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Tata Power: Pioneering India’s sustainable energy future

August 29, 2023
Shantanu Srivastava

Key Findings

Tata Power’s thermal portfolio has increased by a mere 2.3% compounded annual growth rate (CAGR) from March 2015 to March 2023, with no additions since 2020.

At the same time, the company’s renewable generation portfolio has grown rapidly by a CAGR of 18.4%, growing almost four times over the same period.

Tata Power has expanded its operations across the clean energy value chain, from solar module manufacturing to electric vehicle charging infrastructure. 

In a world grappling with the consequences of climate change and environmental degradation, the urgency to transition from polluting energy sources to sustainable alternatives has never been more apparent. As one of the world’s fastest-growing economies, India must take a leading role in embracing clean energy solutions to ensure a healthier future for its citizens and the planet. While the debate around this transition continues to simmer, Tata Power is emerging as a beacon of hope, illuminating the path towards a cleaner and more sustainable energy landscape.  

The strategic significance of increasing renewable energy installations cannot be overstated. It offers a structured approach to tackle the escalating demand for power while simultaneously reducing the carbon footprint. By embracing renewable sources like wind and solar power, India can significantly reduce its reliance on coal and other polluting energy sources. Tata Power’s commitment to decarbonise its portfolio by 2045 exemplifies the forward-thinking approach that is desperately needed.  

In a bid to address the dual challenges of energy security and climate change, developing countries like India may sway towards the former in the short run, favouring fossil fuels to provide firm, dependable power. However, the long-term trajectory of any fossil fuel is downward, given the strong economic case in favour of renewable energy and its carbon mitigation potential. The fast-establishing viability of storage solutions, such as battery and pumped hydro, will ensure the availability of firm and reliable clean energy in the next few years. Moreover, the inherent safety of grid-scale battery storage systems far outweighs the potential safety risks posed by traditional nuclear power and the health and climate risks posed by coal power plants.

Clear and ambitious target

India’s short-term pivot towards coal might seem like the country is derailing from its renewable energy goals. Still, the energy transition strategies of leading power sector companies paint a different picture. Tata Power leads the pack among them. Tata Power stands out as a true trailblazer with a clear and ambitious target of achieving carbon net zero by 2045. It is actively demonstrating that economic growth and environmental stewardship are not mutually exclusive; instead, they can be harmoniously integrated to secure a prosperous future for the nation.  

Tata Power’s unwavering dedication to renewable energy doesn’t just make for good corporate social responsibility; it sets a precedent for other power utilities to follow suit. By shunning the construction of new coal or fossil fuel-based power plants and instead focusing on expanding its renewable energy capacity, Tata Power sets the standard for responsible energy practices in India. The company’s thermal portfolio has increased by a mere 2.3% compounded annual growth rate (CAGR) from March 2015 to March 2023, with no additions since 2020. At the same time, the renewable generation portfolio has grown rapidly by a CAGR of 18.4%, growing almost four times over the same period. The benefits of this approach are manifold – from reduced greenhouse gas emissions and improved air quality to enhanced energy security and job creation. 

Besides grid-scale generation, Tata Power has expanded its operations across the clean energy value chain. It has a presence in solar engineering procurement and construction (EPC) with an order book of close to Rs 100 billion (excluding own projects). In rooftop solar, the company has a channel network in more than 275 districts, while in solar pumps, it has installed more than 100,000 pumps so far. 

It recently forayed into installing public electric vehicle charging infrastructure, with close to 4,500 public chargers already installed and a significant presence in the home charging space. The company is the only large utility active in the off-grid solar segment. 

Lastly, the company is also setting up a 4GW solar module manufacturing capacity as part of the production-linked incentive scheme of the government, providing cost control in its renewable energy operations and opportunities to cater to the growing domestic and global market. All these product offerings are also the focus area for the government as part of the nation’s clean energy goals.  

Global investments

The company’s clean energy forays have also caught the fancy of global investors. With industry-leading environmental, social and governance (ESG) disclosures and an increasing ESG score across different rating providers, the company has been able to attract significant ESG capital lately. Tata Power signed up for a US$ 54 million sustainable trade finance facility with Japan’s MUFG and raised US$ 320 million in sustainability-linked loans for the first time from foreign lenders. Last year, UAE’s sovereign wealth fund Mubadala, in partnership with BlackRock, invested US$ 525 million in Tata Power’s renewables platform. India’s energy transition requires mobilising significant financing from global capital providers, and Tata Power offers cues into how to do that effectively.   

In a world where the effects of climate change are becoming increasingly evident, and international pressure to transition to cleaner energy sources is mounting, Tata Power’s proactive stance couldn’t be timelier. As the Indian government weighs its options and debates the best course of action, Tata Power shows India a clear and compelling path forward. The utility’s commitment to decarbonisation is not just a business strategy; it’s a visionary blueprint that has the potential to transform India’s energy landscape and inspire a new era of sustainable progress. The time has come for other players in the energy sector to take a cue from Tata Power and join the march towards a greener and more promising future.

This article was first published on Energy Tracker Asia

Shantanu Srivastava

Shantanu Srivastava is responsible for leading the sustainable finance and climate risk initiatives at IEEFA South Asia. He specializes in the financing, policy, and technology aspects of the Indian electricity market.

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