Tata favors wind and solar over coal as smarter investment

March 09, 2012

India’s gigantic Tata Group has said that it will pursue renewable energy projects for its overseas investments as coal-fired plants become more difficult to justify, according to Bloomberg.

In a report on Tata Power’s bid to enter the promising South African wind and solar sector, Executive Director S. Padmanabhan said that coal-fired projects have become “impossible” to develop.

Tata Group, which accounts for almost five percent of India’s gross domestic product, has built a global business spanning steel, cars and drinks by acquiring Corus, Jaguar Land Rover and Tetley Group Plc. Its overseas clean-energy investments include stakes in two geothermal projects in Australia and Indonesia with Sydney-based Origin Energy.

Tata Group is focusing on new clean-energy investments as coal-powered projects face fuel shortages in India and environmental hurdles in the US and Europe, Padmanabhan said.

“Why would anyone want to invest at this stage in a coal project?” Padmanabhan said in an interview in Mumbai yesterday. “Investment has stopped.”

South Africa, where average power prices almost tripled in four years, is a “prime market for development” because of its size and abundant clean-energy resources, according to Bloomberg New Energy Finance.

Renewable projects are a better way to expand into new power markets because the investment tends to be smaller, the plants are built faster, and costs are usually more uniform globally, Padmanabhan said.

He added that climate-change concerns could potentially shut coal plants in western countries in the future so their “longevity for 25 to 30 years isn’t guaranteed.”