GROUP: SUBSIDIARIES/ JVs
SEGMENT: REVENUE Rs 1,000-3,000 CRORE
FASTEST-GROWING Emerging Companies Rank: 2

At a time when private power producers are facing the heat of rising consumer demand, inadequate fuel supply and high generation cost, Raj West Power (RWPL), a wholly-owned subsidiary of Sajjan Jindal-controlled JSW Energy, is braving the scorching heat of Thar desert to weave a success story around Rajasthan's electricity needs. Located in Barmer, RWPL has been one of the best performing power plants in the country in terms of assured and consistent returns on investment, with a turnover of around Rs 1,900 crore.

There are many reasons for RWPL to become profitable. One, the entire output of 1,080 Mw is purchased by the state government. Two, unlike most power plants, it operates on a cost-plus-tariff-based structure under Section 62 of the Electricity Act, where the company gets to charge a price that factors in the cost as well as a certain return, given its capital-intensive business model. Three, and the most important of all, is that unlike coal-starved power plants, RWPL has adequate fuel supply - two pithead lignite mines in neighbouring Jalipa and Kapurdi, having 375 million to 380 million tonnes of reserves, feed its plants, while the company's annual requirement is a mere nine million tonnes.

RWPL uses circulating fluidised bed combustion (CFBC) technology, which allows the use of lignite, a low-calorific coal with high sulphur and moisture levels. Experts say the technology requires higher investment of about $1.1 million per Mw, compared to $ 0.76 million per Mw for coal-based power plants. "The RWPL model, which has an assured and steady return over the project life, should be considered the ideal model for power plants development in India," says Sanjay Sagar, Joint Managing Director and Chief Executive of JSW Energy.

In 2011/12 and 2012/13, RWPL's plant load factor (PLF), which determines a plant's performance, fell to below the 80 per cent level due to low demand from utilities, says Abhinav Sharma, Analyst with HDFC Securities. However, in 2014/15, the average PLF went up to 86 per cent compared to the all-India average of 61 per cent.

JSW Energy had acquired the company in 2005 from the family of the Maharaja of Jaipur, late Bhawani Singh, to build the plant at a total investment of Rs 10,000 crore. Around 10,000 workers weathered the extreme heat and cold conditions to commission the eight units of 135 Mw, each, by 2013. In a first for a power plant in India, a dedicated 185-km pipeline was also constructed to source water from the Indira Gandhi Canal.

"With the success of the plant so far, JSW Energy has sent a proposal to the Rajasthan Government to expand the plant capacity by another 600 Mw," says Sagar.