Tata Power Company Limited has been awarded the Letter of Intent (LoI) by the Odisha Electricity Regulatory Commission (OERC) for the distribution and supply of electricity in Odisha’s five circles that constitute the Central Electricity Supply of Odisha (CESU).
The five circles which constitute the CESU are the areas of Bhubaneswar (Electrical Circle I and II), Cuttack, Paradip, and Dhenkanal. Initially, the license for the supply of electricity is being offered for 25 years.
Currently, CESU is spread over an area of 30,000 square km, covering a population of 14 million with a consumer base of 2.5 million, while the average power demand of CESU is approximately 1.3 GW.
At present, Tata Power has a consumer base of 2.5 million, and with the addition of CESU, the figure is expected to touch the 5 million mark.
Speaking on the development, Praveer Sinha, CEO and managing director of Tata Power, said, “Tata Power has several successful public-private partnerships in the generation, transmission, and distribution in the country. Recently, our focus has been on increasing the company’s existing footprint in the distribution of electricity through Public-Private-Partnerships (PPP) with DISCOMs. This tie-up with CESU is the latest such partnership in the distribution business.”
The proposed acquisition of CESU by Tata Power will be through the formation of a special purpose vehicle (SPV) in which Tata Power will have 51% equity, and the Odisha government will have a 49% stake in the SPV.
Tata Power has a considerable presence in the country, and with its subsidiaries and jointly controlled entities, the company has an installed capacity of nearly 11 GW. Renewable energy assets account for almost 30% of the company’s portfolio.
Tata Power had earlier acquired distribution license in Mumbai, Delhi, and Ajmer. Tata Power entered into a similar PPP model after the privatization of the Delhi Vidyut Board in 2002. The aggregate technical & commercial (AT&C) losses in Delhi after the privatization has been brought down from a high of 53% in 2002 to around 8%, according to the company.
Privatization of power distribution companies has been seen by many project developers as a solution to the problems of the financial distress of these distribution companies and also the payment delays faced by many power developers, especially in the renewable energy sector. The success of this case of privatization will be closely watched by the industry.
Last month, the renewable arm of Tata Power, Tata Power Renewable Energy Ltd. (TPREL), signed a power purchase agreement (PPA) with Gujarat Urja Vikas Nigam Ltd. (GUVNL) for a 250 MW grid-connected solar project to be set up at the Dholera Solar Park in Gujarat. The Dholera solar park is estimated to cover an area of more than 27,000 acres upon completion.
Meanwhile, Tata Power and the Rockefeller Foundation have recently launched TP Renewable Microgrid Ltd., with plans to set up 10,000 microgrids in India by 2026. The new unit is expected to provide clean energy to nearly five million households, directly impacting the lives of 25 million people over the next decade, according to the Rockefeller Foundation. It will be the largest microgrid operator in the world, the company statement says. A microgrid is a small-scale power grid that can operate either on its own, disconnected from the other power grids, or in conjunction with them.