Tata Power’s arm to set up 41 MW solar plant in TN; stock rises 2%

Shares of Tata Power Company rose nearly 2% in opening trade on Thursday after the power producer said that its subsidiary, Tata Power Renewable Energy Limited (TPREL), will set up a solar plant at Thoothukudi, Tamil Nadu for TP Solar Limited. The Tata Power stock has witnessed decent rally in the recent past thanks to back-to-back orders for its renewables business.

Currently, Tata Power's renewable portfolio stands at around 7.8 Gigawatt (GW), with 4.1 GW operational and 3.6 GW under implementation. The company is already operating a solar cell and module manufacturing plant of 500 Megawatt (MW) capacity, each at Bengaluru.

Reacting to the news, Tata Power shares opened 1% higher at ₹262.40 against the previous closing price of ₹259.65 on the BSE. In the first hour of trade so far, the counter climbed as much as 1.7% to ₹264.15 levels, while the market capitalisation increased to ₹83,846 crore.

Earlier this month, the largecap stock hit a 52-week high of ₹276.50 on September 8, 2023. The stock has risen 44.5% in the last six months from its 52-week low of ₹182.45 touched on March 28, 2023. The share price of Tata Power has gained 23% in a year; 24% in the calendar year 2023; and more than 7% in a month.

In an exchange filing on Wednesday, Tata Power said that TPREL will set up a 41 MW captive solar plant for TP Solar for its upcoming 4.3 GW solar cell and module manufacturing facility at Tirunelveli, Tamil Nadu. TP Solar is a subsidiary of TPREL.

“The captive plant will help generate 101 million units of electricity and offset around 72,000 metric tonnes of CO2 emissions annually,” the Tata Group company says in the BSE filing.

As per the company, the captive solar project will be commissioned 12 months after the signing of the project development agreement (PDA). TPREL has established TP Govardhan Creatives Limited, a specialised entity entrusted with the development, operation, and upkeep of this facility for TP Solar.

TP Solar’s manufacturing plant is expected to start commercial production of cells and modules by FY24-25.

Ashish Khanna, CEO, TPREL, said, “Green energy supply to our state-of-the-art 4.3 GW solar cell and module manufacturing facility from the captive solar plant is a shining example of our commitment to a sustainable transition to green energy. This arrangement will act as a model for all the upcoming solar component manufacturing facilities to source green energy for their production and the resulting domino effect will significantly contribute towards the country’s ambitious target of achieving 500 GW of non-fossil fuel-based energy capacity by the end of this decade.”

With this new captive solar plant, TPREL’s total capacity will expand to 7,877 MW including 3,720 MW of projects at different stages of implementation, and an operational capacity of 4,157 MW, comprising 3,154 MW solar energy and 1,003 MW wind energy.

Earlier this month, the U.S. International Development Finance Corporation’s (DFC) board of directors had approved the provision of up to $425 million in financing in TP Solar for its upcoming solar cell and module manufacturing plant in Tamil Nadu. DFC is America’s development finance institution.

DFC partners with the private sector players across the globe to finance solutions to the most critical challenges facing the developing world today. The financing support came at a time when global leaders were deliberating on energy transition and other critical sustainability challenges at the recently concluded G20 Summit in New Delhi. This financing support will contribute towards securing India’s commitment to achieve 500 GW of clean energy targets by 2030, as per the company.

Last week, TPREL signed an agreement with Dugar Power Private Limited, a subsidiary of Dugar Group which is a prominent business house in Nepal. As per the company, the tie up indicated TPREL's strategic entry into Nepal's rapidly evolving renewable energy sector.

On September 14, TPREL inked a power delivery agreement with Xpro India Limited, through a special purpose vehicle (SPV), for the development of a 3.125 MW AC Group Captive Solar Plant. The SPV will develop, operate, and maintain this captive solar power facility.

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