Tata Power plans Rs 60,000 crore capex over next three years

 Tata Power, which is among India's largest integrated power companies, is rapidly scaling up its renewable energy capacity as it transitions from a thermal power generator to a clean energy company over the next couple of decades. Till the financial year 2027, the Tata Group company estimates a capital expenditure of around Rs 60,000 crore and 45 per cent of that will be spent on renewable energy.

"Over the next three years, the capacity add that will happen in the renewable energy space and some of the other businesses, including in transmission and distribution, will require nearly Rs 60,000 crore of capex. This will help us meet future obligations in terms of meeting the capacity adds and also the financial metric that we are talking about," said Praveer Sinha, the CEO and MD of Tata Power.

Tata Power reported a profit of Rs 3,810 crore on revenue of Rs 56,033 crore in the year ended March 2023 and hopes to double the profit and revenue by the year ending March 2027.

The company's current capacity includes 9,281 MW clean energy (including 3,760 MW in pipeline) and 8,860 MW in thermal power generation. It has a solar EPC order book of Rs 18,700 crore.

In August this year, the company signed a memorandum of understanding with the Maharashtra government for the development of 2,800 MW pumped hydro storage projects. One project of 1,000 MW will be in Bhivpuri near Mumbai and another 1,800 MW will be in Pune district's Shirawta. The total investments for these projects is estimated to be around Rs 13,000 crore.

Additionally, the company sees a potential development of 9 GW pumped hydro power capacity at its other locations.

In conventional hydro projects, water from the reservoir flows into the power generation turbine and is then released into the river downstream. In a pumped hydro storage project, the water that flows from an upper reservoir into the turbine is then stored in a lower reservoir. This can be pumped back into the upper reservoir and reused. This is cost-effective too.

"Today, if you need 24x7 renewable power, the options are a mix of solar, wind and battery storage. Battery storage is about Rs 10-11 per unit. Pumped hydro will be much lower than that. Moreover, battery storage is only for a 10-year life. This will be for 40-50 years, so your weighted average cost of pump hydro will be much lower. The blended cost that you will give to the consumer, hypothetically, can be lower," said Sinha.

Tata Power hopes to start work on both the pump hydro storage plants by the middle of next year. The Bhivpuri plant is expected to be ready by the end of 2027 and the Shirawta plant will be ready by the end of 2028.

The company has already announced plans to transition completely into a clean energy company by 2045 and these investments the company is making are steps in those direction. In 2015, as much as 84 per cent of power generation was coal-based. Last year, that came down to 62 per cent, with clean energy accounting for 38 per cent. By 2030, Tata Power hopes clean energy will contribute 70 per cent of its power generation. It will phase out coal-based power generation completely by 2045 as the power purchase agreements for its thermal plants expire.