JSW Energy to spin-off thermal power plants for unlocking value

Suresh P Iyengar Mumbai | Updated on August 02, 2021

The company currently has 4,559 MW of generation capacity of which, 3,158 MW is thermal power

JSW Energy plans to spin-off its thermal power plants into a separate legal entity with plans to unlock value in the long run.

The company currently has 4,559 MW of generation capacity. Of this, 3,158 MW is thermal power, 1,391 MW is hydropower and 10 MW is solar power.

JSW Energy has already made a conscious decision to expand capacity only through green power.

Prashant Jain, Joint Managing Director, JSW Energy, told BusinessLine that the company has decided to appoint legal and financial advisors to reorganise grey and green energy businesses into separate entities to enhance value-proposition for stakeholders. The future of energy business lies in green power and the company is all geared to tap into it, he said.

Tying up financial resources to fossil fuel-fired plants is becoming increasingly difficult and has turned a costly affair as lenders turn ESG (environment, social and governance) score-conscious.

Lower interest cost

JSW Energy has managed to bring down interest cost from 8.67 per cent to below 8 per cent by pre-paying rupee debt, said Jain.

The company’s wholly-owned subsidiary JSW Hydro Energy raised ₹5,187 crore via green bonds priced at 4.12 per cent to retire high-cost debt.

The company is in the process of setting up 2,458 MW of green energy with 1,993 MW from wind, 240 MW of hydro and 225 MW of solar by March 2030.

“We have focused our growth strategies towards transforming our generation portfolio to 70 per cent renewable-driven by FY25. By embracing new age green energy as our foundation for dynamic growth, we are transforming ourselves to ensure that we become a ‘net zero’ contributor of greenhouse gas emissions by 2050 or even earlier,” said Sajjan Jindal, Chairman, JSW Group, in his address to shareholders.

JSW Future Energy, a wholly-owned subsidiary of JSW Energy, recently tide up with Australian Fortescue Future Industries Pty to separate hydrogen and oxygen from water and use them for industrial applications.

ESG score of each businesses will soon become important like the profit they generate as lenders including banks which lend to corporates will be ranked on the basis of the ESG score of its borrowers,

Published on August 01, 2021

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