Tata Power will be a leading supplier for PM Rooftop Solar Scheme: CEO Praveer Sinha

Tata Power, one of India’s leading power generation and distribution companies, plans to aggressively participate in the recently announced ‘PM Surya Ghar: Free Power Scheme’, which aims to electrify one crore households in the country with solar energy. To illuminate, said the company’s Chief Executive Officer (CEO). Praveer Sinha Said in an exclusive interview given to Moneycontrol. Additionally, the company is also going to start work on its first two 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 FY 2023-24, registering an annual growth of 2 per cent from the previous year’s consolidated profit of Rs 1,052.14 crore. Tell us about the numbers and the reasons for flat PAT.

First of all, it is 17th consecutive quarter Where the company’s profit has been higher than the same period last year. Second, the quality of profit has improved tremendously as almost 70 per cent of profit this quarter is from our core business, unlike last year, where it was only 40 per cent (from the core business). There was a lot of profit from our coal mining business in Q3 FY23, which is not there this year. So, I think the quality of profits has improved, and that has come from our existing generation, transmission, distribution and renewables businesses.

Also read: Agreement on Mundra power plant expected before June end: Tata Power CEO

This shows that there will be great stability in profits going forward and this will help us increase it by 80-90 per cent in the next few years. This will lead to considerable stability and improvement in the quality of profits 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 his budget speech on February 1?

Oh yes! The plan that has been announced is huge, and we are waiting for the details. Tata Power is the largest player in rooftop solar with 18 percent market share. We have 500 channel partners in 400 cities. So we will definitely go ahead with this new scheme as a trusted seller/distributor.

Also read: Modi renames rooftop solar power scheme as ‘PM Surya Ghar: Free power scheme’ with investment of Rs 75,000 crore

Additionally, the timing of the revised plan could not have been better for us. The target of installing solar panels in one crore homes under the scheme will require DCR (domestic content requirement) solar PV modules. Tata Power, with its new module manufacturing unit, will be well positioned 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. 4 gigawatt (GW) cell manufacturing unit to be operational by Q1 FY25.

With the government’s latest order to reintroduce 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 has won its first project under the Tariff-Based Competitive Bidding (TBCB) process. Is this another area where the company plans to do business aggressively?

We were in the transmission business, but we did not do much in it in the last decade. Therefore, we are now focusing on renewable energy transmission projects. We already have two projects – Rajasthan Phase IV Part C (344 CKM), for which we have received the MoU; and Jalpura Khurja Power Transmission Limited (80 CKM), where we are the lowest bidder (declared L1). The planned capital expenditure for both is at least Rs 2,294 crore.

We will bid for more such projects, but when we bid, we will do it in a way that our margins do not come down; We are very careful about this. Therefore, we will bid for green energy corridor projects in a very mature and calibrated manner so that we get projects while maintaining our margins.

For this we are in touch with many states. As you know, there is huge capacity addition in renewable energy in the country. To free up that power, transmission line capacity will have to be increased both within and across states.

In January, Tata Power committed to invest at least Rs 70,000 crore each in Tamil Nadu and Gujarat for renewable energy development. What is the total capex plan for the RE portfolio in FY25, FY27 and FY30?

Yes, in Gujarat and Tamil Nadu, we said we will consider 10 GW of renewable capacity each. This will take more than five to seven years. But, by 2027 we have planned a capital expenditure of Rs 60,000 crore. If we look at renewable energy as a whole, excluding pumped hydro, our capex in FY24 was around Rs 15,000 crore. In FY25, it will be around Rs 20,000 crore, in FY26 Rs 22,000 crore and in FY27 Rs 23,000 crore.

The estimated capital expenditure till FY30 is still under discussion.

Tata Power has decided that 45 per cent of its capital expenditure between FY24-27 will be spent on renewable energy.

Is Tata Power going to start work on its first Pumped Storage Projects (PSP) soon?

Yes. Our two upcoming PSPs will support 24×7 renewable energy from FY28.

One is the 1,000 MW Bhivpuri PSP with a capital expenditure of Rs 4,700 crore, work for which will start by Q3FY25. Work for the second – 1,800 MW Shiravat PSP with an investment of Rs 7,850 crore – will begin by the last quarter of FY2015.

While the first is expected to be completed by the end of 2027, the second will be completed by 2028.

The cost structure is being finalized as we are still working on various approvals and various studies (are being conducted). Its cost is approximately Rs 5 crore per MW.

What is your view on coal prices?

Coal prices have now stabilized to some extent. It has come down to around $120 for 6,500 kilocalories of coal. We expect this to be an area where there will not be much growth in the coming quarter as there is a good supply-demand mix.