MUMBAI
:
One of India’s largest renewable power generators, Tata Power, has not participated in the country’s nascent International Renewable Energy Certificates (IRECs) market—considered an alternative to carbon credits—citing a lack of buyers.
Praveer Sinha, Tata Power’s managing director and chief executive officer, said policy intervention—in terms of target-based incentives and disincentives—is a must to breathe life into the IREC and carbon credit market in India.
“There are no buyers today,” Sinha said. “In India, there is no regulation that incentivizes or penalizes heavy polluters for their emissions. Without that, carbon credits will not take off.”
Tata Power has registered with Green Certificate Company (‘GCC’), the Sheffield, UK-based company that issues IRECs. However, Sinha said Tata Power is not applying for these certificates.
IRECs are energy attribution certificates that indicate that the holder has consumed renewable energy. Each IREC represents one megawatt-hour (MWh) of electricity. These certificates are issued to companies generating renewable power, who can then sell them in a secondary market. Companies utilizing power from non-renewable sources may purchase IRECs to meet their sustainability targets.
In India, IRECs are traded on the Indian Energy Exchange (IEX) and the Power Exchange India Ltd (PXIL). They are mostly purchased by power distribution companies, captive power plants, and large consumers to meet their Renewable Purchase Obligations (RPO), which are targets for minimum renewable power consumption set by the power ministry.
Prices of IRECs fell to an all-time low in September due to oversupply, as per a report by S&P Platts. The fall in prices was “driven by significant oversupply as unconsumed certificates continue to flood the market, with demand lagging far behind,” S&P analysts noted.
Meanwhile, the Bureau of Energy Efficiency (BEE) is developing India’s Carbon Credit Trading Scheme (CCTS), a framework that will govern voluntary and compliance-based carbon trading in India.
A carbon credit represents avoidance of emission of one tonne of carbon dioxide in the atmosphere and companies with high emissions can purchase these credits to offset the impact of their emissions.
Profit growth trajectory to continue
Tata Power, which has been on a profit growth trajectory for 21 quarters, will continue on the path in the mid-term as the company’s investments across the power value chain start paying dividends, Sinha said.
The company on Tuesday reported a 10% y-o-y growth in its profit for the December quarter at ₹1,188 crore. Revenue grew 2% to ₹15,118 crore.
Tata Power has invested in solar cell and panel manufacturing, rooftop solar solutions, and power transmission and distribution, in addition to power generation.
It recently commissioned its 4-gigawatt per annum manufacturing line for solar cells in Tirunelveli. This will also help the company boost its market share in the rooftop solar space. The company is presently the largest rooftop solar player in India with a 13% market share that it wants to take up to 20%.
“Our investments will now be paying off and the growth trajectory will continue,” Sinha said.
To fund its investments in new projects, including two pumped-hydro storage plants in Maharashtra, Tata Power in November signed a $4.5 billion funding line from the Asian Development Bank (ADB). The funds will be received over the coming three years and will be used to not just fund new projects but also refinance some of the existing funding lines, bringing down the company’s total cost of borrowing.
