Power sector to require ₹3 trn investment in 5 years: Praveer Sinha

India must accelerate renewables, ease capital access, and streamline clearances to achieve its 500 GW clean energy goal by 2030, says Sinha

The power sector will need a “huge amount of capital” to meet the country’s needs, said Praveer Sinha, chief executive and managing director of The Tata Power Company, at the Business Standard Infrastructure Summit in New Delhi. “That capital has to come from multiple sources,” he told Sudheer Pal Singh of Business Standard. Edited excerpts: 

When we talk about Viksit Bharat 2047, what is the kind of infrastructure growth you see happening, especially in green energy? 

Talking about infrastructure, I think India is growing. In any area, our per capita consumption is one of the lowest — steel, power, water, or any sector. That is where, I think, we have a unique opportunity. For the next 10–20 years, we will continue to be the fastest growing in terms of GDP. 

We today have 6–7 per cent GDP growth. I think we have the capability to do 8–10 per cent and will not be satisfied with the 6–7 per cent growth. We need more airports, better roads, and better transportation. I do not see any reason why we cannot have that. 

We do not have great access to energy. In our country, we have 90 gigawatt (GW) of diesel power. I think that is a waste. There is no reason why we should have diesel power.

 

If you want to look at the way our infrastructure sector developed over the last decade, what are the top two things that you consider as fantastic achievements?

 

Let me stick to the power sector. At the turn of this century in 2000, India had an installed capacity of around 100 GW. Today, we are at 490 GW, and our aspiration is to have 500 GW of clean energy by 2030, and our total will be about 750 GW by then. That is the type of numbers that we are looking at. At that time (2000s), we had a very small amount of clean energy, and today around 50 per cent of our total power comes from clean energy. That is a huge improvement.

 

Now, look at solar. In 2015, we were 5 GW and today, we have 115 GW, and we have the aspiration to become 290 GW by 2030. In the last decade, we would typically add 5 GW every year. In the last few years, we are adding about 10–12 GW. Last year, we added 30 GW. We have done much better.

 

Let me compare with what China has done. Last year, we added 30 GW of renewable capacity, and China did 400 GW, with around 280 GW of solar. This year, in the first six months, China added 212 GW. That is the type of capacity addition that is happening. We are talking about 490 GW and they are talking about 2,500 GW. In terms of population, we are virtually the same. We need to work more, do more, and bring speed and agility.

 

Which are the two areas where we could have done better?

 

Every area we can do better. Whatever we have done is good, but it is not the best. We have a huge road ahead of us to make huge improvements in every area. We have done good roads, but there is so much more that we need to do. We have built many airports, but it is still inadequate. That is true for everything, whether road, railway, or ship transport.

 

How difficult is it for large corporates like Tata Power to access capital?

 

The power sector itself requires more than ₹3 trillion in the next five years. I think there is a huge amount of capital that is required. That capital has to come from multiple sources. Today, we have Indian banks that have the ability to fund projects. There is a whole lot of multilateral funding, international funding that needs to come. Today, India's cost of funding is one of the highest in the world. We are not able to get the type of funding that we are looking at to make the project viable. In most of the places internationally, you get money at 2–3 per cent, and we get it in double digits.

 

There are also a lot of restrictions, like insurance companies cannot do funding, cannot do equity holding, or financing as is being done. You have the Canadians and others from Europe and the UK who come into funding over here. Our insurance companies are not allowed to do it, and they are sitting on a huge pile of cash. I think there is a necessity to open up some of the channels which have been very restrictive. Look at long-term financing- most of the projects that we do are for 20–25 years. Why can't we have a 30- or 35-year tenure? In Tata Power, fortunately, we don't face such challenges. I do know companies that face such challenges.

 

Do you think we are taking the right policy steps specifically from the green infrastructure point of view?

 

Let me come to the policy part of it and the legal framework around that. We have a federal structure. We have the Union government which makes the laws. The implementation of it in most of the cases, especially in power, I see is a concurrent subject, and it is the states who take the call, whether it is on land, forest, or any other issue.

 

With 28 states and nine union territories, everyone has a different agenda. It is very difficult to get everyone to come on a common platform. Recently, a report said to set up a solar plant in India, you require 2,700 approvals and clearances. I think there is so much more that needs to be done. The speed at which legislations have to come, and the speed at which the enforcement of those legislations has to happen. One great example that we have is the common GST Council. Possibly, you need a similar council for land clearances, for power, for water, and then only will we be able to see the great speed at which we can transform and make a difference in the country.