Hong Kong’s CLP Invests in India’s Energy Sector

CLP Holdings plans power plant in Gujarat with a projected cost of US$2 billion and renewable development is on the cards.
Published: Wed 21 Jan 2015

Hong Kong-based China Light & Power (CLP) Holdings Limited, China’s leading power generation company, is planning a 2,000MW coal-based power plant in Gujarat, India at a projected investment of US$2 billion (around Rs 12,400 crore), adding to its operational gas-based 600MW power plant in the state.

CLP Holdings CEO Richard Lancaster said the company is undertaking a feasibility study for the power plant which will probably be fuelled by imported coal.

He says that CLP’s gas fired power plant is nearing the end of its power purchase agreement. “It has come at a time when affordable gas availability is constrained. An additional capacity would be better placed with environmentally clean coal-fired power plant."

CLP’s energy plans for India

CLP has been growing steadily in India over the last 10 years. It has a 1,320MW supercritical coal-fired power plant in Haryana and half a dozen other sub-100MW plants in various other states such as Maharashtra, Karnataka, Gujarat and Rajasthan.

The company has been looking for inorganic growth in India for the past three to four years. However, high valuations and regulatory hurdles have forced the company to stick to the organic growth path. "We have realised we can add more value when we build assets ourselves," Lancaster said when asked about CLPs acquisition plans in India.

Renewable growth opportunities in India

CLP is also keen on developing renewable energy, especially in the form of solar and wind farms in India. Lancaster says, "Our main focus is on renewable energy and we want to grow our portfolio of wind farm and solar farms.”

Access to land and the process to acquire it, however, remains a concern in India apart from the various other regulatory challenges. "As a private investor, regulatory certainty is important to us and so is the access to fuel," Lancaster said.

While there are half a dozen major power projects in Gujarat, Lancaster does not consider it as a risk. "Since Gujarat exports power to other states and since the transmission mechanism is in place, it is no risk," he said.

Other firms that are showing interest in Gujarat’s energy sector include Suzlon Energy which announced plans to invest.Rs 24,000 crore (US$3.8 million) over the next five years in wind energy projects in the state and Welspun Renewables says it will spend Rs 8,300 crore (US$1.3 million) and has signed two MoUs for 500MW wind and 600MW solar capacities with Gujarat Urja Vikas Nigam, an electrical services umbrella company in the state.

Gujarat is one of the states in India that will be receiving funds from the Green Energy Corridor project to develop their renewable energy output. [Engerati – Tamil Nadu Seeks to Improve Power Grid.]

Further reading

Sustainable Energy For All- Sustainable Energy for All takes Centre-Stage at Vibrant Gujarat Global Summit