After reducing debt substantially, JSW Energy has hit the growth button with a Rs 75,000-crore investment plan. The company has reduced receivables from power distribution companies by 38 per cent to Rs 1,300 crore as of March-end. With the revival in demand, the company is focusing on green energy for future expansion. Joint Managing Director, JSW Energy, Prashant Jain, spoke to BusinessLine on its future plans. Excerpts:
What are your expansion plans?
The board has approved capacity expansion by 20 GW by FY30 with investment of Rs 75,000 crore. During this quarter, we have signed a PPA (power purchase agreement) of 958 MW between JSW Steel and JSW Energy to supply green power by solar and wind energy. With this, our PPA portfolio will increase to 1260 MW. We will commission 2.5 GW of green power by FY’23. In all, we will be a 7 GW company by June 2023 and our renewal portfolio will increase from 33 per cent to 65 per cent. Thereafter, we will add fresh capacity of 2 GW every year.
How will the expansion be funded?
Of the total investment, 25-30 per cent will be equity and the rest debt. The entire equity will be funded by internal accruals. We are generating Rs 2,000-Rs 2,200 crore profit every year. We are very comfortable with adding fresh debt because our Debt to Equity has come down to two times against the industry average of 5 times. It does not mean that we will be increasing debt to that level.
Any plans to issue more green bonds?
We raised $710 million in the last quarter at 4.12 per cent. There was a good appetite for the issue as the initial book was subscribed five times. The bonds are trading at 3.2 to 3.9 per cent right now and investors are happy. We will be exploring the opportunity to issue more green bonds in the international market.
JSW Renew Energy, SECI sign pact for selling 540 MW green energyThis is the single largest power purchase agreement to be signed by SECI for wind/blended wind category
How do you see the entry of Reliance Industries in the renewable energy space?
We are eagerly awaiting Reliance’s entry into green power. They are talking of setting up a Giga factory to produce 10 GW of solar panels. We will be happy to source solar panels from Reliance. Other Indian companies such as Adani and Tata Power are also looking to set up plants to produce solar panels. Power companies can think of moving away from sourcing panels from China with so many Indian companies entering the fray.
Is the sharp rise in panel prices a cause for concern?
Solar panel prices have gone up dramatically due to the uptrend in the commodity cycle. This will have an impact on power tariffs in future bids. Given the kind of bids people have made, I’m not sure that they are viable and whether they will be able to fulfil their commitment. That is exactly why we were conscious and selective about the bids we placed. I’m sure tariffs will go up in future bidding for solar projects.
Will domestic sourcing bring down panel prices?
It will take some time. The Government has come out with a specific scheme of PLI (performance linked incentive) for the renewable sector and that is exactly why some of the players want to get into this space. It will take three to five years to source panels at a competitive price in India. There is enough turbine capacity to produce wind energy. In three years, the same will be true for solar panels also, with both demand and production going up. Till then we will have to meet our requirements through imports.
Any expansion plans on the thermal side?
We have no plans to expand thermal power capacity. The existing thermal power is running well and most of the power is sold through PPAs. As the steel production capacity goes up at Vijayanagar, we will add thermal capacity there. We plan to operate the existing thermal power plant up to its life cycle and incremental capacity will come only in green power.
JSW Energy net profit up 17% at ₹105 cr in March quarterRevenue down 12% at ₹1,570 crore
Any plans to sell of thermal power that the PPA has been signed?
We have no plans to sell them. On the other hand, we are taking initiatives to reduce greenhouse gas emissions. This year we brought it down by 11 per cent by reducing specific coal consumption in power plants. We have 100 per cent utilisation of solid waste, ash and wastewater. We are continuously reducing our carbon footprint. We want to bring it down to zero by increasing green power.
How do you see the split between thermal and green power?
Of our entire portfolio, green power is 35 per cent and will increase to 70 per cent by FY’25 and 85 per cent by FY’30, with the commissioning of 13 GW capacity. Of the 20 GW, 17 GW will be renewable, including wind, hydro and solar.