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Reduction in Backdown helps OGPL post a profit

Renewable energy is seen as a luxury than a norm in India. Many renewable energy companies (like OGPL) find it difficult to gain profits quickly. The reasons for that include high initial costs, fluctuations in weather and most importantly, backdowns.  Backdown is the arbitrary shutting-off of power intake by a DISCOM (Distribution Company) for fear of overloading the grid. It has been a perennial problem for wind energy producers in Tamil Nadu for the last few years, with their association even petitioning the state electricity regulatory commission and the Supreme Court.

Backdowns have been a crippling problem for wind energy producers in Tamil Nadu for the last few years, with their association petitioning the state electricity regulator and the Supreme Court demanding a ‘must run’ status for wind energy. Backdowns in Tamil Nadu amounted to 20% of wind energy in 2013-14, 19% the following year and 23% in 2015-16. In the current fiscal year so far, backdowns have been down to 10-11%. This reduction has helped Delhi – based companies like Orient Green Power Limited (OGPL) gain a profit this quarter, by making conditions a bit more pliant. Read more on Loses

OGPL has managed to raise a profit this year, by posting PAT (Profit After Tax) of 829 crore rupees in the second quarter. The Shriram Group-promoted company incurred a net loss of Rs 227 crore in the corresponding quarter a year ago, while consolidated losses for 2015-16 had been Rs 340.3 crore. Though it had begun recovering in the first quarter of 2016-17, it was still in the red by Rs 22.70 crore. Revenue rose to Rs 1,738 crore in the second quarter of 2016-17 — an 11.1 per cent increase from the corresponding quarter the previous year.

The company, which is based in Chennai, has wind farms located in Tamil Nadu, Andhra Pradesh, Gujarat and Kerala, all producing a total of 429.23 MW of power. More than three fourths of its 45 wind projects are in Tamil Nadu and the rest in Andhra Pradesh. It will add another 47 MW to its existing 50.54-MW wind farm at Tadipatri, Andhra Pradesh, by the end of the financial year.  They have also recently begun construction of wind energy farms overseas in Sri Lanka and Croatia. They also produce 106 MW of power due to biomass plants in 5 states in India.

“This is the highest quarterly and half-yearly profit in company history”, said S Venkatachalam, managing director, OGPL. “We are extremely pleased with our performance”. OGPL has an installed capacity of 536 MW, which includes wind assets of 430 MW and the rest in biomass. OGPL has posted this profit despite losing nearly 250 crores due to backdowns over the years.

There is little doubt that it is the reduction in backdowns that has caused OGPL to post this profit. Like OGPL, there will be plenty of companies which have profited from the reduction in backdowns.  If the government could better handle the grid and India’s electricity needs, all of these energy companies could take a profit and power the country to greener tomorrow. This article was written by our content writer, Ravikiran RamakrishnanRead more on Startup News

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Reduction in Backdown helps OGPL post a profit
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