Torrent Power: Aiming for sustainable growth across segments

Torrent Power Limited is a leading private sector power utility with a diverse portfolio of generation assets totalling over 4.2 GW across coal, gas, solar and wind. In the distribution segment, it serves approximately 4 million consumers across multiple territories, including Gujarat, Maharashtra, Uttar Pradesh, and the recently acquired union territory of Dadra & Nagar Haveli and Daman & Diu (DNH&DD), as part of the government’s union territory privatisation drive. Notably, it is one of the best-performing distribution utilities, maintaining exceptionally low distribution losses across all its areas of supply, and ensuring 24×7 power supply in licensed areas. Torrent also has a presence in the transmission segment, with ownership of transmission lines spanning a total of 482 km, encompassing 249 km and 105 km of 400 kV, and 128 km of 220 kV double-circuit transmission lines across the Ahmedabad, Surat and Navsari districts in Gujarat.

Recent operational performance

Thermal generation: Torrent Power’s thermal generation capacity currently stands at 3,092 MW, with 88 per cent (2,730 MW) powered by natural gas, while only 12 per cent (362 MW) of the capacity is derived from coal. The capacity is spread across four power plants in Gujarat – the 362 MW Amgen coal-based station, the 1,147.5 MW Sugen combined cycle power plant (CCPP), the 1,200 MW Dgen CCPP and the 382.5 MW Unosugen CCPP.

In terms of fuel mix, Amgen power plant runs on a mix of domestic (70 per cent) and imported coal (30 per cent), while Sugen and Unosugen CCPP operate on a mix of domestic and imported liquefied natural gas (LNG), and Dgen CCPP operates on imported LNG.

During 2022-23, its thermal power plants generated approximately 4,089 MUs of electricity, recording a year-on-year decline of 48 per cent from the 7,903 MUs generated in 2021-22. Plant-wise, Amgen plant generated 2,565 MUs of electricity, an increase of 15.4 per cent over that in the previous year; while Sugen plant generated 1,467 MUs (66 per cent decline) and Unosugen plant generated 57 MUs (96 per cent decline) as compared to the previous year. Amgen plant operated at a healthy plant load factor (PLF) of 88.23 per cent during 2022-23, while Sugen and Unosugen gas-based plants operated at PLFs of 15.01 per cent and 1.74 per cent, respectively.

Despite acute coal shortages across the country, Amgen plant received its allocated domestic coal as per the fuel supply agreement. However, due to the continued Russia-Ukraine conflict and other factors, gas prices in international markets remained high for a significant part of the year, leading to lower overall utilisation of gas-based plant capacities, including Sugen and Unosugen plants. The Dgen gas-based power plant did not operate during the year.

The three thermal generating plants, na­me­ly Amgen, Sugen and Unosugen, ha­ve achieved their targets under the Per­form, Achieve and Trade scheme of the Bureau of Energy Efficiency. Further, all thermal plants operated by the company have implemented a mechanism for zero liquid discharge.

Renewable generation: As of 2022-23, Torrent Power has a portfolio of renewable energy plants totalling 1,067.5 MW spread across Gujarat, Maharashtra, Telangana, Rajasthan, Madhya Pradesh and Karnataka. These include 263 MW of solar plants and 804.5 MW of wind pl­a­nts. These plants generated 2,129 MUs of electricity during 2022-23, an increase of 22 per cent compared to 1,744 MUs generated in 2021-22.

The solar plants collectively generated 414 MUs during 2022-23, which is an increase of 104 per cent over that in the previous year. The PLF of the solar plants was recorded at 18.69 per cent, higher than the 16.82 per cent recorded in the previous year. Meanwhile, the wind plants collectively generated 1,715 MUs, an 11.3 per cent increase over the previous year. The PLF of the wind plants was recorded at 24.33 per cent, which is lower than the 27.12 per cent recorded in the previous year. This decline is primarily due to the drop in wind speed and the non-operation of 50 MW of capacity on account of extra high voltage tower failure and right-of-way issues.

In July 2023, Torrent Power commission­ed a 115 MW wind power project thro­ugh its wholly-owned subsidiary, Torrent Solargen Limited, in the Devbhumi Dwarka district of Gujarat. With this project, the company’s installed renewable capacity has reached approximately 1.18 GW.

Transmission: Torrent Power’s transmission network includes transmission lines built to evacuate power from its generation plants in Gujarat. It has installed a 249 km long 400 kV double-circuit line to transmit power from Sugen CCPP to Ahmedabad. This is operated through Torrent Power Grid Limited, a joint venture with Power Grid Corporation of India Limited. Additio­na­lly, the company owns and operates 105 km of 400 kV transmission line for the transmission of power from the Dgen plant to the Navsari substation. Torrent Power has also laid 220 kV double-circuit transmission lines for the transmission of power from Sugen CCPP to Surat.

Distribution: Torrent Power holds distribution licences in Ahmedabad and Ga­ndhinagar, Surat, and Dahej (Gujarat); and the newly acquired licensed distribution area of DNH&DD. Furthermore, it operates franchisee contracts in Bhi­wa­n­di and Shil-Mumbra-Kalwa (SMK) in Maharashtra, and Agra in Uttar Pradesh. Meanwhile, operations are yet to commence at its Dholera licensed area. Over­all, the company serves a consumer base of 4 million, to which it distributed 28 BUs of power during 2022-23.

Distribution losses in Ahmedabad and Surat have declined to 3.74 per cent and 3.17 per cent respectively, in 2022-23, as compared to 4.17 per cent and 3.38 per cent, respectively, in 2021-22. This has been achieved through initiatives such as network improvement, slum electrification, and mass raids in theft-prone areas. Meanwhile, distribution losses at DNH&DD and Dahej have been recorded at an impressive 1.59 per cent and 0.48 per cent respectively in 2022-23.

Bhiwandi recorded aggregate technical and commercial (AT&C) losses of 9.64 per cent in 2022-23 as compared to 9.87 per cent in 2021-22. Agra recorded AT&C losses of 9.43 per cent in 2022-23, as compared to 13.33 per cent in 2021-22. Meanwhile, SMK recorded AT&C losses of 32.77 per cent in 2022-23, as compared to 38.89 per cent in 2021-22. The collection efficiency at all the franchised distribution areas remained high due to continuous vigilance and disconnection drives, along with a pick-up in economic activities. Bhiwandi achieved a collection efficiency of 100.41 per cent, Agra achieved a collection efficiency of 100.06 per cent, and SMK achieved a collection efficiency of 101.07 per cent.


Financial performance

In 2022-23, Torrent Power’s consolidated revenue reached Rs 260.76 billion, marking an increase of 80 per cent from Rs 144.93 billion in 2021-22. Subsequently, its net profit increased by 372 per cent from Rs 4.59 billion in 2022-23 to Rs 21.65 billion in 2021-22. From 2018-19 to 2022-23, the company recorded a heal­thy compound annual growth rate of 18.2 per cent in revenues and 24.4 per cent in net profits. This growth was primarily driven by the newly acquired licensed distribution business, new renewable projects, improved performance at distribution units and the sale of regasified LNG. As of 2022-23, the company’s current ratio stood at 1.52, while the interest coverage ratio was 5.67.

Torrent Power’s capex during 2022-23 has been recorded at Rs 29.38 billion, an increase of 54 per cent from Rs 19.06 billion in 2021-22. In June 2023, the company raised Rs 6 billion through the iss­uance of Series 11 – 60,000 secured, rated, listed, taxable, non-cumulative, redee­m­able and non-convertible debentures, on a private placement basis at a coupon rate of 8.50 per cent per annum.

Future plans

Going forward, Torrent Power’s vision is to grow sustainably. On the generation front, the company has approximately 621 MW of renewable capacity in the pipeline. This includes 300 MW of wind power capacity to be set up in Karna­taka, won through competitive bidding from Solar Energy Corporation of India; and 300 MW of solar project to be set up in Surendranagar and Patan, Gujarat. Further, the company has secured commercial and industrial solar projects with a capacity of approximately 21 MW. These solar projects are expected to be commissioned by March 2024, while the wind project is expected to be commissioned by March 2025.

Earlier in October 2022, Torrent Power announced plans to develop 10 GW of renewable energy projects, including green hydrogen, in Rajasthan in a phased manner. It intends to invest over Rs 600 billion in these projects.

In June 2023, Torrent Power signed an MoU with the government of Mahara­sh­tra for the development of three pum­ped storage hydro projects with a total capacity of 5,700 MW in Mahara­shtra. The projects would be executed at three sites, namely, Karjat (3,000 MW) in Raigarh District, Maval (1,200 MW) and Junnar (1,500 MW) in Pune district. The­se projects would entail an investment of approximately Rs 270 billion and are planned to be executed over a period of five years.

Further, in the transmission segment, Torrent Power Grid Limited received a mandate from the Central Transmission Utility of India, awarding the company a transmission scheme to evacuate 4.5 GW of renewable energy power. The project consists of laying a 60 km long D/C line and bay upgradation under the regulated tariff mechanism.

In the distribution segment, an investment of approximately Rs 12 billion is en­visaged over a span of 10 years in Dholera SIR to cater to demands of about 425 MVA. Of this, Rs 2.05 billion has been in­curred till 2022-23. Further, a capex of Rs 3 billion has been planned for the SMK franchised area throughout the agreement term, with Rs 1.5 billion expected to be invested within the first 5 years.

Torrent is actively seeking new opportunities in the distribution sector through avenues such as privatisation, parallel licensee or acquiring franchise rights in existing areas. Recently, the company filed applications for the grant of distribution licences for Pune, Nagpur, Thane and Palghar regions. Meanwhile, to mitigate the impact of lo­wer PLFs on gas-based projects, the co­mpany is making efforts to secure power purchase agreements for its unutilised gas power capacity. Notably, in response to the government’s tender to supply gas-based power during the summer crunch period, Torrent Power was awarded a contract to supply power based on competitive bidding. Apart from this, in accordance with the mandate from the Central Electricity Autho­rity on flexible operation for all coal-based power plants, the Amgen plant has initiated a feasibility study for minimum load operation.

Other key focus areas for the company include digitalisation and automation, along with an emphasis on ensuring cybersecurity.

With these robust plans and expansion strategies, supported by strong financial performance and a strategic focus on the development of renewable energy, Torrent Power is expected to maintain its position as one of the strongest integrated power utilities in the country.