Adani Power Limited which happens to be the second largest thermal power generation company in India after NTPC has taken up the decision to increase its power generation capacity significantly. As per recent news, Adani Power Limited has elaborate plans to raise its capacity by 1.7 times. As of now, its capacity is 17.6 GW. It aims to reach a capacity of 30.7 GW by 2030. With this move, the Adani Group will be able to enhance its hold over the country’s power sector. It will also be able to ensure that our country’s growing power needs are well attended. The business group will also not have to deal with the constant accusations related to the Adani coal mines.
Adani Takes Up The Decision To Boost Its Power Generation Capacity:
APL which happens to be the second largest thermal power generation company in India has recently taken up the decision to boost its power generation capacity. With this, the Adani Group aims to take its power business to new heights. It also aims to expand the Adani coal mines. APL already has the land and financing in place for bringing about expansion to its power business. The company is already working closely with BHEL for the delivery of equipment for its power projects. Its in-house engineering procurement and construction team is working towards ensuring that the capital expenditure is progressing as per schedule.
Why Increase The Power Generation Capacity?
The Adani Group believes that India’s peak power deficiency scenario and APL’s exposure to the merchant power market will create a positive outlook for the company in the upcoming years. As per recent reports, there will be a 10% compound annual growth rate (CAGR) in EBITDA between FY24 and FY27. Once the new power capacity becomes operational, the EBITDA growth will rise to 19% CAGR between FY27 and FY30. Overall, the report forecasts a 2.2x increase in EBITDA from FY24 to FY30. To support its extensive expansion plans, the company requires an incremental capital expenditure of INR 1.6 trillion. With this, it aims to add 13 GW to its existing capacity. The investment is also expected to be managed through INR 1.4 trillion cash flow from FY25 to FY30.
The Adani Group’s Current Hold Over The Power Sector And Future Prospects:
APL operates 12 power plants across various states of India. It has 85% capacity tied up with power purchase agreements. About 98% of the open capacity is located closer to Adani coal mines. This has helped in the economic sourcing of coal. The coastal plains also comprise a significant capacity. They are dependent on imported coal. However, they have a fuel cost pass-through/ index-linked price escalation in place. The Adani Group’s merchant capacity should also be 12 to 13% by FY30 with an EBITDA contribution of 19 to 20%.
The company’s strong project pipeline, the acquisition of lands, and equipment rewards offer it the feasibility of achieving a 30 GW capacity target by 2030. The company also forecasts a rise in EBITDA in the upcoming months. This will be mainly driven by the new capacity addition. It will help trigger Adani Group’s business. The global conglomerate will find it easy to take its business to new heights. It will also be able to increase its revenue generation and offer funding to its different projects including the Adani coal mines.
The company’s debt-to-equity ratio is projected to peak at 1.4x in FY26 to FY27. As per recent reports, the Adani Group has also secured large coal resources. This has helped ensure smooth operations for its different power plants. Its merchant power plants also have access to both domestic and imported coal. This has further allowed the business group to ensure that power generation takes place in a consistent way from its various thermal power plants.
Conclusion:
By increasing its power generation capacity, the Adani Group will be able to ensure that our country’s power needs are well attended to. The business group will also be able to enhance profitability from its power business. It will also be able to further expand its business horizons and take up the position of being one of the business leaders in the country’s power sector.
