INTERVIEW: India's Tata Power targets 70% renewable capacity in generation mix by 2030

India's Tata Power aims to achieve 70% of its power generation capacity from renewable energy sources by 2030, supported by "drastically" declining prices, CEO and Managing Director Praveer Sinha said Oct. 8, outlining the company's energy transition strategy.

With a net zero target set for 2045 or earlier, Tata Power has 15 GW of power-generating capacity, including about 6 GW from renewable sources. The company also has a 5-GW pipeline of renewable energy projects.

The challenge for the company is to provide "a package of solutions whereby 24/7 electricity is supplied, based on customers' requirements," factoring in renewable and conventional power sources, Sinha told S&P Global Commodity Insights on the sidelines of the FT Energy Transition Summit India over Oct. 8-9.

"The understanding we as a power utility have is that during different hours of the day, during different periods of the year, [customers] will have different requirements," Sinha said.

In 2030, Tata Power aims to have around 31 GW of power capacity, with about 22 GW coming from renewable sources, including hydropower, he added.

In addition to falling renewable power costs, growing customer demand for renewable energy is driving its expansion, Sinha said.

Commercial and industrial customers, required to meet their renewable energy goals, typically request that 70%, 80% or 90% of their power supply come from renewable sources, according to Sinha.

As an example, Sinha said that Tata Power will supply Tata Steel with 70% of its renewable energy requirements starting next year, as part of a plan that is currently under implementation.

The renewable power requirement will be met "not over the day, but every hour, every 15 minutes," which will help the steelmaker produce low-carbon steel.

"At some stage, I will give them 100% [renewable power] when I bundle it with battery storage, pump storage and hydropower," Sinha said.

Falling prices

Renewable power prices have declined due to technological advancements, market dynamics and the onset of domestic manufacturing of solar photovoltaic modules and cells in India, analysts and industry members have said.

The average renewable power price has decreased over the past decade from around Rupees 12-13/kWh (14-15 cents/kWh) to nearly Rupees 2.50-3/kWh, Sinha said.

Looking ahead, the average price for industrial and commercial customers -- combining both conventional and renewable sources -- is expected to fall to about Rupees 5/kWh by 2030 from about Rupees 8-9/kWh currently, he added.

"What is important when we talk about clean energy is that the cost of energy should also be affordable and economical, and they [users] are able to reduce their overall energy costs," Sinha said.

The decline in power prices is primarily aided by the downward trend in renewable energy prices, according to Sinha.

Tata Power has two plants for manufacturing solar PV cells and modules located in Karnataka and Tamil Nadu, with a total capacity of 4.9 GW.

In September, the company signed a memorandum of understanding with the Rajasthan government for an investment plan of Rupees 1.2 trillion aimed at various renewable energy projects, including the manufacturing of solar PV modules and cells.

Capital expenditures

Renewable projects involve significant capital expenditures, and at Tata Power, most of the capex is directed toward these projects, according to Sinha.

Tata Power's annual capital expenditure ranges from Rupees 200 billion to Rupees 250 billion, with 60% allocated for the expansion of renewable capacity, Sinha said.

The remainder of the capex is allocated to the company's transmission, distribution and hydropower plant projects, he added.

"It is not only renewables that we are doing; we are also growing very big in the transmission and distribution businesses," Sinha said, describing it as an "opportunity" in the growing renewable market in India.

The company is also expanding its hydropower and pumped hydro projects as part of its four-pronged approach, he added.

Monitoring hydrogen

Tata Power will monitor the progress and prices of renewable hydrogen before deciding to commercially produce it, Sinha said.

"I don't feel quite convinced that $2/kg for renewable hydrogen is happening so quickly because the cost is dependent on the cost of power," he said, referring to the benchmark price at which renewable hydrogen is expected to be commercially viable.

"So, whenever hydrogen will come, we will play a very, very important role."

Platts, part of Commodity Insights, assessed Saudi Arabia hydrogen produced via alkaline electrolysis (including capex) at $4.28/kg on Oct. 8, little changed from the previous month.

Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $6.17/kg on Oct. 8, up 10.45% on the month.

"Let's do what we know. There is so much opportunity in renewables. There is so much opportunity in transmission," Sinha said.

"Let's do this thing first."