Interview with Dr Praveer Sinha

“Tata Power wants to become a preferred utility of choice for every consumer”

Tata Power is India’s largest private sector utility with a presence across the entire power sector value chain and is gearing up to become the preferred utility of choice for every consumer. The top priorities for the company are to increase its renewable energy capacity, ensure reliable and quality power supply to consumers at competitive prices, and develop capabilities in new and emerging areas such as electric vehicle (EV) charging and energy storage. In a recent interview with Power Line, Dr Praveer Sinha, CEO and MD, Tata Power, talked about the plans and priorities for Tata Power, the current state of the power sector and the future outlook…

What is your perspective on the current state of the power sector?

The power sector has been evolving continuously over the past 30 years, especially post the economic liberalisation in 1991 and the promulgation of the Elec­tricity Act 2003. Over all these years, the­re has been significant capacity addition and today, we are at 400 GW plus of installed power generation capacity. A huge network of transmission lines has been laid out throughout the length and bre­ad­th of the country to increase electrification. With the increasing impacts of climate change and a greater push for cle­an energy, the country witnessed a massive increase in renewable capacity addition, especially in the last five to six years and continues to do so. Conside­ring the intermittency of solar and wind power, there is now an increased focus on hybrid power capacity and battery storage solutions.

The distribution segment, however, is one area that continues to drag down the power sector and needs much im­pro­ve­ment. Distribution reforms have not happened to the extent required to develop a smarter grid and offer impro­ved power distribution services and quality of power to both urban and rural areas.

How do you rate the performance of the power sector in the last one year or so? What were the key hits and misses?

Over the last one year, the power sector witnessed many significant develop­men­ts owing to the Ukraine-Russia war, the commodity price boom and solar supply disruptions. Energy prices were at an all-time high, putting the world into a situation of energy crisis. The Indian en­ergy sector, too, saw many consequential effects in terms of increased prices for oil, imported coal, solar module frei­ght and many other commodities such as aluminium, copper and steel.

Despite all this and the Covid-related di­sruptions, power generation in the country remained steady and all generation plants across the thermal, hydro and re­newable energy segments have operated very well. The country witnessed a new high for peak demand, which cros­sed 200 GW for the first time. The transmission segment remained reliable and stable. The renewable sector saw the hi­g­hest installations over the last year.

The distribution segment, however, was under huge stress owing to delays in bill­ing and collection of electricity dues. The decline in revenues of commercial and in­­dus­trial entities compromised th­eir ability to clear electricity dues on ti­me, leading to an accumulation of huge outstanding discom debt. This was also re­flected in the coal crisis in April and May 2022 when several gencos witnes­sed hu­ge coal shortages. Owing to del­ayed payments by discoms, the gencos co­uld not sto­ck up on coal and were op­erating on minimal capacity. This came to light with the increase in power gene­ration on the back of load enhancement and recovery of power demand in the country post Covid.

What, according to you, are some of the big­gest challenges in achieving India’s net zero goals? What is the way forward for addressing them?

India has the ability to add another 350 GW of renewable energy over the existing solar and wind capacity of 100-110 GW as well as 46 GW of hydro by 2030. For this, the country needs an annual ca­pacity addition of 40-45 GW in terms of solar, wind-storage-hydrogen, hydro, etc. over the next eight years. This is a to­u­gh target considering that India’s capa­city addition over the last several years has been around 12-15 GW annually. For achieving 40-45 GW of capacity addition annually we require the collaboration of all industry stakeholders. We need to ensure that the discoms are able to make sufficiently large bids that will ab­sorb and meet the renewable purch­ase obligations (RPOs). The Govern­ment of India has come up with a very ambitious RPO target of achieving 47 per cent of energy from renewable sources by 2030. For this, it will also be necessary to develop enou­gh evacuation lines to connect the rene­wable en­ergy generation units. This also requires a scaling-up of domestic manufacturing and sourcing capabilities. The first part of the performance-linked in­cen­tives scheme has done well, while the second part needs to be expedited so that we are able to meet future require­me­nts for modules do­­mestically. In the interim, at least for the next two years, we need to ensure that our prices of re­ne­wable energy eq­ui­pment are competitive. It was anticipated that a lot of ca­pacity addition will take place in 2022-23, but most of these investments have now been deferred to 2024-25 in the wa­ke of solar supply chain disruptions and inc­reased module prices.

Hence, till such time as that happens, there is an opportunity to move the basic customs duty by two years so that it becomes effective from April 1, 2024. Similarly, the Approved List of Models and Manufacturers and some of the other requirements also need to be de­ferred till April 2024 in order to help the developers source materials at a more competitive price from outside the co­untry till the time the domestic manufacturing capacity comes online over next two years. Thereafter, we will have adequate manufacturing capacity at co­mpetitive prices within the country to ensure that capacity addition 2024 on­wards is achieved using local units.

Apart from utility-scale projects, there is also a lot of opportunity in the distribu­t­ed generation segment such as in roof­top or solar pump technologies. India has 30 million pumps, of which 9 million pumps work on diesel generator (DG) sets and only 300,000-400,000 pumps are solar powered. The KUSUM progra­m­me plans to raise the number of solar pumps to 4 million in the coming years.  There is an opportunity to replace all the DG pu­mp sets with solar pumps. At least around 9 million solar pumps should co­me up in the next five years. We also need to have enough financing arrangements that can be achieved through special gre­en banks or green funding arran­geme­nts. Other support required by stakehol­ders such as land and early cl­e­arances also need to be prioritised. Over­all, the ambitious commitments are very difficult yet doable, and require co­nti­nu­ous efforts from all stakeholders.

How do you see coal-based power generation evolving in the coming years with the growing share of renewable energy sources?

Coal-based power generation will be required for some more time but there is no need to set up additional greenfield thermal capacity. The existing coal-ba­sed power plants can continue to ope­ra­te till their useful life and be repla­ced by renewable power supplemented with en­ergy storage or hybrid renewable po­w­er. In the future, coal-based power plan­ts may only be required for balancing purposes till such time as India gets alternatives for more backup power su­ch as energy storage solutions. Unfor­tu­nately, India does not have enough natural gas and whatever is available is quit­e expensive. Hence, until we are able to get alternative fuels based on gas or small modular nuclear power plants, India will continue to use coal as backup power, that is, for balancing purposes.

What are your views on the Electricity (Am­end­­ment) Bill, 2022 and its implications for the sector?

The electricity amendment bill is an important document and, more so, because it has been about 20 years since the original act was introduced. A lot of changes that are being proposed in the amendment bill have been quite water­ed down from what was originally being discussed. However, it opens up a lot of opportunities in terms of multiple suppliers of electricity. It also focuses on stricter implementation of regulatory me­chanisms and monitoring by the load despatch centres, as well as enforceme­nt of payment discipline among disco­ms. The penalty mechanism for non-compliance of RPOs is also a welcome move. Overall, it is a very progressive bill and will help the sector improve further, and become more commercially viable and financially sustainable, which is the need of the hour.

What is your overall outlook for the sector in the near, medium and long terms?

The entire power sector is at the cusp of transformation, thus making the outlook of the sector very promising. The po­t­ential is huge. The 3D’s – Decarboni­za­tion, Distribution and Digitalisation – continue to guide the sector with opportunities emerging in the areas of distributed energy generation, energy management and smart metering. The industry is witnessing a number of technological ch­an­ges in the areas of EVs, demand-side management and energy management. Besides these technological chan­g­es, the policy and regulatory landscape is expec­ted to undergo a significant ch­an­ge in the country with many encouraging reforms already announced and many being in the pipeline. The sector is bound to beco­me stronger and more resilient going forward. These changes will be good for consumers, businesses, the government, and the financial institutions. There is a str­o­ng interest amon­gst the global and do­mestic investors, focusing on sustainable businesses and practices.  It is an opportunity for us to participate in the change that is taking place in the country.

What are your top priorities and plans for Tata Power in the next one to two years? 

Tata Power’s priorities are aligned with the country’s energy priorities, and it has been actively working towards accelerating India’s energy transition journey. Over the last few years, Tata Power has developed its presence across the entire “Gre­en Energy” value chain, with a focus on building new consumer-centric solutions that provide power in the hands of consumers. The company has secured in­dustry leading positions in most of these businesses and is expanding aggressively.

We target to increase the renewable portfolio to almost 20 GW over the next five years, thus increasing the clean and green portfolio from the existing 35 per cent to more than 65 per cent by 2027. To support the company’s internal growth plans and to augment the country’s solar manufacturing capacity, we are setting up a 4 GW manufacturing capacity for solar cells and modules with an investment of about Rs 3,400 crore. We are equally ex­panding our portfolio in the rooftop so­lar, solar pump, EV charging and energy management segments and target to be­co­­me the preferred green energy brand.

We are the biggest player in the distribution segment with around 12 million cus­tomers. Once multiple suppliers of electricity are allowed, we want to go to many more cities. We aim to grow in the distribution and transmission segments while working on expanding in emerging technology areas such as EVs charging and storage solutions, including hy­drogen-based storage. We intend to offer complete energy management solutions to our consumers. We continue to adopt the best technological solutions and have collaborated with start-ups, both Indian and foreign, as well as with various educational and research institutions. These collaborations enable Tata Power to analyse the viability of the new technologies as well as explore the possibility of customising them for Indian markets. Tata Power aims to offer a competitive supply of electricity to consu­me­rs in both rural and urban areas and become a preferred utility of choice for every consumer.

 

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