Torrent Power

Growing renewable energy portfolio

Gujarat-based Torrent Power, promoted by the Torrent Group, is an integrated power utility operating in the areas of power generation, transmission, distribution, and manufacturing and supply of power cables in India. The company forayed into the power sector in 2011-2012, by taking over Mahendra Electri­cals, renaming it Torrent Cables Limited, now me­r­ged with Torrent Power Limited. It ma­de its mark in renewables by successfully commissioning its first 49.6 MW wind po­wer plant at Lalpur, in Jamnagar district, Gujarat in March 2012. While the firm’s port­folio as a power producer has been heavily dominated by gas-based capacity so far, increasingly, more renewable ass­ets have been added to it in recent years. The company’s recent activity in the acquisition and competitive bidding space for green projects indicates a strong interest in the renewables’ space.
Current portfolio
Torrent Power has a total installed generation capacity of 3,879 MW, with 2,730 MW of gas-based capacity, 787 MW of renewables capacity, and 362 MW of coal-ba­sed capacity. It also has 815 MW of re­ne­w­able power projects under development, of which 515 MW of capacity is tied up under projects for which letters of award (LoAs) have been received and power purchase agreements (PPAs) have been signed. Of the total capacity of renewables, 82.5 per cent (649 MW) is wind po­wer capacity, while the remaining 17.5 per cent (138 MW) is solar power capacity. As Torrent power has a dominant share of wind power compared to solar, its executed projects are largely located in wind-rich states such as Gujarat, Karnataka and Maharashtra. A large share of the projects is located in the state of Gujarat, particularly in Jamnagar, Charanka near Su­rat, Kutch, Rajkot and Bhavnagar. So­me projects are also located in the Gul­ba­r­ga and Raichur areas in Karnataka and Osmanabad in Maharashtra.

Recent acquisitions and tenders

Torrent Power has been expanding its re­new­ables’ portfolio, with one of the key recent strategies being geared towards acquisition. The company has acquired more than 200 MW of renewable assets, including wind and solar, within a span of three months from July to September, 2021. Torrent Power signed a share purchase agreement in September 2021 to acquire 156 MW of wind power projects for about Rs 7.9 billion from Surya Vidyut, a subsidiary of Chamundeshwari Electri­city Supply Corporation Limited (CESC). Torr­ent Power has acquired 100 per cent of the share capital of Surya Vidyut Limi­ted from CESC Limited, Haldia Energy Limited and other nominal shareholders. Surya Vidyut operates 156 MW wind power plants, whi­ch sell power to discoms in Gujarat, Ra­jas­than and Madhya Pradesh, at the weighted average tariff of Rs 4.68 per unit. The Guja­rat discom has more than 60 per cent of the PPAs for these plants, with an average tariff of Rs 4.09 per unit.

Earlier, in July 2021, Torrent Power Limited acquired 100 per cent of the share capital and all securities of LREHL Renewables India SPV 1 Private Limited (SPV) from Li­ght­source India Limited and Lightsource Renewable Energy (India) Limited. The en­terprise value was Rs 3.17 billion, in­clu­ding the viability gap funding (VGF) rece­ivable. The procurement is subject to cus­tomary transaction closing conditions. As part of the acquisition, Torrent Power also gained control of the 50 MW solar power facility located in the Solapur district of Maharashtra and operating under Light­source. It won the bid to develop this project in a 450 MW auction held by the Solar En­er­gy Corporation of India in 2016 and began operations in 2018.

Another mode of expanding the company’s renewables’ portfolio has been thro­ugh participation in competitive auctions for the development of renewable energy projects. In February 2021, Torrent Power emerged as the lowest bidder for Andhra Pradesh’s solar auction for 6.4 GW of solar projects conducted by Andhra Pra­desh Green Energy Corpo­ra­tion. A tariff of Rs 2.47 per kWh was quoted by Torrent Power for developing 300 MW of capacity at the Kambadur Ultra Mega Solar Park located in Anantapuram district. In the same mon­th, Torrent Power Generation and Adani Green Energy were declared winners in Torrent Power Limited’s auction to develop 300 MW of solar capacity in Gujarat. Under this tender, Adani Green and Torrent Power each won a capacity of 150 MW at a tariff of Rs 2.22 per kWh. The tender was earlier issued in January 2019, but later reissued in August 2019 after being modified by Torrent Power to allow for an added capacity of 300 MW under the greenshoe option. The tender was well received and oversubscribed. Further, Torrent Power Generation also wanted to execute another 150 MW capacity under the greenshoe option.

 

Financials

As per Torrent Power’s financial results for the first quarter of the financial year 2022, it witnessed a 3.05 per cent year-on-year growth in its revenue from operations, up from Rs 30.07 in the corresponding period in the previous year, to Rs 30.99 billion this year. Although the company’s total income declined by nearly 44 per cent to Rs 2.08 billion compared to the same period in the previous year, this change has been attributed to two “one-off” events. In the financial year 2021, Torrent Power announced a total comprehensive income of Rs 13 billion, up by 13 per cent compared to Rs 11.5 billion in the financial year 2020.
Adjusting for a net one-off charge of Rs 210 million in the first quarter of 2022 and a net-off gain of Rs 2.34 billion in the first quarter of the financial year 2021, the total income increase is equivalent to 72 per cent. According to the firm, a reduction in transmission and distribution losses in franchised distribution business, a decline in interest cost and lower contribution from merchant power sales in gas-based businesses have been favourable to the adjusted total income.

Outlook

With improving financials, promising quoted tariffs and the intent to increase its re­newable capacity, the company is already on its way to becoming a significant market player in the renewable energy space. Renewables, which now form more than 20 per cent of its total portfolio, are expected to play an even larger part in its growth, moving forward. Since Torrent Power is a well-established player in the power sector, it will have an advantage in creating a gre­ater footprint in the green energy space. N

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