NTPC Gung Ho On Renewables Targets, Sees Bigger Opportunities Open Up

National Power Utility NTPC Limited has been in the news for all the right reasons recently. A soaring stock price has been driven by rising power demand, which has meant higher utilisation of NTPC’s coal power fleet, even as NTPC itself has extracted almost 65% higher coal during the year gone by. That, plus a plan to add another 7 GW of brownfield expansions in its thermal capacities also point to the corporation looking to balance environmental concerns with larger issues of energy security. Plus, keep in mind that the NTPC remains the buyer of choice for the government in cases involving sick generation plants that could be turned around with better management.  Plus the fact that private players will find it increasingly difficult to raise funding for coal based power. We have already seen how it has stepped in at NLCT for key thermal assets every now and then, with more to follow in all probability. So does that mean the renewables plan if off track? Not really.

At an analyst meet, the company spokesperson stressed that while it already has 2 GW of installed renewable capacity, another 4 GW is under construction, which should be done by 2025. We have won close to 4 GW tariff based competitive bidding contracts since FY22. We are setting up country’s largest solar park of 4.75 GW in Kutch district of Gujarat. Plan for development of another 19 GW ultra-mega renewable energy parks is in various stages. With all this, there is a clear visibility, project pipeline of RE capacity on our hand, and we are well on our way to attain our target of 60 GW RE capacity by
2032.

Some notable highlights from Fy 23, as shared by CMD Gurdeep Singh include the first time ever that organic renewable capacity additions overtook thermal capacity creation. With a pipeline of 20 GW, renewables capacity is set to accrue at a much faster rate in the coming years, thanks to the lower construction time it requires. At an analyst call subsequent to annoiuncing it’s Q1 FY 24 results, the firm also stressed that work at the largest renewable energy park at Khavda in Gujarat has started and it has 4,750
MW capacity. An MOU with the government of Rajasthan for allocation of land parcel for setting up an aggregate renewable capacity of 10 GW is also in place now, potentially providing a strong fillip in the near future to renewable plans.

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Singh stressed in his message to shareholders that ” We have adopted multiple models for securing land banks and are well on track to achieve our targeted capacity addition of 60GW by 2032. Additionally, we have made several new partnerships in the renewable segment”. He added that even in the Green Hydrogen space, “We have successfully commissioned blending project that incorporate green hydrogen with PNG (Piped Natural Gas). Moreover, green hydrogen mobility projects in Leh and Delhi, are set to be commissioned in the current fiscal. We are also working with Indian Army for setting up green hydrogen-based microgrids in remote locations”.

In all this, the firm has also shared that it has dropped plans to find a strategic investor for NTPC Green Energy Limited (NGEL) and is instead considering an Initial Public Offer (IPO). This, the firm hopes, will unlock more value, considering the higher valuations renewable energy firms have been enjoying of late.

Perhaps the only jarring note at this stage is the iteration by the CMD about plans to “transform its thermal plants into chemical complexes for carbon capture and alternate fuel production, thus avoiding premature closures and reducing dependency on imported fossil fuels,” As we have pointed out here before too, CCUS technologies remain unproven even at this stage, and any firm counting on those needs to be very careful of a high probability of failure down this route for now.

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Upsides To the 60 GW Target

With the government on the verge of allowing coal-based power plant to supply renewables in place of costly coal based capacity where the variable cost is high, capacity of almost 17 GW of renewables could be created . This makes it a great new opportunity for NTPC to add to, in addition to its 60 GW target for 2032. Moreover, with the Green Open Access Rules being pushed, the firm has already indicated a serious effort to seek RTC power with large storage projects. Any disruptive storage technology outside the pumped storage space will allow it to ramp up plans on that segment faster too, through its renewable subsidiary.