AESL bets on energy solutions in pivot as distribution policies lag

Adani Transmission, which was recently rebranded Adani Energy Solutions (AESL), is shifting focus towards energy solution services. This is owing to a slower-than-expected pace of policy developments in the core distribution sector, according to a top company executive.

“The rate of progress in opening up the distribution segment and providing choice to consumers has been slow. As a result, we need to explore innovative methods to deliver solutions to our last-mile customers,” said Anil Sardana, managing director (MD) and chief executive officer (CEO).

“Internally, we’re focusing on two verticals — transmission and retail connect,” he added.

The retail connect vertical will comprise existing distribution, smart metering, cooling systems, parallel distribution licenses, and energy solutions.

Within energy solutions, Sardana said,  " A lot of semiconductor companies, new-age companies, are seeking energy solutions, which are innovative. And I think that's where our strength is."

At the end of June 2023, transmission brought in Rs 162 crore to the company’s quarterly profit, while distribution accounted for Rs 20 crore. The Mumbai electricity supply business is included in the distribution vertical.

According to Sardana, in the long run, retail connect and transmission will contribute equally to the company’s profit.

“Yes, at the profitability level. However, the equation will differ at the revenue level,” Sardana said.

In terms of revenue, at the end of June, the proportions were reversed, with Rs 884 crore from transmission and Rs 2,738 crore from distribution.

This disparity is attributed to the distribution segment’s turnover, which includes the input cost of power, a factor not applicable to transmission.

“Transmission will continue to grow faster due to its extensive pipeline, particularly as there is significant emphasis on renewable energy. I predict transmission will remain dominant for the next three-five years, after which energy distribution should start accelerating,” Sardana added.

On fund-raising plans, Sardana said the company is working on the eariler announced plans of equity infusion. In June, the company sought shareholder approval to raise funds through way of qualified institutional placements.

He said that there are no plans to divest any of the existing transmission assets but added that the company would consider acquisition opportunities within the transmission sector.