Coal doesn't make sense in today's environment: Avaada group chairman

Mittal has raised $2.6 billion since 2023 from Canadian fund Brookfield and Thailand's state-run oil company PTT group, enabling him to participate and win several bids this year

Avaada group Chairman Vineet Mittal, who heads one of India’s fastest-growing renewables companies, shares his plans with S Dinakar and throws light on how the sector can accelerate installations to meet the target of 500 Gw by 2030. Mittal, 49, a Harvard Business School alumnus, has raised $2.6 billion since 2023 from Canadian fund Brookfield and Thailand’s state-run oil company PTT group, enabling him to participate and win several bids this year. Edited excerpts.

Can you give us an update on Avaada’s business?

We have operationalised almost 5 gigawatts (Gw), and our target by 2026 is 11 Gw. We have much more than that in power-purchase agreements, and in manufacturing we are much ahead of the target. Almost every week, we are winning some deal or the other.

It has been noticed for the past few months you have been aggressive with your bids. Is there any reason behind this?

After we raised money from Brookfield, every month we have been winning. We have good capital, which we want to deploy.

How much capital are you sitting on?

A lot of cash. We are fully funded for the next few years. There is always an advantage when you raise the money ahead of time. Then you are able to walk the talk and execute your business plan. We have a plan of doing 5 Gw of wind energy by 2030, and are moving fast on pumped storage.

Is there any issue regarding environmental clearance for pump storage?

The process has been made cumbersome. It takes around 18 months for environment clearance and approval from the Central Electricity Authority (CEA). The government is overly sensitive to anything that has to do with hydro after one or two incidents, so it wants to check everything.

It can take more than four years from the day you are planning the concept, because for everything and at every stage the CEA investigates. The environment ministry has a cumbersome process, and so do state governments. Converting forest land needs to be done. The government has to simplify that.

But battery storage will not have any of these issues.

For batteries you don’t need much land. When we are building a 500 Mw plant, we are doing it in 1,500-2,000 acres. They (the government) are also opening up mandatory storage for batteries too. They have introduced a policy that wherever there is a solar plant, they need to have some hours for battery storage. Industry consultation is going on.

A large part of the transmission system is underutilised. The government will grant VGF (viability gap funding) for storage projects, and waiver in inter-state transmission charges will also be given for four-five years. And they will also allow sale on the exchange (power exchange).

When do you think this policy will come up?

October. In the last meeting we had, they said by October they would consult all the regulators, the legal wing, and the industry. They have done two-three rounds of consultation with us already.

Will there be a percentage of solar or wind capacity reserved for battery storage?

The process is for hybrid projects, where you have solar and wind. They would try to do two-four hours of storage.

What about tariffs? Does energy storage compete with coal?

Tariffs are Rs 5 (per unit or kilowatt hour) for thermal. All the new bids are happening above Rs 6. Capex for thermal is Rs 11 crore plus (a megawatt.) The government is realising that in solar and wind hybrid you purchase at Rs 3.50 -- the cost if taken on an LCU (loop control unit) basis will be Rs 2 or Rs 1.70. In terms of apple to apple comparison, solar and wind are ridiculously cheap, at least half the price of conventional power. So along with storage, if it comes in at Rs 5, even then it’s cheaper.

Why do you think they are trying to set up 80-100 Gw of new coal power then?

I don’t think it makes sense in today’s environment. Putting up coal-fired plants now is like committing a sin. With technology advancing, we should go all out and put up solar, wind, pumped storage, and battery, and make India go green. They should handhold us. The approval process is long and cumbersome, and they should reduce the duration.

Why are developers in India slow?

A point for both the industry and government to introspect. Though they need 500 Gw of solar, wind and pumped storage by 2030 they will keep bidding for 2 Gw every week or two weeks to get the benefit of bidding, a fall in prices of aluminum or copper, or a decline in interest rates. So they are trying to optimise every paisa.

India is a democracy. There are land-acquisition challenges, and right of way challenges. Power is on the Concurrent List of the Constitution. When the central government mandates renewable purchase obligations, there are states not complying with them.