L&T looks to tap green business, more infra projects in West Asia

Over 30% of L&T's power order book is from green energy. It has also electrified 10% of Indian villages over the last decade and modernised systems in several towns

Larsen & Toubro (L&T) is looking to expand its power portfolio through a mix of overseas and government contracts in India. The global focus on green energy has brought opportunities for the company, while at the same time, high oil prices have increased the prospects of West Asian countries offering more infrastructure contracts.

More than 30 per cent of L&T’s current power order book is from green energy projects. The company’s distribution footprint includes electrification of about 10 per cent of villages in India over the last decade besides modernisation of systems across several towns. It is executing more than 3 GW solar projects in India and abroad.

According to Das, T Madhava Das, whole-time director and senior executive vice-president (utilities) L&T, most of the investment in the transmission business other than the Green Energy Corridors would be from intra state system strengthening by states in the short to medium term. “Power Grid (the central agency) focusing on ‘One Country One Grid’ which eventually became a success. Till then, the states were mostly building 132kV and 220kV networks. But in recent years, the need for upgrade is felt by state TRANSCOs and many states have upgraded their transmission and distribution (T&D) networks in the last five to six years,” he said.

Das cites the example of Rajasthan adopting a 765kV system. “We played our part in the Anta–Phagi link in Rajasthan. The company had put up 765/400 kV capacity air insulated Substation commissioned and executed on a turnkey basis a transmission line between Anta (Baran) – and Phagi (Jaipur) for the Rajasthan Rajya Vidhyut Prasaran Nigam Ltd at a cost of about Rs 2,500 crore. It was not only the first in the state but also the first transmission line stretched across 213 km on a single circuit line.

Tamil Nadu which once had to resort to renewable curtailments because of lack of transmission infrastructure came up with several 400kV projects. “Now, Kerala also is resorting to multi circuit lines and voltage level upgrade using the same corridor, etc,” said Das. Besides, West Bengal, Madhya Pradesh and Karnataka are also upgrading.

According to Das, funding is not much of a constraint for state-owned utilities despite their precarious financial health since states are finding ways to get funds from international financing institutions and power financiers, like Power Finance Corporation and Rural Electrification Corporation, to undertake the works. Also, to efficiently manage the network, states have started thinking about technological interventions like digital substations and distribution automation etc.

The transmission business, however, still largely comes from the government since participation of private developers is limited to only those projects awarded through tariff based competitive bidding mode. “There are limited players like Adani, Sterlite and Renew. Almost all the international orders are from government utilities. So, the order book from private players typically is about 5 per cent and almost entirely in India, as far as Power T&D (business segment) is concerned,” he added.

Das said while the current order book is progressing well, there was delay as far as fresh order inflow is concerned. On an overall basis, there is traction in execution as clients are also inclined to finish the projects on time, he added.

The first two quarters have not been very upbeat in India. With oil prices hovering above $70, order finalization in West Asia is strong. Though the customers there have become very selective about which projects should be taken up, once the decision is made they progress well. An example is Saudi Arabia. We see a lot of prospects from Thailand and the Philippines as well.

L&T started to do renewable projects more than a decade back after it put up rooftop solar at its campus in Chennai. Besides, it has done electrification in remote districts of Bihar with battery energy storage based microgrids. It also designed and executed one of the largest operating storage capacity of 16MWh in Andaman Islands. “So, we are well prepared for the green energy transition, having gathered experience both at the large scale Solar PV plants and at the microgrid level,” said Das.

The company is also looking forward to the next tranche of Green Energy Corridor projects in India. Several state TRANSCOs including the ones in south India have come up with certain projects. There are green shoots all around. As we have completed electrification of households the focus of distribution has now shifted to power quality and reliability. But, the projects from the much awaited Revamped Results Linked Distribution Scheme are yet to take off.