Tata Power acquires 40% stake in Bhutan hydroelectric project, aims to participate in small modular nuclear reactors

Tata Power, one of the largest players in renewable energy, is increasing its investment in the sector, acquiring a 40 per cent stake in a hydroelectric project in Bhutan and also looking to explore the development of small modular nuclear reactors.

Last month in the Union Budget, Finance Minister Nirmala Sitharaman had announced that nuclear power is likely to form a very significant part of developed India’s energy mix and to achieve this, the government will partner with the private sector to build Bharat Small Reactors and conduct research and development on newer technologies in nuclear power.

“The government has announced that it will bring in a policy that will encourage public-private partnership. That means there will be a government entity along with the private sector that can develop these small modular reactors, which I am told are typically 200-300 MW. We are trying to work out the technical details and the nature of the opportunity as soon as we get more details. On our part, we will definitely explore this opportunity to leverage it so that we can enhance our clean energy capabilities,” said Praveer Sinha, CEO and Managing Director, Tata Power.

In the June quarter, the company had an installed capacity of 6.1 GW of clean energy, with a further 5.3 GW under construction.

Tata Power has tied up with Druk Green Power Corporation Ltd to develop the 600 MW Khorlochhu hydropower project in Bhutan with a 40 per cent equity stake. The estimated cost of the project is Rs 6,900 crore. The company will pay around Rs 830 crore for a 40 per cent stake in Khorlochhu Hydro Power Ltd.

“This project will be implemented over a period of five years and has received all approvals. We should be able to start operations in the second half of this year. Some of the energy that will be produced will be used only in Bhutan and some will be sold in India,” Sinha said, explaining the outline of the project.

This will be Tata Power’s second hydroelectric project in Bhutan. The company already has the 126 MW Dagachhu hydroelectric project in the Himalayan kingdom. Unit one of that project was commissioned in 2015. The Khorlochhu project will give it a wider reach in Bhutan, Sinha noted.

Tata Power aims to grow its clean and green energy portfolio to over 11 GW, which will account for 56 per cent of its total capacity, over the next 12-24 months. The company had earlier announced that two-thirds of its capacity would come from renewable sources by 2030, and Sinha said the company was on track to achieve that.

Tata Power on Tuesday reported a consolidated net profit of Rs 1,189 crore in the April-June quarter, up 4 per cent from a profit of Rs 1,141 crore a year earlier. Barring any exceptional gains in the year-ago quarter, the company’s profit rose 31 per cent in the first quarter.

Revenue from operations during the quarter rose nearly 14 per cent to Rs 17,294 crore from Rs 15,213 crore.

Tata Power incurred a capex of Rs 4,000 crore in the June quarter and plans to invest Rs 20,000 crore this fiscal. It will look at similar investments of around Rs 20,000-25,000 crore in the next 2-3 years, Sinha said.

Sinha noted that the company, while expanding its renewable energy capacity in the thermal power space, will consider options from time to time from an “energy security perspective” and depending on what returns they can offer.

At the same time, Tata Power is still looking at opportunities to strengthen its power transmission footprint. It has won the tender for 384 CKm (circuit kilometres) of 765 kV Paradeep-Angul substation worth Rs 2,300 crore, taking its total transmission network to over 2,000 CKm. Sinha said the company is confident of completing the project within 24 months.

“We continue to tender regularly and any good project where we can identify opportunities, we will do that. That (transmission) is a growth area, as is our renewable business, and we will continue to focus on that,” he added.