Tata Power vs Adani Power: Which Is Better In 2024

Adani Power vs Tata Power: The energy and utility sector in India is rapidly evolving. Tata Power and Adani Power are two companies, in this industry. If you’re a consumer you might be interested in knowing which company provides service and value. This guide, for beginners offers an analysis of Tata Power and Adani Power comparing them on factors to assist you in making an informed choice.

Company Overviews

First, let’s look at brief overviews of both companies.

Tata Power

Tata Power is one of India’s largest integrated power companies. It has an installed generation capacity of 12,742 MW. Tata Power’s operations span across generation, transmission, distribution and trading. It also has a strong renewable energy portfolio. Tata Power has been serving consumers for over 100 years.

Adani Power

Adani Power Limited is the power business subsidiary of the Adani group. With an installed generation capacity of 12,450 MW, it is one of India’s leading private power producers. Adani Power generates power from thermal, solar and wind plants across various states in India. The company has been operational for about 20 years now.

Financial Health

The financial health of a company provides an indication of how stable and reliable it is in the long run.

Tata Power

Tata Power has seen consistent financial growth over the past 5 years. Its net profit margin in 2022 stood at 8.08%. The company’s total debt decreased from ₹48,807 crores in 2018 to ₹37,379 crores in 2022. This indicates that Tata Power has been working on lowering its debt by using its profits wisely. Its interests are also fully covered by its operating income.

Adani Power

On the other hand, Adani Power has seen fluctuating financials recently. Its net profit margin in 2022 was just 0.88% compared to 8.08% for Tata Power. While its total debt has gone down from ₹47,840 crores in 2018 to ₹44,000 crores now, its operating income is insufficient to cover its interest obligations fully. This raises concerns about the company’s financial stability.

Therefore, from a financial health perspective, Tata Power appears to be in a more stable position than Adani Power.

Power Generation Capacity

The total power generation capacity of a company determines how much electricity it can provide to meet consumer and commercial needs.

Tata Power

As mentioned previously, Tata Power has an installed generation capacity of 12,742 MW. The breakup is as follows:

  • Thermal Power Plants – 7,876 MW
  • Renewable Energy Plants – 4,836 MW
  • Hydroelectric Power Plants – 30 MW

It generates about 86,561 million units of electricity annually. Tata Power also has plans for aggressive growth in renewable energy going forward.

Adani Power vs Tata Power

Adani Power

In comparison, Adani Power has a slightly lower installed generation capacity at 12,450 MW comprising:

  • Thermal Power Plants – 10,440 MW
  • Renewable Energy Plants – 2,000 MW
  • Solar Power Plants – 10 MW

It produces about 88,000 million units of electricity each year on average. While Adani Power generates more units currently, Tata Power isn’t far behind and is expanding rapidly.

Thus, both companies have sizable and comparable power generation capacities overall. Tata Power edges out due to its larger renewable energy portfolio.

Power Plants and Infrastructure

The location, technology, and reliability of a company’s power plants impact the quality of electricity it provides.

Tata Power

Tata Power’s power plants are strategically located near consumption centers. Over 50% of its capacity is based in Maharashtra and Gujarat which have high power demands. It uses eco-friendly advanced supercritical technology in most of its thermal power plants. The company has received many awards for high plant load factors indicating infrastructure reliability.

Adani Power

Adani Power’s plants are mainly concentrated in Gujarat and Maharashtra as well. It has also gradually upgraded older subcritical units to supercritical units. Though plant uptime meets industrial benchmarks, it hasn’t received any major infrastructure efficiency awards yet. Coal supply shortages have occasionally affected operations too.

Tata Power edges ahead of Adani Power in terms of superior plant infrastructure and reliability.

Distribution Network Reach & Quality

The coverage and stability of a company’s electricity distribution network impacts how many customers it can provide uninterrupted power supply to.

Tata Power

Tata Power distributes electricity to nearly 7 million consumers via its distribution arms like TP Northern Odisha Distribution Limited, TP Central Odisha Distribution Limited and TP Western Odisha Distribution Limited. It serves areas of Delhi, Mumbai, Ajmer, parts of Odisha, Jamshedpur and some more.

The company focuses heavily on distribution automation and smart grid technologies to minimize outages. It scored well above average for key distribution parameters like SAIDI, SAIFI and CAIDI as per the latest MERC report, indicating reliable supply.

Adani Power

Adani Power is primarily involved in power generation and electricity transmission to distribution companies. It does not have its own distribution network directly serving retail consumers. The company supplies power in bulk quantities to state electricity boards in areas like Himachal Pradesh, Madhya Pradesh, Kerala and Odisha among others.

As Adani Power’s role ends at transmitting electricity to distribution companies, assessing the end-quality and uninterrupted reach of supply to consumers is not applicable.

Tata Power is the clear winner here with its own extensive distribution network ensuring reliable last-mile connectivity.

Power Trading Portfolio

Comparing the power trading activities provides an idea of each company’s ability to sell electricity competitively on exchanges as a secondary revenue source.

Tata Power

Tata Power has been trading actively on India’s two power exchanges – IEX and PXIL – for several years now. It traded 5,044 Million Units in FY 2021-22. The company was among the top five power trading participants on IEX last year. Such large trades indicate Tata Power’s strong market presence.

Adani Power

Adani Power’s total traded electricity volume in FY 2021-22 was 460 Million Units. In contrast with Tata Power’s figures, this is quite small considering Adani Power’s total capacity and generation. The numbers suggest that Adani Power is not harnessing electricity trading opportunities optimally yet.

Tata Power surges far ahead of Adani Power in the power trading segment.

Renewable Energy Capacity

Renewable energy is vital for the future considering rising environmental concerns. Let’s see how the two companies compare here.

Tata Power

As mentioned earlier Tata Power currently has a power generation capacity of 4,836 MW representing a quarter of its capacity. The company aims to raise this proportion to 80% by 2030. Eventually reach a 99% by 2050. Such ambitious long term plans for high renewable energy growth make Tata Power a frontrunner in this space.

Adani Power

Adani Power has just 2,000 MW of installed renewable energy capacity currently. This forms only 16% of its overall generation capacity portfolio. Though it aims for over 20 gigawatts renewable energy capacity by 2030 as well, this target is behind Tata Power’s goals by a fair margin.

Tata Power has greater focus and demonstrably larger investments in renewable energy for the future.

Electricity Rates and Inflation Management

The rates at which a company supplies electricity and how well it controls inflation impacts consumers’ electricity bills significantly.

Tata Power

As an integrated utility, Tata Power supplies electricity directly to retail consumers in some areas. The tariffs are pre-fixed by the electricity regulatory body and apply uniformly across distribution companies in that region.

Despite rising fuel prices and inflation recently, Tata Power managed to contain cost escalations reasonably well in 2022 with various measures. This helped ensure rates charged to consumers were not excessively high.

Adani Power

Since Adani Power primarily sells electricity in bulk to distribution companies, the retail consumer rates in the states it supplies to cannot be credited to it directly. We’d need to analyze utility-level prices state-wise.

However, in Madhya Pradesh where Adani Power has a Power Purchase Agreement, utility electricity rates rose enormously by 20-55% across consumer categories in 2022. Partly attributable to expensive imported coal procurement by Adani. This negatively impacted end consumers.

Clearly Tata Power fares better in terms of managing inflation as per public reports.

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Corporate Governance and Transparency

Lastly, the ethics and compliance aspects of a company also matter from a consumer perspective regarding trust and transparency.

Tata Power

As a Tata group company, Tata Power maintains exemplary corporate governance standards rooted in fair business practices. The company rates high on corporate transparency regarding financial data, plant operations, environmental compliance and more. Tata Power frequently receives awards highlighting its governance quality as well.

Adani Power

In contrast, independent assessments indicate Adani Power demonstrates comparatively weaker transparency and public data access across areas like environmental clearances, land acquisition disputes, labor issues etc. Its financial opacity has raised investor concerns too sometimes. These could be improved to match industry benchmarks.

Tata Power scores higher on corporate governance and transparency parameters crucial for consumers.

Conclusion

To conclude, Tata Power performs better than Adani Power across most comparative parameters that matter to electricity consumers – financial stability, generation capacity, infrastructure quality and reliability, distribution network reach, renewable energy investments, inflation containment and corporate governance.

Hopefully, this beginner’s guide has helped highlight the key differences between the two companies in an easy-to-understand format. While both have their merits and demerits, Tata Power edges out Adani Power convincingly for now as the more consumer-friendly power utility overall.

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