CESC Ltd, the flagship of the RP-SG Group, is mulling ‘substantial investment’ in renewable energy generation, signalling a change in the company’s growth strategy.
The company, which supplies electricity to Calcutta and its adjoining areas, may set up around 3 gigawatt (GW) of renewable energy in more than one state. The CESC board on Wednesday discussed the possibility of expanding the renewable footprint to partially meet the purchase obligation of renewable power for its distribution business.
While the company did not give out investment numbers, it is estimated that 3 GW or 3,000 megawatt of renewable power could call for a Rs 10,000 crore commitment from the sponsor.
If materialised, the plan will signal a shift in CESC’s growth strategy. After the 600 megawatt thermal power plants in Haldia went for commercial production in January 2015, it has largely focused on its distribution business, participating in privatisation of distribution franchisees in Rajasthan and Maharashtra.
The company strategically shied away from building power plants given the regulatory risk associated with it. The board discussion, which was made public by a regulatory filing on Wednesday, underscores that CESC is pivoting itself towards renewable power.
On a consolidated basis, CESC has five thermal power plants, one solar power unit and six distribution licences. The combined capacity is 2,140 MW, including a 18 MW plant in Tamil Nadu.
The development follows a notification by the Union ministry of power mandating share of renewable power in a distribution area from FY25 onwards. The share of total renewable energy has to be 29.91 per cent in FY25, going up progressively.
During the annual general meeting of CESC in August, the company announced a renewable power purchase agreement for 100MW, indicating that more such arrangements are in the offing. CESC plans to build the renewable power stations itself.
Profit up 13.8%
CESC posted a 13.8 per cent rise in net profit on a consolidated basis to Rs 363 crore in Q2FY24 compared with Rs 319 crore a year ago. Revenue from operations went up by 11.2 per cent to Rs 4,352 crore compared with Rs 3,913 crore in Q2FY23.
