Tata Power stood at the forefront of India’s energy transition. The firm’s long history was deeply intertwined with the country’s development. As Mumbai’s power needs increased, Tata Power built out thermal assets across India, and while thermal power generation remained Tata Power’s mainstay, the firm slowly started diversifying. By 2024, Tata Power was India’s largest private power producer by installed capacity with annual revenues of $7.4 billion. In 2020, Tata Power boldly announced a commitment to net-zero emissions by 2050, concurrent with a complete phase-down of thermal capacity. It later brought this commitment forward to 2045.
To prepare for declining revenues from thermal power generation, it was actively expanding its renewable business, but stakeholders had concerns about Tata Power’s ambitions. Was the firm’s decision to sacrifice potentially high returns in thermal power generation financially imprudent, or did it position the firm well as India inevitably accelerated its energy transition?
In this episode, host Brian Kenny welcomes Harvard Business School Professor Vikram Gandhi and Tata Power CEO Praveer Sinha to discuss the case Tata Power and India’s Energy Transition, and how India’s largest private power producer is reimagining its future.
They explore how the legacy energy company should allocate capital between proven thermal assets and emerging renewable technologies, and what lessons the company’s journey offers for leaders navigating disruption, investor expectations, and the balance between profits and purpose.
BRIAN KENNY: Welcome to Cold Call, where we dive deep into Harvard Business School’s groundbreaking case studies. It’s been 10 years since 195 nations signed the Paris Agreement, the landmark international treaty that formalized the concept of net zero emissions. Today, thousands of companies around the world have set ambitious goals to achieve net zero emissions, including Tata Power, India’s oldest and largest private power producer.
By 2045, Tata has committed to phasing down its reliance on coal, even as India’s energy demand continues to grow. Today’s case looks at whether Tata Power can balance profitability with purpose as it diversifies into renewables, distributed energy, EV charging, and smart grids. Should they focus narrowly on their strongest businesses or is being integrated across the value chain, a source of resilience in a transforming sector? And what lessons does their journey offer for companies navigating similar energy transitions worldwide?
Today on Cold Call, we’ll discuss the case, “Tata Power and India’s Energy Transition” with Professor Vikram Gandhi and Dr. Praveer Sinha, CEO of Tata Power. I’m your host Brian Kenny, and you’re listening to Cold Call on the HBR podcast network.
Vikram Gandhi teaches about sustainable investing, and he is the founder of Asha Ventures, an impact-oriented venture capital firm. Dr. Praveer Sinha is CEO of Tata Power and the protagonist in today’s case. I’m thrilled to have you both here joining me on Cold Call. Thanks for being here.
VIKRAM GANDHI: Thank you, Brian. I’m delighted to be here.
PRAVEER SINHA: Thank you, Brian, and thank you, Vikram. Such a pleasure to be part of this program.
BRIAN KENNY: Yes. I didn’t realize until I started doing a little research that it has been 10 years almost, I guess it’ll be 10 years in December, that the Paris Agreement was signed. And certainly, there’s been a lot written about it and a lot of analysis done on it over the years and mixed reviews about how effective it’s been. But I thought this case really nicely teed up many of the complexities that organizations face as they try to meet these ambitious goals of net zero emissions.And so thank you for writing and thank you for being here to talk about it. And let’s just dive right in. Vikram, I’ll start with you. If you can tell us why you decided to write about Tata Power’s transition and what your cold call is when you start the discussion in class.
VIKRAM GANDHI: Sure, Brian. So just to give you a little context, so the Tata Power case was written for another course that I teach at HBS. It’s an immersive course, it’s immersive field course, it’s called “Development While Decarbonizing, India’s Path to Net Zero,” where we have classes in the fall, which will start in October of this year. And then I take the MBA students to India and spend 10 days there, five days in Mumbai and five days in Bengaluru, to really explore the energy transition in a growth and developing economy. And the genesis of writing, both developing the case, developing the course, and then writing the case, was one fundamental concept, which is that as I got involved with a lot of the climate initiatives at Harvard, not just at the business school but across the university, I found that the focus, to a large extent, was on OECD countries where the growth has slowed down and it’s more about energy transition, reducing emissions, and not really about how do you balance growth with carbon and decarbonization agenda. And so what I felt was that 60%, 70% of the world is still growing dramatically. Power access and energy access is still an issue. And so how do you actually make that happen where growth has to be balanced with a low-emission agenda? And there was no better example than India as a country and Tata Power as a company to actually focus on that. So that’s the genesis of the case. I mean, Tata, as you know, are one of the biggest industrial houses in India, one of the leaders in India. And I’m sure Dr. Sinha will elaborate on that a little bit on this podcast. And we’ve taught this case now a few times and I will teach it again. This is January at the Harvard Business School classroom in Mumbai where Dr. Sinha comes as a guest. And the cold call is pretty straightforward because I try to keep it light because they’re, first of all, in a new country and jet-lagged and everything else. It’s not too aggressive. But basically, it’s like what are the key elements of Tata Power’s net zero emission strategy, and what are the pros and cons of it? That’s the cold call.
BRIAN KENNY: Okay. Maybe you can set the stage for our listeners who aren’t as familiar with the challenges that India faces, where it comes to these climate challenges, what makes energy transition in India uniquely challenging compared to other emerging markets?
VIKRAM GANDHI: Well, the challenges are similar to other emerging markets, quite honestly, but India, just given its scale, is just at a totally different level. One of the statistics which are in the case is that about 75% to 80% of India’s infrastructure has still not been built. And the fact is that everything that you require to build infrastructure, power, steel, cement, growth in terms of income levels and affluence, if you will, food, all these things actually are high-emitting industries. And so therefore, India was a perfect example where it’s at scale, it’s nearly one and a half billion people. It’s the biggest country in the world from a population standpoint. And the GDP per capita is about $2,300 per capita. And so it’s at a stage where the inflection point of growth is going to happen in a big way. Even if carbon intensity per unit of power production or steel production goes down, the actual demand in terms of actual numbers goes up. And so therefore, how do you balance that? Because the adverse impacts of climate change in a developing country like India are probably going to be more extreme than they would be in the US.
BRIAN KENNY: Dr. Sinha, let me turn to you for a second. Tata Power has committed to net zero by 2045. And in India, I think their target was 2070. So you’ve really set a very ambitious goal for yourself. What drove you personally and strategically as you accelerated this timeline for Tata Power?
PRAVEER SINHA: So Brian, when we started discussing about the climate change that is happening and how we need to transition to clean energy, we initially thought in 2020 that we would become net zero by 2050. And subsequently, we improved it to 2045. This is not about a choice that we need to make, but it’s a commitment that how do we bring smart solutions, to bring 24/7 reliable electricity to the consumers? And we identified certain technologies, and because we are an integrated power company, we understand that it’s not just about generation, but it also about supply and doing a demand forecast as to what is the profile of consumption that the consumers will have. And that helped us to identify opportunities whereby we can transition from the conventional generation, which typically gives you the base load to intermittent generation with storage, with the hydro to move towards clean energy solutions. This is, of course, a work in progress, but we feel very strongly committed that this is the right thing to do for the country, and what is right for the country is right for us in Tata Power. And that’s why we took a bold step, and we stand committed, and we do have a solution, and we’ll definitely implement it.
BRIAN KENNY: Vikram, I’ll come back to you for a second. The case does a wonderful job of showing some of the things that the balance that they need to strike as they think about focus versus breadth. And some people had questioned whether or not Tata Power’s shift away from thermal was leading them to overdiversification. Can you talk a little bit about the strategy here and how you would manage that tension of focus versus breadth as you look at all the many ways in which you can get to net zero?
VIKRAM GANDHI: Yes, for sure. I think one of the key fundamental issues here, Brian, is the short term versus the long term. I mean, I think if you believe in climate change, which I think has been proven scientifically, and so there shouldn’t be any question about that, that in the long term, whether it be through regulation or through market forces, that companies are going to have to focus on decarbonization. And particularly in a country like India, where demand power or power for demand is actually going up demographically, that to do it in a cleaner way. Having said that, one of the questions which I heard investors have, and maybe Dr. Sinha can comment on this a little bit more, is that there are other opportunities in India of buying really distressed thermal assets, cheap thermal assets, where the actual short-term return could be pretty high as opposed to investing in renewables and new technologies and others. If I have a certain amount of capital to allocate, should I allocate it in buying distressed thermal assets and turn them around because thermal energy is still until storage capacity is scalable and can be done in an economical way, base load factor … So just to … A little sidetrack here, Brian.
BRIAN KENNY: Yeah.
VIKRAM GANDHI: Base load factor in terms of having the ability to provide 24/7 energy is critical. And right now, storage is just not there economically from a scale standpoint. That’s one. And two is security. I mean, right now, India has … As you can see from all the discussions around tariffs and India buying Russian oil and everything else, the reason why India is buying Russian oil is because it’s still very, very dependent on fossil fuels for energy generation. Coal, on the other hand, actually is domestically available. And so from an energy security standpoint, too, from a strategy perspective, the country’s saying India has a lot of sun, India has potentially a lot of wind, India has a lot of hydropower, like lots of rivers and flowing. So therefore, how can we, over a 25-year period, actually take advantage of that so we are not dependent on Russian oil, and it’s the biggest outflow of foreign exchange in India by far. And so to reduce that is critical. And Tata Power plays an important role in that. But again, it gets back to the short term versus the long term. So that’s one. And two is, should Tata Power be in everything from generation to distribution to retail? So generation, transmission, and distribution being the three elements of energy. And the third, I would say, is technology. I mean, ultimately, I think the key solution here for India, for most developing countries, is coming up with technologies that can be implemented at scale, at an economic level that is viable relative to fossil fuels. And I think how Tata Power, as a leader, by a clear leader in the industry, which is why I was delighted to write this case, and as I said before, Dr. Sinha and his whole team have been very, very supportive of this, is how a leader like Tata Power can show the way for the country and for other people in the energy industry to invest in technologies that can make a huge difference.
BRIAN KENNY: Yeah. That’s a big challenge, Dr. Sinha, what he’s just described for you there. I’m wondering how do you think about balancing these tensions, the time tensions that Vikram mentioned, and also the tension between reliable sources of energy that we know about versus experimental pilots, and new technologies, and things?
PRAVEER SINHA: So Tata Power has always been about not only leadership in thought, but also leadership in action. The whole premise of setting up Tata Power in 1915 was to produce clean energy through hydropower and bring it to the city of Mumbai. And I think we owe it to the country, owe it to everyone here, that we need to try some new solutions. And they may be path-breaking, sometimes you will succeed, sometimes you will not, but it’s very important to take a leap of faith. And as Vikram mentioned that we had lot of choices, but we said that there are solutions, these are difficult solutions at present, but as we move forward, they will become much more scalable and much more easier to implement. And we do find that we are now coming up with very smart solutions to provide reliable power. And mind you, there are two things, which is very important, reliability of power. And the second is the affordability of power. We find that renewable power, if we do a hybrid solution of solar and wind, where solar is during daytime and wind is during evening and nighttime, and with battery storage, with pump storage, hydropower, on a combined basis, we do have a good solution. Of course, in power, we also talk about resilience, so that there is a backup. For the time being, we will have a backup with the existing coal. But I think over a period of time, when we get into some of the other new solutions, especially nuclear and the small modular nuclear reactors, we possibly will have a much cleaner and a much lower cost solution. So I think we thought about it, we deliberated, and we took a conscious decision that this is the right way to move forward and get ready for next hundred years if we really want to see a difference in the way the energy is being produced and used in the country.
BRIAN KENNY: Yeah. Vikram, did you have something you wanted to say about that?
VIKRAM GANDHI: I think Dr. Sinha just talked about a hundred years. I mean, I think let’s not maybe go a hundred years but maybe just go 25. But even someone like Tata Power, when they talk about a quarter, I mean while they have to be in India and elsewhere, you have to have quarterly earnings and everything else, is that when you’re talking about a quarter, I mean, Tata Power is thinking about not the next 90 days, but it’s thinking about 25 years. And I think that’s where the leadership really comes in. I think maybe a question for Dr. Sinha from my standpoint is that, though, I do hear from investors that: Why would Tata Power not take advantage of buying distressed thermal assets, turning them around and generating high profitability in the near term, which can then be invested in new technologies and renewables? And I would just be curious to know as to what you would say to that question.
PRAVEER SINHA: So it’s not that we did not take one of the stressed assets. We did take one of the stressed assets way back in 2020 and turned it around. But we also took the opportunity that there is an alternate way of producing power, and ultimately, it is the similar type of returns that they would give you, and why unnecessarily go a route which can become a challenge i