the Bhivpuri PSP of 1,000 MW with a capex of Rs 4,700 crore, work for which will start by the third quarter of FY25. Work for the second one — the Shirawata PSP of 1,800 MW with an investment of Rs 7,850 crore — will start by the last quarter of FY25.
While the first is expected to be completed by the end of 2027, the other will be done by 2028.
The cost structure is being finalised as we are still working on various approvals and various studies (are being conducted). It costs approximately Rs 5 crore per megawatt.
What is your outlook on coal prices?
Coal prices have now somewhat stabilised. It has come to a level of around $120 for 6,500 kcal coal. We expect that this is an area where not much of a hike will take place in the coming quarter because there is a good demand-supply match in it.
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