MSP Steel & Power has signed a 25-year Power Purchase Agreement for 10 MWp of solar power at Rs 3.17 per unit. The company also plans to acquire a 26% stake in the power generator.

MSP Steel & Power Secures Solar Power Deal

MSP Steel & Power Limited has entered into a significant Power Purchase Agreement (PPA) for solar energy, aiming to control energy costs and boost its renewable power usage. The agreement is with Elevate Solar Energy Private Limited for a 10 MWp (DC) capacity at a tariff of Rs 3.17 per unit, spanning 25 years. This solar power will be sourced under the Group Captive Open Access mechanism from a project located in Baloda Bazar District, Chhattisgarh.

Reader Takeaway: Fixed solar tariff for 25 years locks in costs; pending equity stake adds strategic control.

What just happened

The company has formalized a 25-year Power Purchase Agreement (PPA) for 10 MWp of solar power at Rs 3.17 per unit with Elevate Solar Energy Private Limited. This agreement is structured under the Group Captive Open Access mechanism.

Why this matters

This PPA aims to optimize energy costs for MSP Steel & Power and increase its reliance on renewable energy sources. The fixed tariff provides long-term cost predictability for a portion of its power needs.

The backstory

MSP Steel & Power is actively seeking ways to manage its operational expenses, particularly energy costs, which are a significant component for steel and power companies. This move aligns with broader industry trends towards adopting cleaner energy sources.

What changes now

The company gains a secured supply of solar power at a pre-determined rate for 25 years. Additionally, MSP Steel & Power has stated its intent to acquire a 26% equity stake in Elevate Solar Energy Private Limited, subject to a Shareholders' Agreement. The generator's total planned capacity is 70 MWp (DC) / 50 MW (AC).

Risks to watch

The 26% equity stake acquisition is not yet finalized and depends on the execution of a Shareholders' Agreement. The project's benefits are also contingent on the timely commissioning and stable operation of the solar generation facility.

Peer comparison

Several Indian companies across manufacturing and heavy industries are increasingly entering into PPAs for renewable energy to hedge against volatile energy prices and meet environmental, social, and governance (ESG) goals. Fixed-tariff PPAs for long durations are common in the sector to ensure cost stability.

Context metrics (time-bound)

• Contracted Capacity: 10 MWp (DC) per annum
• Tariff Rate: Rs 3.17 per unit
• PPA Term: 25 years
• Proposed Equity Stake: 26%
• Generator's Total Capacity: 70 MWp (DC) / 50 MW (AC)

What to track next

Investors should watch for the execution of the Shareholders' Agreement for the proposed 26% equity stake and updates on the commissioning and operational status of the solar power project.