Rooftop solar subsidy scheme a billion dollar opportunity for Tata Power

  • Tata Power will be relying on its network of over 500 channel partners across 450 cities for the sale of its rooftop solar units

Nehal Chaliawala
First Published12 May 2024, 07:26 PM IST
Tata Power, which holds 13% of the domestic solar module market, is looking to ramp up its share to 20% on the back of its new solar cell and module manufacturing unit in Tamil Nadu. (Photo: Mint)
Tata Power, which holds 13% of the domestic solar module market, is looking to ramp up its share to 20% on the back of its new solar cell and module manufacturing unit in Tamil Nadu. (Photo: Mint)

The central government’s rooftop solar subsidy scheme for households could present a $1 billion-plus business opportunity for Tata Power, the company’s managing director Praveer Sinha said. The opportunity will play out over the coming three years, as the company looks to corner a fifth of the domestic market for solar modules, Sinha added.

“One place where we will have lot of momentum is the new program of Prime Minister Surya Ghar, where the target is about 1 crore homes,” Sinha said in an interview. “That's a huge upside that will come to us.”

The PM Surya Ghar Muft Bijli Yojana, established this February, looks to provide subsidies for rooftop solar installation to 10 million households. Sinha reckons the scheme could generate demand for 25-30 GW of solar modules over its duration. Tata Power wants to cater to 5-6 GW of this demand, he said.

At an estimated price of 20 cents per watt, according to Sinha, this could translate to a business opportunity of $1-1.2 billion ( 8,350-10,000 crore).

Sinha, who says Tata Power holds 13% of the domestic solar module market, wants to ramp up its share to 20% on the back of its new solar cell and module manufacturing unit in Tamil Nadu. Set up at an investment of 3,000 crore, the Tirunelveli-based unit can manufacture 4 GW of solar cells and modules each year.

Impact of the new manufacturing plant

“The manufacturing plant will be fully operational this year. The module (manufacturing unit) will be fully operational (throughout the year) while the cell will be operational for, say, about 9 months,” Sinha said. 

The new manufacturing unit will also give the company an advantage in the rooftop solar scheme, as the scheme mandates the use of domestically manufactured solar cells and modules.

“Since we have put up the plant, we will be at a huge advantage, because we will be able to use our own domestic cell and module for this scheme,” he said. “There is just one other domestic manufacturer with a 2 GW domestic cell manufacturing capacity and another one with 2 GW is coming up.”

Also read: Govt to act against solar power developers flouting local sourcing norms

ReNew Power has a 2 GW solar cell manufacturing unit in Gujarat and an Adani Enterprises unit is setting up another 2 GW plant in the state.

After Tata Power's new plant goes live, the company's total installed solar module capacity would be 4.9 GW including 600 MW annual capacity at its Bengaluru plant. The company also executes EPC (engineering, procurement and construction) projects for solar power through its subsidiary Tata Power Solar.

Tata Power will be relying on its network of over 500 channel partners across 450 cities for the sale of its rooftop solar units, Sinha said. The company is looking to double its network to 1,000 channel partners this year, he added.

Tata Power shares have nearly doubled over the past year to close at 414.75 on the BSE on Friday. The scrip has lost nearly 10% in the last five trading sessions after the company’s Q4 profit missed street estimates. The power major reported a 15% year-on-year growth in profit at 895 crore.

A solar cell is a photovoltaic unit containing semiconducting materials that convert sunlight into electrical energy. These cells are connected in chains to form larger units known as modules.

Details of the PM Surya scheme

Under the PM Surya Ghar Muft Bijlee Yojana, the Centre is looking to provide subsidies to households of 60% of the solar unit cost for systems up to 2 kW capacity and 40% of additional system cost for systems of 2-3 kW capacity.

Also read: US DFC approves up to $425 million for Tata Power solar-cell and module plant

At current benchmark prices, this will mean 30,000 subsidy for 1 kW systems, 60,000 for 2 kW systems and 78,000 for 3 kW systems or higher, as per a government statement earlier.

The scheme was approved by the Union Cabinet on 29 February and has a budget of 75,021 crore.

 

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First Published:12 May 2024, 07:26 PM IST
HomeCompaniesNewsRooftop solar subsidy scheme a billion dollar opportunity for Tata Power

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