A top executive at Sterlite Power said 80 percent of the company’s new transmission bids and tenders will be for projects related to renewable energy, a move to pivot into the clean energy space.
“Government’s ambitious vision to achieve 450GW of renewable energy capacity by 2030 with an interim target of 175GW by 2022 has created immense opportunities for power transmission to evacuate green energy,” Pratik Agarwal, MD of Sterlite NSE 3.23 % Power, told ET. “Sterlite Power will participate in this massive effort for greening the grid, and we see about 80 percent of our new projects to be linked to the transportation of renewable energy.”
According to industry estimates, the government is likely to issue tenders worth Rs 20,000 crore to 30,000 crores for renewable energy transmission projects in the current financial year, compared to nil 10 years ago.
Sterlite is nearly on a par with state-owned Power Grid Corporation of India (PGCIL) in terms of market share, but is not looking to aggressively expand at the moment. “We have a very healthy share right now. We want to pursue challenging and impactful projects,” he said.
The government’s policy changes to reduce the power and renewable energy industry’s reliance on China will not affect the transmission sector, as over 99 per cent of their equipment is sourced from India, Agarwal said.
Having a market share of 30 per cent in the tariff-based competitive bidding (TBCB) segment, Sterlite also remains reluctant to enter the power distribution segment right now. “The Indian distribution regulations have to be reformed, just look at the AT&C losses,” said Agarwal. After structural reforms, Agarwal said Sterlitewill look into the financial and practical implications of such an undertaking, but distribution is “definitely on the 10-year plan,” he said.
Talking about Covid-19, Agarwal said that power demand has recovered significantly in June, and was at 97 to 98 per cent of pre-Covid levels in July. “This black swan event tested the resiliency of the energy and infrastructure industry in the country, and we came out on top,” he said. Although Sterlite suffered from some delays in cashflow due to the pandemic, Agarwal said that it is back to normal right now. “Our revenue was not connected to the cashflow, while the billing happened as usual,” he said.
Sterlite also remains bullish about the government’s ‘One Sun-One Grid’ project, which aims to connect the Indian grid as far as the Middle East, along with other Southeast Asian countries, to always keep generating power and transporting it to wherever necessary. “We trade in various other commodities—why don’t we import and export power as well?” said Agarwal. “The commercials are challenging, but the execution may not be.”
Although the ministry of new and renewable energy has currently put the One Sun-One Grid plan on hold, Agarwal remains confident of it resuming once the Covid-19 situation gets better.