How Praveer Sinha is helping Tata Power become an important player in green power

Climate change has significantly disrupted weather patterns, leading to harsher summers, shorter winters, and unpredictable monsoons. These shifts have directly impacted power consumption. The 105-year-old Tata Power recognised the evolving demand patterns early on.

To meet peak power requirements, the company set out to transition from a conventional, coal-based power provider to a leader in green energy solutions.

In 2020, Tata Power became the first Indian company to announce a goal of achieving carbon neutrality by 2050, later revising it to 2045. This meant a halt to new investments in greenfield coal-based power plants and a sharper focus on renewable energy.

“In a distribution company, you need to be on your toes, whether rains arrive in June or July. Based on that you need to supply power 24/7. We need to keep in mind peak power both during the day and night, especially when everyone switches on air conditioners at 45–50-degree temperature,” says Praveer Sinha, Chairman and Managing Director of Tata Power.

AHEAD OF THE CURVE

Sinha, who has led Tata Power since May 2018, was reappointed in May 2023 for another four years to drive the company’s sustainability agenda. His decades of experience in the power sector not only shaped the company’s ambitions but also made him the choice for the Green Growth Visionary category at this year’s BT-PwC India’s Best CEOs Awards.

At the helm of one of India's largest integrated power companies, Sinha says that Tata Power isn’t striving to be the biggest in capacity but be a key player in clean energy with the best returns. “We are democratising energy consumption, and renewable energy gives us that opportunity,” he says.

Sinha, 61, foresees a huge transformation in the sector- not just in how energy is produced but also in how it is used and exchanged across platforms. This vision has driven Tata Power to offer bundled service solutions for large commercial and industrial consumers, residential users, and utility-scale operations.

“Our focus, over a period of time, has gone from pure solar and pure wind to a hybrid of solar-wind and storage. It can be battery storage, or it can be pump storage, but how do we profile and give the solution which meets the consumer requirement 365 days. I think this is something that no other company is offering,” says Sinha.

MULTI-PRONGED STRATEGY

In order to meet different kinds of energy needs, Tata Power is leveraging multiple clean energy technologies, including solar, wind, hydro, hybrid, floating solar, and advanced storage solutions like battery and pumped storage systems. Breaking away from traditional utility models, the company is bundling its services into a digital Energy-as-a-Service (EaaS) platform, enabling individuals, businesses and communities to access round-the-clock clean energy tailored to their needs. Tata Power is also a leader in rooftop solar and already completed 1,00,000 installations. It aims to reach three million households in the next three years, supporting the PM Surya Ghar Yojana.

 

“How do we bring the ability to individual consumers to produce energy and use it and give some to the grid? The other model we are working on giving to a cluster of homes or a cluster in colonies. Many of these solutions are democratising the use of energy so that consumers are not stuck with a monopolistic supplier,” he says.

REACHING BEYOND

India’s solar expansion has long been hindered by its reliance on imports, particularly from China, a vulnerability exposed further by the Covid-19 pandemic, To address the supply chain challenges for solar modules, Tata Power recently inaugurated the country’s single largest solar cell and module manufacturing unit in Tamil Nadu. The 4.30 GW photovoltaic cell and module manufacturing unit has been built by the company’s solar manufacturing arm, TP Solar Ltd., with an investment of Rs 4,300 crore.

“I think with the manufacturing that we have set up, we have a very good supply chain now. We are not dependent on someone else,” he says.

The indigenous production of solar cells marks a significant milestone, supporting India’s ambitious clean energy goals and reducing reliance on imports. The solar cell production, currently at a 2 GW capacity, will enhance Tata Power’s ability to meet the growing demand for high-quality, domestically produced solar components, especially for large-scale capacity-addition projects

Over the next five years, Tata Power plans to invest Rs 1.25 lakh crore in the energy sector. Of this, 50-55% would be in the renewable space, 30% in transmission and distribution, and about 20% in hydro and pumped hydro projects. In FY24, the company invested Rs 12,000 crore, and this is expected to rise to Rs 22,000 crore in FY25. Additionally, Tata Power is working on a hydropower project in Bhutan. The 5,000-MW project is a partnership between leading power companies in Bhutan and India aimed at creating a clean energy landscape. The projects include 2,000 MW of hydro, 2,500 MW of pumped storage, and 500 MW of solar capacity, ensuring round-the-clock energy supply to both Bhutan and India.

Beyond conventional power, the company is also eyeing nuclear energy, following the Indian government's decision to open the sector to private players. While nuclear projects have long gestation periods, Tata Power sees them as crucial to its future clean energy portfolio.

For the past two years, Tata Power has been actively exploring opportunities in the nuclear energy sector, focusing on key aspects such as technology, regulatory requirements, nuclear fuel sourcing, storage and disposal, potential plant locations, state-level statutory approvals, public support, water availability, nuclear liability, and third-party insurance.

ON TRACK

The company has maintained a steady growth trajectory, with increased profitability for 21 consecutive quarters. Sinha says the company is poised for even stronger performance, backed by planned capital expenditure across its three core businesses—generation, transmission and distribution, and renewables.

“There is a huge amount of consistency. A great foundation that has been laid for growth. The fundamentals of the company are right. I strongly believe we will continue to perform much better considering the type of capital expenditure that we have planned in all our three core businesses,” he says.

Sinha highlights three key priorities to drive future growth-accelerating project execution, despite challenges related to land acquisition and power evacuation, maintaining a strong focus on returns, and ensuring efficient cash management.

Analysts continue to view Tata Power as one of the best-positioned players to capitalise on renewable energy opportunities due to its comprehensive renewables platform. Tata Power also aims to add 5 GW of renewable capacity over the next two years.

“A strong focus on renewables and transmission will drive robust earnings growth for Tata Power. With a well-defined clean energy strategy, the company is targeting a 2.5x increase in PAT by FY2030E over FY2024. We expect PAT to grow at a 20% CAGR from FY2024 to FY2027E, with a healthy RoE of 14% in FY2027E,” says a Sharekhan report dated February 5. An ICICI Securities report describes Tata Power as an emerging end-to-end power solutions provider covering the entire value chain—from generation to distribution, trading, solar manufacturing, large-scale solar utility projects, and rooftop EPC solutions. “However, execution and order booking in the solar EPC segment, as well as the pace of renewable energy capacity additions, have been slower than anticipated. These will remain key areas to watch going forward,” the report adds.

Sinha believes Tata Power is well-positioned to leverage its expertise, industry knowledge, and technical capabilities to successfully scale up its renewable energy portfolio. 

@richajourno