Open to wind, solar modes for future projects: Prashant Jain, JSW Energy

JSW Energy's joint MD and CEO Prashant Jain speaks about the company's growth opportunities

JSW Energy’s robust free cash flow generation will be ploughed back for expansion, Joint Managing Director (joint MD) and Chief Executive Officer (CEO) Prashant Jain tells Amritha Pillay. According to Jain, the company now has ample headroom to pursue growth opportunities. Edited excerpts: 

How has the power demand recovery been? Do you expect to end Q3 with a double-digit growth? 

October witnessed a power demand growth of 12 per cent year-on-year (YoY), led by resumption of economic activity across the country and also a low-base effect. In November, demand recovery continued with a 3 per cent YoY growth, and in the first two weeks of December also, power demand is up by 4.5 per cent. So, overall we expect this quarter to show a healthy demand growth over the last one.

What is driving this demand and is there a change in the segments contributing to this demand?

With a gradual unlocking of the economy over the past few months, the high-frequency indicators have been showing an improvement in activity levels. Further, continued resilience in agriculture, resurgence of rural demand, increase in e-way bills, higher railway freight and reviving auto sales, among others, are all pointing towards a revival in economic activity. All these have augured well for the power sector, leading to power demand recovery across sectors. With the number of Covid-19 infection cases reducing, we expect the recovery momentum to continue.

Will your expansion plans in the renewable segment be restricted to solar, with wind as an exception only in hybrid model projects? Are you also aiming for hydro-based expansion?

We have received Letter of Awards for setting up total blended wind capacity of 810 megawatt (Mw) from Solar Energy Corporation of India (SECI). In this project, we have an option to build up to 20 per cent of solar capacity and the rest wind. For our future projects, we are open to both wind and solar modes. In hydro, we are currently incurring capital expenditure (capex) for the construction of a 240 Mw greenfield plant at Kutehr, Himachal Pradesh.

You mentioned plans to complete the deleveraging cycle in the current financial year. With focus on renewables (less capital-intensive), what is the debt position JSW Energy will be comfortable with?

JSW Energy has one of the strongest balance sheets in the power sector. We have proactively used the healthy free cash-flow generation over the last few years, marked by prudent capital allocation, to de-leverage by both repaying as well as pre-paying debt. This has created ample headroom to pursue attractive growth opportunities.

What are the options for the free cash available and likely to be generated?

We have set ambitious growth plans and intend to become a 10-gigawatt (Gw) company over the medium term. This will entail a significant capital outlay, and the robust free cash flow generation from our existing businesses as well as levering up the current under levered balance sheet will largely fuel this growth. 

What would be JSW Energy's long-term coal sourcing policy in terms of a domestic-imported mix?

We rely on imported coal for our Ratnagiri and Vijayanagar plants. However, we have an option to blend up to 50 per cent of domestic coal at both these plants. Given the current imported coal prices and the structure of our power purchase agreements (PPAs), we will continue to import coal for these plants.

From a Covid-19 perspective, what are the new learnings for the company? Any cost-cutting measures which are expected to stay for the long term?

Post Covid-19, we have revisited all our strategic plans and further optimised our cost structure. We have become more agile, and used this crisis as an opportunity to further optimise our operational efficacy and reinforce our position as the most efficient power producer in the country.