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Tata Power announces expansion of rooftop solar services

FE Bureau
So far, Tata Power has installed more than 375 megawatt (MW) of rooftop projects.

In line with the company's strategy to diversify its revenue sources, Tata Power on Thursday announced the expansion of its rooftop solar services to 90 cities across the country.

At the end of Q3, FY20, Tata Power had an order book of nearly Rs 550 crore for rooftop solar and the new rollout is coming at a time when commercial, industrial, residential and public sector consumers are seen to increasingly adopt solar power to save energy costs. So far, Tata Power has installed more than 375 megawatt (MW) of rooftop projects.

The development follows the central government, in February, approving the second phase of the grid connected rooftop solar programme, with a central financial support of Rs 11,814 crore to provide funding for 20-40% of rooftop solar cost, depending on the size of the installation. The scheme aims to have 40,000 MW of rooftop solar capacity by 2022. Out of the total solar capacity of 34,406 MW, only 2,425 MW currently comes from rooftop solar.

As FE reported earlier, Tata Power expects renewables and the customer-oriented business - distribution, rooftop solar, micro-grid and solar pumps, home automation and electric vehicle (EV) charging - to contribute about half the company's revenues in the next five years. Tata Power's revenues of close to Rs 30,000 crore in FY19 came equally from generation, transmission-distribution and renewables. "It is in line with the change and the disruption taking place globally as countries move from generation plants and transmission systems to distributed and decentralised generation," Praveer Sinha, CEO and MD, Tata Power, had said.

Brokerage firm Jefferies recently downgraded Tata Power from 'buy' to 'hold', casting doubt on the country's largest integrated power company's ability to reduce its debt of Rs 48,400 crore as it prepares to spend another Rs 6,000 crore in renewable energy and electricity distribution projects. Eyeing portfolio diversification, Tata Power is executing close to 700 MW of solar power plants at a cost of around `3,500 crore and is also seen to invest `2,650 crore in its recently-won Odisha distribution project.

Identifying potential renewable monetisation as the "key trigger" for Tata Power stock, IDFC Securties noted that the company is consolidating its entire renewable portfolio into Tata Power Renewable Energy. "A separate listing of renewables arm will help in value unlocking," IDFC noted. "We have made considerable progress in our process to set up the growth vehicle for our renewables, which can unlock significant capital for Tata Power," the company recently said while interacting with analysts, adding that "we hope to announce the specifics on these in the next few months after we make some substantial progress".

The 2,856 MW of wind and solar power-producing capacity (including 1,010 MW from Welspun acquisition) constitute more than 26% of the company's generation portfolio. Earnings before interest, taxes, depreciation and amortisation (Ebitda) of Tata Power's renewables business increased 18% year-on-year (y-o-) to `515 crore in Q3,FY20. "Our renewable business profitability is continuously improving as the portfolio gained size and the projects stabilised and the return on the renewables is as per our expectations," the company said.

As consumers are becoming 'prosumers', those who produce energy, consume a part of it and also give a part to the grid, Tata Power is also foraying into smart rural micro-grid projects. To that end, in collaboration with the Rockefeller Foundation in Q3FY20, Tata Power launched the TP Renewable Microgrid Ltd to set up 10,000 micro grids over the next six years. The company has implemented two 15 KWp mini-grid projects in Tayabpur and Behlolpur villages in Bihar to create a sustainable model of smart microgrids.

Tata Power is eyeing growth in the solar pump business as well, with the installation of 4,700 pumps in Q3, FY20 and a "very strong pipeline of orders". Tata Power Solar, the company's solar module manufacturing arm, has also recently received a letters of award for 160 MW NTPC Jetstar and 250 MW CPSU solar projects.

Tata Power is also teaming up with Tata Motors and other automakers to build charging stations for electric vehicles and hopes to grow the business from nine cities. Recently, it partnered with Jaguar Land Rover India for end-to-end charging solutions for the latter's range of electrified vehicles to be launched in India.