Mahindra Group’s green arm Mahindra Susten recently forayed into the hybrid energy sector with a Rs 1,200-crore investment into a wind solar project. Deepak Thakur, CEO & MD, Mahindra Susten, told Raghavendra Kamath that the investment is part of the company’s plans to develop 5500 MW of renewable energy over the next five years.
What is the kind of opportunity you see in group captive space?
In our first solar-wind hybrid project, almost 50% capacity is for group companies and third-party offtake is being considered for the balance. Mahindra Group is already a RE 100 signatory and as per this mandate, group firms are committed to transitioning to green energy. Susten will partner with group businesses, enabling them to meet RE transition goals.
What are your plans in green hydrogen space?
Green hydrogen is an evolving opportunity, however, in very nascent stages, within the domestic context. At Susten, we are assessing various dimensions of this opportunity, such as domestic demand trends across various industry segments, offtake prices movement, green hydrogen economics versus conventionally produced hydrogen/ammonia and other factors including VGFs and green mandates, etc.
Green hydrogen exports to developed markets like the EU, South Korea, Japan also seen as huge opportunity. This is expected to provide an initial momentum to the build-up of the country’s green hydrogen generation capacity. In this context, it would be crucial to also deep dive into the competitiveness of supplies across other competing hubs from Australia, West Asia and Latin America. Pertinent strategies will have to be adopted to gain a reasonable share of the addressable global market for Indian companies and the country per se. The focus in medium term would be to continue building high pedigree RE projects and evaluate the supply of green electrons competitively to green hydrogen developers.
How much of renewable energy you are developing now?
While we have flipped 1.5 GWp of solar assets to the InvIT, which has Susten and Ontario Teachers’ Pension Plan as sponsors, Susten won bids for five solar projects with a cumulative capacity of ~1900 MWp (megawatt peak) last fiscal and is also executing a100 MW solar-wind group captive project. Overall, we plan to add 5.4 GWp as part of our five-year plan, which will include solar, wind-solar hybrid, RTC (round the clock), FDRE (firm dispatchable renewable energy) and storage projects. Of the above six projects, three are under execution.
Most of your peers have crossed 10 GW mark. Are you expanding slowly and cautiously?
We are among the earliest RE players in the country. Susten started primarily as a third-party EPC provider and has built over 4200 MWp of solar projects over a decade-and-a-half. We began developing our own RE assets around 2016 and we created 10 projects totaling ~ 1600 MWp capacity till 2021. We now plan to grow this by almost 5 times over the next 4-5 years.
In January, we sold, 1500 MWp of operating solar assets to InvIT, which has since also been listed. High pedigree Mahindra parentage of Susten has been further supplemented with OTPP, coming on board, while capital commitments from both shareholders ensure the robustness of our growth plans, the presence of in-house ‘best in class’ EPC capabilities support efficient build out of 5.5 GWp of green energy capacities.
While there are stated RE capacity targets for 2030 for the country, in the near term, the MNRE road map of about 50 GW capacity being tendered annually reinforces large addressable opportunity. Whereas these capacities would have NTPC, SVJN, SECI, NHPC as the Renewable Energy Implementing Agencies (REIAs), it is expected that certain states would also have own utility RE tenders, in addition. Renewable capacity requirements for green hydrogen would be over and above. Business pipeline achieved by Susten last fiscal and growth in utility-scale RE offtakes from now to the turn of the decade, drives us to evaluate the possibility of expanding our plan in sync with emerging market opportunities.
Despite the rise of RE, thermal remains mainstay of mitigating India’s power demand? Is RE meaningfully helping to mitigate demand?
RE is indeed making significant strides in the power sector. The growth rate of RE is much higher than that of thermal power, and in absolute terms, the new RE capacity being installed surpasses that of thermal energy. For instance, RE capacity addition is expected to rise by 25 GW in FY25, up from 18.5 GW in FY24 — 135% growth y-o-y, driven by a substantial project pipeline of 89 GW. However, due to the intermittency of RE and the need for base load to be supported as also a requirement for round-the-clock power supply, thermal power remains essential.
Further, integrating a high percentage of RE, into the existing power grid, requires substantial upgrades and the inclusion of smart grid technologies to manage variability and ensure stable supply; steps in this direction are ongoing, but these would fructify in a phased manner till the end of the decade and beyond. To address these imperatives and challenges, the government has announced the addition of 80 GW of new thermal capacity by 2031-32. While RE will continue to be the key driver of generation capacity addition, thermal power is necessary to ensure reliability until RE technologies especially storage reach critical mass and viable economics, enabling RE to compete with thermal power, on dispatchability.
From: financialexpress
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