Tata Power Shifts Focus to Thermal Energy

Tata Power, one of India’s leading private power utilities, is reportedly rethinking its exit from coal-generated power, with plans to expand its thermal power capacity. This shift in strategy, which involves potential acquisitions of existing thermal plants and brownfield expansions of current facilities, marks a notable change in the company’s commitment to clean energy. Tata Power had previously outlined an ambitious plan to phase out coal power between 2040 and 2045, focusing on renewables like solar and wind to meet its energy needs. However, recent market conditions and muted returns from its wind energy business appear to have influenced this change in direction.
The company, which currently has a total capacity of 14,264 MW, including 8,860 MW of thermal capacity, 1,034 MW of wind, 3,490 MW of solar, and 880 MW of hydro capacity, has maintained for years that it would prioritise renewable energy sources. The goal was to shift towards cleaner energy, with an ambitious target of having two-thirds of its total capacity come from renewables by 2030. However, the disappointing returns from its wind energy projects, coupled with growing global reliance on coal-based power, have led Tata Power to reconsider its approach.
Sources suggest that Tata Power’s wind energy operations have not been as profitable as anticipated, leading to a reassessment of its renewable energy strategy. The company has been seeking bids for wind turbines for its hybrid renewable energy projects across India, with a total capacity of 1GW. However, the cost and returns associated with these wind projects are reportedly falling short of expectations. This has prompted the company to turn back to thermal energy, a sector in which competitors like JSW Power and the Adani Group have already made substantial acquisitions.
Tata Power’s renewed focus on thermal power comes at a time when global demand for coal remains significant. While the company initially planned to transition to a cleaner energy model, the realisation that coal remains an important part of energy security for many nations, including India, has prompted a shift in strategy. The growing role of thermal power in supporting grid stability and meeting rising energy demand in a rapidly developing economy has been a key consideration in this decision.
Despite the shift towards thermal expansion, Tata Power has not abandoned its renewable energy goals entirely. The company remains committed to solar and wind energy, albeit with a more cautious and pragmatic approach. It will continue to explore new projects in these sectors, while also investing in upgrading and expanding its thermal infrastructure. The company’s CEO, in previous statements, emphasised that the decision to explore new thermal projects would be driven by opportunities in energy security, as well as expected returns.
This development signals a broader trend within India’s energy sector, where companies are grappling with the balance between renewable energy commitments and the need for reliable, coal-based power. As India continues to strive towards its net-zero carbon goal, the role of coal in the energy mix remains a topic of debate, with many companies now reconsidering their positions as they face the economic realities of energy transition.
Tata Power’s shift towards thermal energy expansion also highlights the challenges in achieving a swift and full transition to renewables. The company’s previous commitment to clean energy faced hurdles that are not unique to Tata Power alone. With global energy prices fluctuating, and renewable technologies yet to match the reliability and scalability of traditional thermal plants, utilities across India are weighing the costs and benefits of various energy sources. This ongoing evolution will play a significant role in shaping India’s energy future, with companies like Tata Power at the forefront of balancing green ambitions with practical energy needs.
Tata Power’s revised strategy underlines the ongoing complexities within the energy sector, where the push for sustainability must often be tempered with practical concerns over energy security and profitability. As the company moves forward with its expanded thermal capacity, it will continue to evaluate its renewable energy projects and look for opportunities to meet its long-term sustainability targets, all while ensuring reliable energy supply for India’s growing needs.