Adani's utility to supply 60% green power to Mumbai by 2027

By Rajesh Kumar Singh and P R Sanjai

(Bloomberg) --Adani Electricity Mumbai Ltd., a closely held utility of Adani Transmission Ltd., said it’s on course to procure as much as 60% of its power supply from renewable sources by 2027, reiterating the Indian conglomerate’s broader commitment to deploy and produce more green energy.
 

Renewables accounted for 30% of power procurement for Adani Electricity as of March 31 — a ten-fold jump over the last two years, the company said in a presentation to stock exchanges Wednesday. The utility, which provides electricity to some part of the country’s financial capital, said it aims by 2027 to be “amongst the few globally” to source a significant share from renewables.

The pivot is part of its billionaire-owner Gautam Adani’s larger ambitions to invest $70 billion by 2030 across the green energy value chain as the first-generation entrepreneur rapidly diversifies his ports-to-power conglomerate beyond its coal trading origins. While a shortseller attack earlier this year has applied brakes on many of Adani’s growth plans, Bloomberg reported last month that green energy remains one of the group’s core focus areas.

Adani Electricity’s working capital loans more than halved to 5 billion rupees ($60.9 million) as of March 31 compared to the preceding three months, according to its presentation. The firm’s “zero dependence on imported coal” was one of the factors contributing its cost efficiency, it added.

Regulatory Boost
 

The utility also got a boost from a favorable end-March order by the Maharashtra’s power regulator — the state where Mumbai is based —  which allows it to raise tariffs by 2.2% in the current fiscal year that started this month and by 2.1% in the following year. 

Power utilities are supposed to charge a regulator-approved tariff to users but electricity supply costs often exceed that. Such shortfalls in revenue then sit in the company’s books as assets for future compensation.

Adani Electricity also got the regulator’s nod to recover this deficit accumulated over the last three years via higher tariffs from consumers, although the firm didn’t say how long it would take to recover this in its presentation filed to exchanges. 

The “regulatory outcome could lower leverage, both for itself and parent, Adani Transmission,” Bloomberg Intelligence’s Analyst Sharon Chen wrote in a note Wednesday. “The regulator has allowed for a recovery of most of its revenue shortfall, with the utility set to receive 15.7 billion rupees in the next two years.”

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