Torrent Power , a leading player in the Indian power sector, has achieved a significant milestone by securing a contract for a major power project in Madhya Pradesh. The company has been awarded a Letter of Award (LOA) from MP Power Management Co. Ltd. for the development of a 1,600 MW coal-based ultra supercritical power plant.

Project Details

• Capacity: 2x800 MW Ultra-Supercritical power plant
• Location: Madhya Pradesh
• Awarding Authority: MP Power Management Co. Ltd.
• Contract Type: Letter of Award (LOA)
• Project Value: ₹22,000.00 crore
• Tariff: ₹5.83 per kWh
• Model: Design, Build, Finance, Own, and Operate (DBFOO)
• Expected Commissioning: Within 72 months

Long-term Power Purchase Agreement

A crucial component of this deal is the inclusion of a long-term Power Purchase Agreement (PPA). This commitment provides Torrent Power with a stable revenue stream and ensures a consistent power supply for Madhya Pradesh.

Financial Implications

The project is expected to have a significant impact on Torrent Power's financial performance and capacity:

• Increase in Generation Capacity: The project will increase Torrent Power's total locked-in generation capacity to approximately 9.6 GW
• Largest Investment: This represents the Torrent Group's largest investment in the power sector

Technology and Efficiency

The power plant will utilize ultra-supercritical technology, known for its higher efficiency and lower emissions compared to conventional coal-based power plants. This aligns with the growing emphasis on more environmentally conscious power generation methods, even within traditional fossil fuel-based systems.

Market Response

The market has responded positively to this development:

• Share Price: Torrent Power shares gained 2.53% to ₹1,258.30
• Trading Volume: 28.52 lakh shares worth ₹359.97 crore were traded

Analyst Outlook

Morgan Stanley has maintained an Overweight rating on Torrent Power:

• Target Price: ₹1,444.00
• Expected Returns: The brokerage expects the plant to generate internal returns of 15-17%
• Financial Structure: Anticipated 70:30 debt-equity ratio

The brokerage also noted Torrent Power's strong balance sheet with a net debt-to-EBITDA ratio of 1.4x and a net debt-to-equity ratio of 0.4x.

Strategic Importance

This contract marks a significant expansion of Torrent Power's generation capacity and strengthens its presence in Madhya Pradesh. The project is likely to enhance the company's portfolio and contribute to meeting the growing energy demands of the region.

The successful securing of this contract demonstrates Torrent Power's capabilities in handling large-scale power projects and its competitive position in the Indian power sector.

Torrent Power Limited , a leading integrated power utility in India, has received approval to develop a massive 1,600 MW coal-based power plant in Madhya Pradesh. This project marks a significant expansion for the company and is set to become the single largest investment by the Torrent Group in the power sector.

Project Details

The project involves the construction of a greenfield 2x800 MW Ultra-Supercritical power plant, which will be developed on a Design, Build, Finance, Own, and Operate (DBFOO) model. Torrent Power secured this project through a competitive bidding process conducted by MP Power Management Company Limited (MPPMCL).

Key aspects of the project include:

• Capacity: 1,600 MW (2x800 MW)
• Technology: Ultra-Supercritical, ensuring higher efficiency and lower carbon emissions
• Location: Madhya Pradesh
• Investment: Approximately ₹22,000.00 crore
• Power Purchase Agreement: 25-year contract with MPPMCL
• Tariff: ₹5.83 per kWh

Economic Impact

The project is expected to generate substantial revenue for Torrent Power, with estimates suggesting annual earnings of approximately ₹6,500.00 crore. This long-term agreement provides a stable income stream for the company over the next quarter-century.

Environmental Considerations

While the project is coal-based, Torrent Power emphasizes the use of Ultra-Supercritical technology, which is known for its higher efficiency and lower carbon emissions compared to conventional coal power plants. This aligns with the growing focus on reducing the environmental impact of thermal power generation.

Employment Generation

The project is anticipated to create significant employment opportunities:

• 8,000 to 10,000 direct and indirect jobs during the construction phase
• 1,500 direct and indirect jobs during the operational phase

Strategic Importance

Mr. Jinal Mehta, Vice Chairman and Managing Director of Torrent Power, highlighted the strategic importance of this project, stating, "This investment by Torrent Power will play a significant role in achieving GoI's ambitious target of 80 GW of additional coal-based capacity by 2032 to support the country's economic growth and for adding much needed base load capacity to stabilize the grid."

Torrent Power's Growth

With this new project, Torrent Power's total locked-in generation and pump storage capacity will increase to approximately 9.6 GWp and 3 GW respectively. This includes:

• 4.9 GWp of installed generation capacity
• ~3.1 GWp of under-development renewable projects
• 1.6 GW of thermal capacity
• 3 GW of pumped storage capacity

Project Timeline

The power plant is scheduled to be commissioned within 72 months from the date of execution of the Power Purchase Agreement (PPA). MPPMCL will arrange the required coal for the power plant under the SHAKTI Policy of the Ministry of Coal.

This project represents a significant step in Torrent Power's growth strategy and reinforces its position as a major player in India's power sector. The company's focus on using advanced technology for thermal power generation, while also expanding its renewable energy portfolio, demonstrates its commitment to meeting India's growing energy needs in a more sustainable manner.