JSW Energy targets 10 GW capacity by FY25, acquisitions to fuel growth

Company in advanced talks to acquire Mytrah Energy and Vector Green

The energy arm of the Sajjan-Jindal-led JSW group proposes to ramp up its total capacity to 10 gigawatts (GW) by financial year 2024-25 (FY25) from 4.8 GW now, led by acquisitions. JSW Energy is in advanced talks to acquire Mytrah Energy and Vector Green, both renewable energy companies, which it hopes to close in the current financial year (FY23).

While the company signed an exclusivity pact with the 1.8-GW-Mytrah Energy in May to acquire it for an enterprise value of $2 billion, Vector Green, which has around 700 MW of renewable assets, is also being wooed by other players including Torrent Power and Sembcorp, valuing the overall transaction at nearly a $1 billion, sector experts said.

In a conversation with Business Standard, Prashant Jain, chief executive officer and managing director, JSW Energy, said the company was looking at various renewable energy assets to grow its business inorganically.

"Inorganic growth is an important part of our overall strategy. It will allow us to grow quickly. Wherever we see value accretion for all stakeholders, we will evaluate those opportunities from an acquisition perspective," he said.

Both Mytrah and Vector, said sector analysts, if finally acquired by the company, will add around 2.5 GW of capacity to JSW Energy's portfolio, taking its total capacity to 7.3 GW quickly. The balance 2.7 GW of capacity out of the 10-GW target set by the company is expected to be achieved organically, for which the company has a capital expenditure outlay of nearly Rs 16,000 crore sanctioned by its board. Of this, Rs 9,600 crore has been utilised so far, while the balance Rs 6,400 crore will be used this financial year.

The capacity expansion push by JSW Energy comes amid heightened competition in the industry.

Rivals such as Adani group, Tata Power and Reliance Industries (RIL) have all committed significant resources to green their energy portfolios over the next few years.

Tata Power recently said that it plans to spend Rs 75,000 crore to expand the capacity of its renewable energy business over the next five years. While RIL had committed Rs 75,000 crore last year to renewable energy as part of a three-pronged strategy to grow its green energy business in three years. And Adani Enterprises said it would invest $20 billion (Rs 1.48 trillion) over 10 years in the renewable energy sector.

Close to 70 per cent of JSW Energy's 4.8-GW installed capacity is thermal-based, while the balance (30 per cent) is renewable energy capacity. In the next two years, the company hopes to change this split in favour of green energy, with 55 per cent of installed capacity being renewable-energy-based and 45 per cent being thermal-energy-based.

On the organic growth front, the company is currently constructing 2.25-GW greenfield renewable energy plants, which is expected to come on stream in the next 12-18 months.

Once the Rs 16,000-crore capex has been utilised, JSW Energy will revert to a capex outlay of around Rs 8,000-10,000 crore, Jain said. It will be funded using a mix of internal accruals and debt, he said.