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A Century-Old Indian Company Is Betting Big With Billion Dollar Investment In Renewable Energy

Tata Power, one of the largest thermal power companies in India, is making a bet of $5 Billion in the country’s renewable energy sector.

Over the next decade, the 103-year-old company plans to quadruple its clean energy capacity, taking it from around 3,417 MW now to around 12,000 MW. Currently, the company has a total installed capacity of 10,757 MW, of which approximately 30% comes from renewable sources.

“Most of the increase will come from solar energy, there will be large utility projects, as well as residential and commercial roofs,” said CEO of Tata Power, Praveer Sinha.

The company started investing in solar energy in 2011, and in recent years, Tata Group has strengthened its renewable energy portfolio. The conglomerate’s push for renewable energy came at a time when the clean energy sector in India is booming, and the country’s coal-fired power plants are under pressure.

The growth of Tata Power in the clean energy space has been based mainly on acquisitions so far. In September 2016, the company acquired Welspun Renewables Energy, one of the largest clean energy companies in India, for $1,400 Million, with around 1,140 MW of Welspun capacity in the bag.

The debt of Rs 48,000 Crore on Tata Power, which it has been trying to reduce through the sale of non-essential assets, can be a challenge for new investments in thermal assets; so, the pivot towards renewable energy makes sense.

So far, the bet seems to be working well. For the fiscal year 2018, the renewable energy business helped boost the company’s consolidated after-tax earnings, which increased 144% to $402 Million.

In addition, Tata Power plans to expand its investments by another $5 Billion at a time when other leading renewable energy companies, such as ReNew Power, are preparing large investments through IPO.

There is a growing competition among other large conglomerates such as the Adani Group, JSW Energy, and state-owned NTPC have also been pushing for renewable energy, keeping in line with the country’s ambition to have 175,000 MW of renewable energy capacity by 2022.

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