Mumbai: Tata Power Ltd aims to become an energy solutions company, moving away from the narrow definition of a power developer or distributor. It is also looking to acquire stressed thermal power plants instead of building greenfield units or expanding current capacity. In an interview with Mint, Praveer Sinha, managing director and CEO, Tata Power, said it will be asset-light and will focus on meeting its customers’ specific energy needs. Edited excerpts:

We’re seeing a steep fall in electricity demand for the past few months. Why is it so?

Changes in electricity demand are a function of three things—demand because of industrial activity, the consumption spend of individuals, and the state of the distribution sector. With activity in the auto industry falling, we’re seeing demand reduce. The auto industry and its ancillaries account for 50% of our manufacturing GDP. Sales of air conditioners, fans, cooling systems have not gone down to the extent power demand has fallen. In summer, in places like Delhi, we saw the maximum use of home and office cooling systems. The financial capability of power distribution companies (discoms) also affects power demand. If a discom has 100, it will buy power for 100 even if the demand is for 120. If a discom doesn’t have the money required to buy power, it will restrict its purchase.

Distribution reforms have to happen in the state and the Centre has to incentivise this, such as through linking disbursements to the progress of discom reforms. Otherwise, their losses just keep adding up every year and the discom sector will not keep pace with the changes in the power sector.

You bought the stressed Prayagraj plant through your joint venture with Resurgent Power. Are you looking to acquire stressed thermal power plants?

Yes, we are. Our focus on increasing our generating capacity will now only be through this platform. There are coal-based assets that are stressed and we are looking at some of them. These either don’t have PPAs (power purchase agreements) or have only part-PPAs or have incomplete coal linkages. Considering our experience in handling these issues and our ability to operate plants efficiently, we will look at acquisitions. There is huge capacity that is lying unutilized, so it doesn’t make sense to build greenfield plants or do brownfield expansion. We will not build any new coal-based capacity.

Tata Power is the largest integrated power utility. Where are you headed?

We are looking at acquisitions of stressed thermal power plants through platforms. In renewable energy generation, we are all adding capacity, both in utility scale and rooftop solar for industry, commercial and residential. Fortunately this year, we have also done very well with solar pumps. Then solar microgrids (with The Rockefeller Foundation) are something we’ve just started. We’re looking at distribution in a large way, Odisha CESU (Central Electricity Supply Utility of Odisha) will come and that’s fairly big—in five cities and some rural areas. We’re also looking at more opportunities in Odisha and a few more states. Distribution does not require too much capital.

We are also working on EV charging. We already have 100 charging stations in seven cities, but the utilization is less. We’re taking a punt in this. We will expand to 350 by the end of March. We’re looking at home automation, like an IoT (internet of things) platform, so consumers can take advantage of time-of-the-day metering. Apart from that, we have launched the business vertical of ESCO (energy services company). Here we look at industries and commercial establishments for energy conservation, again through an IoT-based platform. The targets for this business are still getting finalized. Tata Power will not just be suppliers of energy but an energy solutions company. The whole business of power is getting digitalized and decentralized and the opportunity is in empowering the consumer. If the consumer wants to decide that they only want to buy renewable power, you can give that sort of choice maybe within the next two years. The customer is becoming king.

In the future, Tata Power will be asset-light and more profitable. We will look at more options where we can reduce our ownership but keep control of our business.

At what stage is the divestment of non-core foreign assets?

This is at item 1 on our plan. These are overseas assets and when we went there, we thought there is great opportunity but we could not grow. So having a single asset in these locations does not make sense. We want to divest and put that money in India where we have the opportunity to grow. They are in different stages. Some of them we have concluded, some are in the process. In the next 12 months, about $1 billion will come in and this will be used to deleverage debt. We intend to reduce the debt-equity ratio to 2 from 2.2 now.

Who will be the foreign partner in the renewables business?

This is something we are constantly examining. It’s too early to say. We have very ambitious targets in renewables. For that, we require money and we are looking at bringing in strategic investors. At the end of the day, we are developers and have the DNA of developers. We have to see what sort of partner will come and what is the value they will bring into the business.

Where does the resolution for the Mundra plant stand now?

Mundra is the elephant in the room (laughs). We are confident to sort it out in this financial year and implement the high-powered committee’s (HPC) recommendations with small changes. In any case, this is a partial solution. The HPC said part of the burden (of higher power costs) will be borne by consumers, part by developers and part by the government. Even then, Mundra will not be profitable. But we will be able to reduce our losses—of 1,000-1,100 crore a year—by half. Over the long term, we hope to at least break even, if not make the plant profitable.

Some states are considering changing their policy for rooftop solar from net metering to net billing to disincentivize consumers. Will it affect your targets?

We need to look at rooftop solar through a much larger frame. Net metering has incentivized consumers in the past. But the total energy that comes through net metering is very small compared to energy that flows through the grid. I feel net metering is a good initiative and state governments should encourage it. It can bring a huge amount of transformation in the way energy can be produced and utilised; it can empower consumers and even lead to peer-to-peer sale of energy.

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