JSW Energy

Expanding its green footprint

JSW Energy Limited, the energy arm of the JSW Group, is one of the leading private players in the power sector. The company has projects across the generation, transmission, manufacturing and trading segments. In recent years, the company has been making the switch to renewable energy projects in light of the government’s push for zero-emission fuels. Currently, it has a strong pipeline of green energy projects and has set out a plan to expand its footprint in India’s green energy sector.

Existing operations

JSW Energy currently has an energy portfolio, comprising 3,158 MW of thermal power. This includes the 1,200 MW Ratnagiri plant, the 1,080 MW Barmer plant, the 860 MW Vijayanagar plant and an 18 MW plant in Nandyal. In addition, the company operates 1,391 MW of hydropower projects in Himachal Pradesh. These are the 1,091 MW Karcham Wangtoo hydropower plant and the 300 MW Baspa II plant. Both these plants are operated by Himachal Baspa Power Company Limited, a subsidiary of JSW Energy. In the solar power space, JSW Energy’s portfolio so far comprises captive plants, 1.77 MW of solar rooftop systems and 10.46 MW of ground-mounted solar systems. These are located in the company’s cement, thermal and hydel plants, spread across various states in the country.

In the transmission segment, the company has two operational 400 kV transmission lines aggregating 330 ckt. km of line length under Jaigad Power Transco Limited (JPTL), which is a joint venture between JSW Energy and Maharashtra State Electricity Transmission Company Limited. JPTL has been set up under the public-private partnership model for the development of an intra-state transmission system aimed at the evacuation of power generated from the 1,200 MW Ratnagiri power plant and also from other proposed projects in the region.

Meanwhile, in the power trading segment, in 2006, JSW Energy incorporated JSW Power Trading Company Limited (JSWPTC), which has a licence from the Central Electricity Regulatory Commission to trade power across India. JSWPTC is a member of Power Exchange of India Limited as well as the Indian Energy Exchange. The company achieved a total trading volume of 602 MUs in 2020-21, recording a decrease of 16.15 per cent, as compared to 718 MUs in the previous year.

Performance highlights

Despite the pandemic-induced challenges, JSW Energy delivered a healthy performance, driven by focused execution and financial prudence. Notably, the company’s long-term power purchase agreement (PPA) tie-up has grown from 81 per cent in 2019-20 to 86 per cent in 2020-21, in line with the company’s strategy to de-risk the business. The overall net generation from the long-term portfolio increased by 3 per cent year on year during 2020-21. Apart from this, JSW Energy’s operations and maintenance cost per MW continued to further decline year on year in 2020-21 and is a benchmark in the industry across various segments of thermal, lignite and hydro.

With regard to power generation, during 2020-21, the company’s net generation decreased by 5.93 per cent and stood at 19,990 MUs as compared to 21,252 MUs in the previous year. Of the total power generation, 5,629 MUs of power is generated through hydro. In addition, the plant load factor has decreased from 66 per cent in 2019-20 to 60 per cent in 2020-21. In the transmission segment, during 2020-21, JPTL maintained a high availability of the transmission system at 99.77 per cent as compared to 99.58 per cent in the previous financial year.

On the financial performance front, during 2020-21, the company recorded a total income of Rs 71.59 billion, a decrease of 16.35 per cent over Rs 85.59 billion in the previous year. During the same period, the company made a net profit of Rs 8.22 billion vis-à-vis Rs 10.81 billion in the previous year. The capex expenditure of the company stood at Rs 4.35 billion in 2020-21.

Recent developments

JSW Energy released the road map for sustainability and renewable energy development, announcing its intentions to double its power generation capacity, primarily driven by renewable energy. Under the plan, the company aims to reduce its carbon footprint by 50 per cent by 2030 and achieve carbon neutrality by 2050, in line with many other players in the infrastructure sectors. Further, it plans to reduce its water consumption per unit of energy produced by 50 per cent. To meet these targets, the company will need to bring its renewable power capacity up to two-thirds of its total installed capacity, while reducing its intensity and auxiliary consumption. A large part of this capacity addition will take place over the next two years, with about 2,300 MW of installations planned. In addition to the utility-scale wind projects that are currently under development, 1,100 MW of renewable projects are under development to meet the company’s group captive requirements.

In May 2021, JSW Hydro Energy, a wholly owned subsidiary of JSW Energy, raised $707 million through the issue of green bonds to refinance the term loan of the existing assets. These notes are set to accrue an interest rate of 4.125 per cent per annum from the date of settlement to maturity. The announcement represents the largest bond sale by a domestic issuer this financial year. It is also the first-ever issuance by a hydropower company in Asia. This will enable the company to strengthen and diversify its sources of funding to further grow its renewable energy business.

Also, in April 2021, the Central Electricity Authority (CEA) granted permission to JSW Energy to uprate the capacity of its Karcham Wangtoo Hydro Electric Project (HEP) from 1,000 MW to 1,091 MW, which will be done in a phased manner. The increase from 1,000 MW to 1,045 MW will be achieved in the first phase for two monsoon seasons, in 2021 and 2022. Thereafter, in the next phase, uprating to 1,091 MW will be achieved. This capacity uprating by 9 per cent to 1,091 MW entails no additional capital expenditure.

Future outlook

JSW Energy has an under-construction project portfolio of 2,458 MW, as per the company’s annual report for 2020-21. Of this, wind accounts for 81 per cent (1,993 MW) of the total share, followed by hydro and solar at 10 per cent (240 MW) and 9 per cent (225 MW) respectively. In total, the company has 2.5 GW of renewable energy projects under construction, with a total envisaged outlay of Rs 158 billion.

The company has started full-fledged construction of the 240 MW Kutehr HEP, run-of-the-river project on the Ravi river in Chamba district of Himachal Pradesh. It is expected to generate 955 GWh of electrical energy annually, 12 per cent of which will be supplied free of cost to the Himachal Pradesh State Electricity Board. For the remaining contracted capacity, a PPA is currently at the finalisation stage with the Haryana Electricity Regulatory Commission. In August 2020, it was announced that Andritz had won a contract from JSW Energy Limited to supply an electromechanical package for the upcoming project in Himachal Pradesh.

JSW Energy also forayed into developing stand-alone and blended wind energy projects. In August 2020, the company’s subsidiary, JSW Future Energy, emerged as a winner in the Solar Energy Corporation of India’s (SECI) 2.5 GW auction for interstate transmission system (ISTS)-connected blended wind power projects (Tranche IX). The subsidiary won 810 MW of blended wind power capacity at a tariff of Rs 3 per kWh. The project is currently being developed in Tuticorin, Tamil Nadu, at an estimated cost of Rs 47 billion-Rs 48 billion. Following this, in March 2021, JSW Future Energy won 450 MW of stand-alone wind capacity at SECI’s auction for ISTS-connected wind projects (Tranche X) at a tariff of Rs 2.77 per kWh. Both projects are expected to be commissioned within 30 months.

Overall, taking advantage of its strong presence in the energy sector, JSW Energy is set to make a smooth transition to becoming a prominent player in renewables, especially with its diversified energy portfolio. The company has set up almost 1.5 GW of renewable power and has set its sights on driving further developments through renewable energy. The company plans to spend $10 billion (Rs 750 billion) in renewable energy by 2030. It aims to shift away from coal and plans to add about 15.4 GW of solar, wind and hydropower capacity by 2030. In the years to come, the company’s renewable portfolio is expected to increase at a faster pace, especially as it expands its operations to other renewable segments.

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