Vedanta to procure 580 MW of renewable energy, moving closer to achieve its Net Zero Carbon

Vedanta Limited, a globally diversified natural resources company announced on Thursday, March 31, that its board of directors had approved plans to procure 580 MW of renewable energy (RE) for the company's operations in India. This power source has the potential to prevent around 2.7 million tonnes of GHG emissions from entering the environment once it is operational.

Vedanta intends to partially replace current captive thermal power capabilities with renewable energy for smelting and other processes, as well as fulfil the power requirements of Vedanta Aluminium Jharsuguda, Balco, and Hindustan Zinc's capacity growth.

Vedanta has signed an Electricity Delivery Agreement (PDA) with special purpose vehicles (SPVs), who are affiliates of Sterlite Power Technologies Pvt Ltd (SPTPL), a company that provides hybrid power using solar, wind, and biomass.

This method is in line with Vedanta's ESG aim of "Transforming for Good." It also marks the beginning of a series of initiatives the firm will take to reach its aim of being "Net Zero Carbon by 2050 or sooner" and "using 2.5 GW of Round the Clock (RTC) renewable energy for its operations by 2030.”

The total agreement calls for SPTPL and its affiliates to build a 1,960 MW hybrid-based renewable energy capacity to generate 580 MW of renewable energy using a combination of solar, wind, and storage options. According to the corporation, once this power source is operational, it has the ability to avoid nearly 2.7 million tonnes of greenhouse gas emissions from entering the environment.

Vedanta’s Chief Safety Officer and Group CEO Sunil Duggal said the project is poised to become one of the largest renewable energy hybrid projects in India.

"It demonstrates the group’s commitment to become one of the greenest natural resources companies in the world. This agreement is an important milestone in our journey towards becoming the ESG leader in the natural resources sector. The project is poised to become one of the largest renewable energy hybrid projects in India." added Duggal.

According to current market norms, these projects will be developed on a group captive model and a Build Own Operate (BOO) basis. The electricity delivery deal, according to the announcement, will extend for 25 years from the project's commissioning date (DOC).

“Within 24 months of the PDA signing, the SPVs are projected to begin delivering power. This would help us secure a steady supply of power at a cheaper cost by using renewable energy sources, as well as protect our company from commodity market volatility “ said Vedanta.

As per Vedanta, the project would be funded on a 70:30 debt-to-equity basis, with Vedanta Limited and its subsidiaries owning 26 percent of the stock in the respective SPVs, for a total investment of up to Rs 850 crore (about $645 million) and an IRR of up to 25 percent.

 “The overall arrangement is to procure 580 MW of renewable power where SPTPL and its affiliates are setting up a 1960 MW hybrid‐based renewable energy capacity to achieve this generation in a combination of solar, wind and storage solutions," said the company.

“In line with prevailing market practices, these projects will be built on a group captive model and build own operate (BOO) basis. The term of the power delivery agreement will be for 25 years from the date of commissioning (DOC) of the project," added the company.