We expect 6% to 8% of power demand growth in next year: Prashant Jain, JSW Energy

"There is a squeeze which is going to take place and that is why government has come out with a Section 11 that they want to see that all the thermal power plant which are based on the imported coal they are running with the full stock and then power crisis does not happen," says Prashant Jain, Jt. MD & CEO, JSW Energy.

Let us start off with the basics, I mean could you begin explaining firstly what could be the implication of the latest Section 11 announcements that the government has now put in place on the power sector?
In the current financial year, we have seen close to 9.5% to 10% till date the power demand growth and that is what is creating a kind of a higher spot merchant power prices.

And if you see during the first 10 months, only 11.5-12 gigawatt of the capacity addition has taken place and which is only from the renewable. So, if you look at last year, total base load was around 172 gigawatt and 10% increase on that you are talking 16,000-17,000 megawatt of the power demand growth whereas the capacity addition in the actual supply terms will be only 3.5 to 4 gigawatt.

So, there is a squeeze which is going to take place and that is why government has come out with a Section 11 that they want to see that all the thermal power plant which are based on the imported coal they are running with the full stock and then power crisis does not happen.


But given the fact that the power demand has been growing at 9% to 10% and the base is now also getting heavier, do you expect this kind of momentum to continue into FY24 as well, a double-digit growth?
Not really. I am not sure that it can continue at that kind of a pace. But yes for sure you are going to talk about 6% to 8% of the power demand growth in next year also. But on the increase base we are talking about something like 12,000 megawatt incremental demand and we are not seeing that kind of investment taking place in the country because right now most of the investments are taking place in the renewable sector and in order to meet that kind of a demand we are talking about some 30,000 to 40,000 megawatt of capacity addition every year. This will require two-and-a-half lakh crore capital investment every year so that really is falling short at this point of time.

But I just wanted to understand how the supply side situation is and if the coal availability and pricing is reasonable.
Even then you are going to see problems in time to come because there is not sufficient investment which has taken place in last five-six years. There was overcapacity until 2015-16.

We saw lot of merchant power prices crash by that time and that overcapacity got absorbed in last four-five years and now we have to tighten our belt in order to increase the capital investment in the power sector in order to mitigate this kind of a demand growth.

We wanted to understand how the coal availability is in the system at the moment. Is it still a problem the way it was last year with the entire coal supply crunch happening or is it better at the moment?
Domestic coal supply is up by 12% and which is taking care of the domestic demand but even then we are falling short of coal. India imports close to 130-140 million tonnes of the thermal coal in order to produce power but that itself is also not sufficient. And even now, in spite of coal prices falling, with the rupee depreciation we are talking about the fuel prices north of Rs 5. So we will be seeing higher power prices. Of course, the sufficient thermal capacity is there for next one to two years’ time frame in order to meet the demand but we will be seeing higher power prices.


Let us talk about your own business and the acquisition that was underway, the large acquisition of Mytrah. It got delayed by a tad, but do you expect it to now get completed in Q4 itself or it can get spilled into Q1?
No, it will be completed within the current quarter.

So the acquisition will get completed in Q4 itself and that will get a bump up in your earnings as well. But you also have a huge pipeline of renewable capacity which is expected to come on board over the next 12 to 18 months and the projection is from the 30% contribution at the moment, it can go up to 70%. Could you detail out for us what the timeline is of those capacity additions?
Right now we are operating at 5 gigawatt capacity. We will be completing 10 gigawatt operational capacity in next 12 to 15 months’ time frame which includes the inorganic acquisition which we are going to complete in the current quarter and also the additional capacity both in renewable space and also 700 megawatt by thermal which we acquired recently in Barath. With that we will be having a 10 gigawatt of operating capacity and of that we will be having 60-65% from the renewable resources.

Given that you are venturing into new areas like hydrogen, battery storage, etc, tell us what kind of investments have you already made and what is it that you are looking to do in terms of capex when it comes to these new areas?
Two new areas where we are working other than the generation side -- one is the storage side where we are building one gigawatt hour of the lithium-ion battery storage plant which the tender we won in the SECI that we will be completing by October 2024.

In addition to that we are also building large portfolio of hydro pump storage. Recently Government of India has announced a very big path-breaking policy on the hydro pump storage because that is the need of the hour and we will be starting the construction on first pump storage project in our steel plant in the current calendar year.

We are also working on electron to molecule side which is the hydrogen and further value addition to make the sustainable aviation fuel – ethanol, methanol. There we are actually shovel ready at this point of time with our project but we are waiting for the framework which needs to be announced by the Government of India and also tying up our offtake agreements.

As soon as we are able to do that, we will be starting the construction of that project and maybe in the current calendar year we will be starting a pilot project which maybe used for the production of the green steel manufacturing by JSW Steel.