‘We foresee opportunity in water treatment and smart cities’

Tata Cleantech Capital Limited (TCCL), a joint venture between Tata Capital Limited and International Finance Corporation (IFC), has been significant in helping the country’s renewable energy sector achieve the 175 GWgoal set for 2022. It has thus far funded projects with a cumulative output of over 3.44 GW. This has translated into savings of approximately 150 million tonnes of CO2 emissions over its 25 years lifespan.

Manish Chourasia, MD and CEO of Tata Cleantech Capital Limited, in an interaction with BusinessLine , outlines the company’s future plans. Excerpts:

What role do you see Tata Cleantech Capital playing in the rapidly growing renewable energy sector?

As a company TCCL offers end-to-end business solutions in the clean tech space, offering consultancy, funding and host of other solutions while bringing in the Tata group synergies. The company identifies, evaluates and funds energy projects in wind, solar, small hydro, biomass and in energy efficiency infrastructure, buildings and industry.

A huge opportunity is unfolding in water treatment and we foresee a bigger role in the upcoming smart cities where energy efficiency and renewable projects will get a major impetus. Over the years, companies have borrowed funds at higher interest rates. Such companies are looking at bringing down costs by lowering the interest rates, this provides opportunity for refinance. As a Non Banking Financial Company, we borrow and lend and help bring down costs.

We have a number of options to raise funds. Rating agencies Crisil and Icra have rated us at AA+. We do not have any NPAs.

How do you see the growth of renewable energy in the backdrop of steep drop in prices and big push from the Government? Is this drop sustainable?

The drop in prices of solar projects has been mainly due to cost of panels coming down by about 55-60 per cent. From 55 cents to a watt it has come down to about 33-35 cents per watt. This is due to huge capacity built up. All this has resulted in fall in bidding prices in the solar parks, which we believe is a better model as there is a guaranteed off take by discoms.

With the drop in prices and huge potential for growth, there is a lot of activity in the sector. Funds are available and there is willingness to support the sector. A number of companies who have completed their projects are seeking to divest and reinvest in new plants. This is resulting in mergers and acquisitions. We expect a paradigm shift in the sector with the Government’s keenness to ensure that about 40 per cent energy comes from renewables by 2030.

In which other areas are you expecting to play a significant role?

As an infrastructure finance company while we have funded a number of projects, both debt finance and project lending, we have been fairly active in the techno-commercial segment. We are in the process of analysing the carbon footprint for Chennai and Bengaluru, Mumbai, Bhubaneshwar and Jamshedpur. This will help work on social and environment management systems.

With an asset base of $ 375 million, we have funded over 80 plus projects with an aggregate capacity of part funding of 3.75 GW. There is a huge opportunity to play the role of financial advisor in the areas of debt syndication, mergers and acquisitions, which are likely to accelerate, and facilitate both debt and equity for new projects.

Solar parks are expected to provide a big push, but there are some concerns as well. What is your assessment?

Last two years has been witness to significant boost. The solar sector has installed capacity of 12 GW. This year, the capacity addition has been 5.5 GW. The wind energy has a capacity of 31-32 GW. We expect significant growth from the Centre’s move to develop solar parks, with their target doubled to 40 GW from 20 GW.

While a number of positives point towards strong growth momentum of the renewable energy sector, the financial health of discoms is a key issues to watch out for. Discoms have agreed to buy power between ₹4 to ₹6-7 per unit and the cost of power has come down to about ₹2-3 per unit, this poses a challenge for discoms. About 25 States have already joined the Uday scheme, they continue to face a lot of headwinds in terms of transmission losses.

Rooftop installations are set to gather momentum with new tenders. What is your perspective on this?

The industrial and commercial power supply in some States and major cities works out to about ₹10-12 per unit and rooftop installations can help address these high rates in a big way. This will insulate against future tariff hikes and provide energy for over 25 years.

A number of large tenders are coming up in various cities and the Railways has come out with a large tender. The Energy Services Companies model will also gather pace as the focus will be on energy efficiency.

Recently, we funded Mumbai’s largest solar rooftop project of 450 KW at the National Centre for Performing Arts.

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