Wed Sep 11 05:59:57 UTC 2024: ## Tata Power’s New Solar Cell Plant Fuels Stock Optimism

**Chennai, India:** Tata Power Company Ltd has commenced production at its new 2GW solar cell line in Tirunelveli, Tamil Nadu. The move has sparked optimism among analysts, with Axis Capital assigning an “Add” rating to the company’s stock, setting a target price of Rs 500.

The new facility, along with Tata Power’s existing 530MW cell production in Bengaluru, bolsters India’s overall cell manufacturing capacity to 9GW, significantly lower than the projected 25GW demand by FY25. This gap presents a lucrative opportunity for Tata Power, particularly as the “Approved List of Models and Manufacturers” (ALMM) for solar cells is not yet enforced.

Axis Capital highlighted that Tata Power can leverage its integrated cell and module capacity to achieve higher returns through domestic rooftop and solar pump projects (DCR) or exports to the US market, mirroring the strategies of Adani Solar and Premier Energies. This approach allows for premium pricing compared to imported modules from China.

The report also noted that while utilizing the cell plant for in-house utility-scale projects might seem efficient, it would result in lower returns due to competitive pricing compared to imported modules. However, the capital cost savings on in-house projects, even after the implementation of ALMM, will contribute to a better IRR over the 25-year project life, although this benefit won’t be immediately reflected in Tata Power’s financials.

The 2GW cell plant is an extension of the 4.3GW module facility that began operations in October 2023. This integrated facility, with a total cost of Rs 4,300 crore, is poised to become one of India’s largest single-location solar manufacturing centers. Notably, the facility employs an 80% female workforce.

Tata Power’s initial plans include using the facility to cater to its existing 913MW solar pipeline and 4,378MW solar-wind hybrid pipeline. The company also aims to utilize up to 2.5GW of capacity annually for in-house solar projects and allocate another 1GW for rooftop projects under the PM Surya Ghar Yojana, utilizing domestically manufactured cells and modules. The facility is partially funded by a $150 million loan from the US Development Finance Corporation (DFC), and is expected to obtain approvals for US module exports by the end of FY25.

With the commencement of production at its new solar cell plant, Tata Power is well-positioned to benefit from the burgeoning domestic solar market while expanding its reach in international markets. As the company ramps up production, it is expected to play a pivotal role in bolstering India’s solar energy sector and achieving its renewable energy goals.

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