Tata Power , a key player in India's energy sector, experienced a decline in its share price following a significant policy development affecting its Mundra power plant. The company's stock fell 0.57% to ₹399.60, reflecting investor concerns over the potential impact on its operations and profitability.

Policy Change Impact

The Ministry of Power's decision not to extend Section 11 for imported coal-based power plants beyond June 30, 2025, has led to the shutdown of all five units of Tata Power's Mundra power plant since July 1. This policy shift has raised questions about the plant's future operations and its effect on the company's financial performance.

Financial Implications

According to IIFL, a leading financial services firm, the shutdown could have significant financial repercussions for Tata Power:

• A potential 5-8% reduction in Profit After Tax (PAT) expectations
• Estimated monthly losses ranging from ₹100-150 crore for each month of shutdown

Analyst Perspectives

Several brokerage firms have weighed in on the situation:

• IIFL: Attributes the non-extension of Section 11 to the absence of peak power shortages and the government's focus on finding a long-term solution for the Mundra tariff issue.
• Axis Capital: Notes that Tata Power's management is hopeful for a permanent resolution to the power purchase agreement with procuring states.
• JM Financial: Anticipates potential tie-ups with five beneficiary states - Gujarat, Maharashtra, Rajasthan, Punjab, and Haryana.

Mundra Plant Performance

The Mundra plant has shown varying levels of operational efficiency in recent years:

Stock Performance

Despite the recent setback, Tata Power's stock has demonstrated resilience in the medium term:

• Current price: ₹399.60
• 6-month performance: 11.44% gain

The company's ability to navigate these regulatory challenges and secure favorable agreements with state governments will be crucial for its future performance and investor confidence.

Tata Power Company Limited 's subsidiary, Tata Power Renewable Energy Limited (TPREL), has made a significant stride in the energy storage sector by signing its first Battery Energy Storage Purchase Agreement (BESPA) with NHPC Limited. This landmark deal involves the implementation of a 30 MW / 120 MWh battery energy storage system (BESS) at the 220 kV substation in Kerala.

Project Details

The agreement, secured through a competitive bidding process, is part of NHPC's BESS Tranche-I tender. The end-user of this cutting-edge battery storage system will be the Kerala State Electricity Board Limited. This project marks a crucial step in addressing peak power demand, enhancing grid flexibility, and facilitating the seamless integration of renewable energy in Kerala.

Broader Initiative and Timeline

This project is a component of NHPC's larger initiative to develop 125 MW / 500 MWh of standalone battery storage capacity in Kerala. The initiative aligns with the Indian government's ambitious goal of achieving 500 GW of non-fossil fuel capacity by 2030.

Key points of the agreement include:

• A 12-year Battery Energy Storage Purchase Agreement (BESPA)
• Commissioning scheduled within 15 months
• Implementation under Ministry of Power guidelines

Impact on Tata Power's Renewable Portfolio

With this new addition, TPREL's total renewable capacity has grown to approximately 10.9 GW. This includes:

• 5.6 GW of operational projects (4.6 GW solar and 1 GW wind)
• 5.3 GW under various stages of development

Significance for Kerala's Energy Landscape

The battery storage system is expected to play a vital role in Kerala's energy infrastructure by:

1. Addressing peak power demand
2. Enhancing grid flexibility
3. Enabling seamless integration of renewable energy

This project positions energy storage as a key enabler of round-the-clock renewable power and grid resilience in the state.

Tata Power's Clean Energy Commitment

Tata Power Company Limited, with a diversified portfolio of 15.7 GW, continues to lead India's clean energy transition. The company currently has 6.9 GW of clean energy generation, constituting 44% of its total capacity. Tata Power has set an ambitious goal of achieving carbon neutrality before 2045.

This BESS project with NHPC not only marks TPREL's first win in the standalone BESS segment but also reinforces its commitment to delivering advanced, dispatchable, and sustainable energy solutions. As India moves towards a greener future, such initiatives in battery energy storage systems are crucial for maintaining grid stability and supporting the country's renewable energy goals.