In a significant development, the US International Development Finance Corporation (DFC) has revealed its intention to inject $425 million into TP Solar, a subsidiary of Tata Power. This substantial investment aims to facilitate the establishment of a state-of-the-art solar cell and module manufacturing plant in India, with a formidable capacity of 4.3 gigawatts (GW).
TP Solar is set to mark its inaugural production of modules by the end of this year, followed by the commencement of commercial cell production in the first quarter of the 2024 financial year. This strategic move underscores Tata Power's commitment to expanding its renewable energy portfolio, as it currently possesses 12.2GW of power generation capacity in India, with a relatively modest 1.7GW in solar capacity as of 2022.
The company's journey towards bolstering its solar capabilities began with the operation of a 1GW cell and module manufacturing plant in the southern state of Karnataka. Consequently, Tata Power's portfolio exhibits a distinct geographic divide, with some regions enjoying substantially higher renewable energy capacity compared to others.
States such as Gujarat, Uttar Pradesh, Maharashtra, and Jharkhand, situated in the northern and central regions of India, contribute significantly to the company's fossil fuel production. Conversely, Karnataka, Rajasthan, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, Bihar, Punjab, and Telangana are leaders in solar power generation, predominantly located in southern India. TP Solar's strategic choice of Tamil Nadu as the location for its new manufacturing facility aligns with this regional focus.
Praveer Sinha, CEO and Managing Director of Tata Power, expressed gratitude for DFC's support in the endeavor, emphasizing their confidence in Tata Power's ability to establish a cutting-edge manufacturing supply chain within the nation. Sinha believes this venture will play a pivotal role in bolstering India's transition towards renewable and clean energy sources.
The involvement of the United States through the DFC's investment holds significant promise for India's ambitious solar energy goals. During the first half of 2023, Indian developers added 3.6GW of new solar capacity, accounting for 43% of all new power capacity additions during that period. However, the volume of new solar capacity additions witnessed a 53% decrease compared to the same period in 2022, raising questions about India's capacity to sustain long-term growth in the solar sector.
In a parallel initiative, TP Solar has also announced plans to collaborate with the Small Industries Development Bank of India on a funding program. This program aims to offer “customized and innovative financing solutions” to micro-, small-, and medium-sized businesses interested in investing in new solar projects, further solidifying India's commitment to harnessing the potential of its burgeoning solar industry.
