Race To Renewable Energy 🔋

CHART OF THE WEEK 📈

India is a front-runner in the renewable energy race, standing 4th globally in installed capacity for solar and wind power. The National Electricity Plan undertaken by the Central Electricity Authority has been the cause of this success.

In just 5 years, there has been a meteoric 167% capacity addition in renewable energy capacity. This has taken the share of renewable energy in the total mix has increased from 22% to 42% in a very short span.

But there’s no stopping here, the next NEP aims to further this goal, with coal power capacity’s share in the total to drop from 58% to 38%, and further to 28% by 2032, with renewable energy making up more than 60% of the capacity mix by 2032!

Why Should I Care?

Not only is renewable energy steadily becoming a part of our lives, but it can also be a budding space to invest in, and one such company is Tata Power!

Here are 5 reasons why they stand to gain from this energy transition:

1. Tata Power has grown to become the largest private power distribution company in the country, with 30% of its energy portfolio being renewable sources (up from 16% in 2015), and aims to grow to 80% of its portfolio by 2030

2. With solar power being the talk of the town, the company has consistently grown its solar EPC order book to Rs. 12,000 crore (up 43% YoY) in FY22, and has also launched the first residential complex which runs on solar power in Mumbai

3. The company intends to invest Rs. 75,000 crore (1.7x its FY22 revenue) over the next 5 years towards capacity addition in renewables from its current 13.5 GW to 30 GW

4. Tata Power is also a leader in the EV sector, having set up 37% of all public charging stations as of 2022 and intends to grow this to 25,000 stations in the next 5 years

5. The GoI’s push for renewable energy is also significant, with the Union Budget 2023 underway. The budget in 2022 allocated Rs. 3,365 crore to solar energy projects (29% YoY growth) and with the net-zero goals of the Government, the budget will push the sector further via capex to grow energy storage and transmission

Coupled with their stellar record of being a socially responsible company, this gem amongst the Tata group is one of the top bets in our Socially Responsible Investing portfolio, being available at a discount to its all-time highs in 2022.