Vedanta approves plans to source 580 MW of renewable energy for operations

Vedanta Ltd on Thursday said its board has approved plans for the group to source 580 MW of renewable energy (RE) for its operations across India.

Vedanta has signed a Power Delivery Agreement (PDA) with special purpose vehicles (SPVs) i.e. affiliates of Sterlite Power Technologies Pvt Ltd (SPTPL), which is engaged in the business of supplying hybrid based power with solar, wind and storage solutions.

The move is aligned with Vedanta's ESG vision of "Transforming for Good". It also marks the beginning of a series of actions by the company to deliver on its goal of becoming "Net Zero Carbon by 2050 or sooner" and "using 2.5 GW of Round the Clock (RTC) renewable energy for its operations by 2030", the company said in a release.

"Vedanta aims to partially replace existing captive thermal power capacities with renewable energy for smelting and associated operations, and meeting power requirements of capacity expansion at Vedanta Aluminium Limited, Jharsuguda, Balco and Hindustan Zinc," it said.

The overall arrangement is to procure 580 MW of renewable power where SPTPL and its affiliates are setting up a 1,960 MW hybrid-based renewable energy capacity to achieve this generation in a combination of solar, wind and storage solutions. 

Once this power supply comes online, it has the potential to prevent about 2.7 million tons of greenhouse gas emissions from entering the atmosphere, the company said.

In line with the prevailing market practices, these projects will be built on group captive model and Build Own Operate (BOO) basis. The term of the power delivery agreement will be for a period of 25 years from the date of commissioning (DOC) of the project, the release said.

"The SPVs are expected to start delivering the power within 24 months of the PDA signing. This will be helpful in securing continuous supply of power through renewable energy source at lower cost and insulate our business from commodity market volatility," it added.

Vedanta said the project will be funded on 70:30 debt to equity basis, with Vedanta Ltd and its subsidiaries owning 26 per cent of equity in the respective SPVs at a total investment of up to Rs 850 crore with an expected IRR of more than 25 per cent. 

Commenting on the development, Vedanta's Chief Safety Officer and Group CEO Sunil Duggal said, "This agreement is an important milestone in our journey towards becoming the ESG leader in the natural resources sector. The project is poised to become one of the largest renewable energy hybrid projects in India. It demonstrates the Group's commitment to become one of the greenest natural resources companies in the world."

On Thursday, shares of Vedanta ended 1.18 per cent higher at Rs 403.45 apiece on the Bombay Stock exchange (BSE).

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