Unlike all its peers, Adani Power invested in conventional power project as late as April this year when its takeover of Lanco Infratech’s 1,200-Mw Udupi power plant was completed. The move to acquire the a brownfield (existing) project at a cost of Rs 6,000 crore didn’t come as a surprise, say industry experts, given that greenfield (new) conventional coal and lignite-based thermal power projects are becoming increasingly unviable.
As a result, it is the renewable energy, led by solar power, that has caught the fancy of the $10-billion (Rs 65,000 crore) Adani Group. Since the acquisition of the Udupi plant, the group has announced at least two solar power plans – a 10,000-Mw solar power park in Rajasthan where the company plans to put up half the capacity itself; and a 648-Mw solar power plant in Tamil Nadu. Currently, it has 40 Mw solar capacity functional, but when the additional 5,648 Mw comes up, the largest private conventional power generating player with 10,440 Mw installed capacity could become the largest solar power generator, too.
The group has already announced its plans to add 10,000-Mw solar power generating capacity by 2022 across the country. “We have embarked on a mission of becoming a world leader in renewable power generation technologies, with special focus on solar. The development of a solar park facility is our contribution towards realisation of Prime Minister Narendra Modi’s campaign and commitment towards a clean and green energy in India,” Gautam Adani, chairman of Adani Group, had stated earlier while announcing the Rajasthan solar park.
Adani Group’s initiatives are part of a trend, which some say is a mere compliance, as demanded by the government from conventional energy players, while others see it as a strategic move to diversify portfolio. With state utilities incurring losses and not paying money on time, they are not tying up new power. “Understandably, the group went for a brownfield project,” says a senior official with Gujarat Urja Vikas Nigam, adding, “Around 25,000 Mw conventional energy in the country has not been tied up on a long-term basis and are sold in short- and medium-term markets. Besides, there are issues in fuel availability and raising finance from banks that are growing wary of conventional energy.”
The group’s foray into solar power began when Adani Power commissioned a 40 Mw solar power plant in Bitta, Kutch district in Gujarat in 2011. Adani Group is also planning to set up a 1,000-Mw solar plant at a net investment of Rs 7,000 crore in Jharkhand for which it has submitted a proposal to Jharkhand Renewable Energy Development Authority.According to Samir Kanabar, partner, EY, conventional power generation players are latching on to the green energy for varied reasons. “We have an overall mandate laid down by the central government for 175 Gw of renewable energy in the country by 2022, of which we are today at 28 Gw. The government has made it mandatory for thermal power plants to have a renewable energy portfolio,” said Kanabar.
Experts also cite incentives such as 100 per cent depreciation on solar and no custom duty on solar panels motivating players such as Adani to enhance their green energy portfolio.”The cost of installing solar power used to be Rs 9-10 crore per 1 Mw, which has now come down to Rs 6-7 crore. There has been a huge reduction in capex for solar. Also, green power tariffs are more attractive than thermal. While the average tariff in solar ranges is Rs 5-5.6 a unit, that of thermal is Rs 4-4.25,” said Kanabar.