NTPC to invest $70 B in RE in India

India’s state owned power generation company NTPC has the largest power generation capacity in the country, with more than 47 GW of power plants running all over the country. It is profitable relatively well run power producer that gives good profits and manages to operate efficiently. Unlike other state owned firms, NTPC is generally seen as less corrupt and slothful. The generator has been made one of the key firms to meet India’s ambitious 175 GW renewable energy target.

Not only is the company developing huge solar power capacities, but it is also helping the government tender out large solar capacities which are being bid by private producers. NTPC is seen as a great counterparty because of its solid balance sheet and long profitable history. As compared to the bankrupt distribution utilities companies in India owned by individual states, NTPC is considered as a reliable counterparty and its gets good prices for its tenders as people ascribe low risk in selling power to NTPC as compared to other state owned organizations.

NTPC has set a very high target of increasing renewable energy capacity to 10 GW from around 300 MW now which means a 33 fold increase. This target will mean an investment of almost $70 billion and the company has already started mopping up funds from a variety of sources such as international financial institutions, domestic banks and even green funds. Solar power has become quite cheap due to a fall in solar panel prices and the company does not really need large subsidies from the government to sell it to the states.

NTPC plans to increase capacity by around 71 GW by 2030, most of which would have come from thermal power. But given the reluctance of financial institutions to fund fossil fuel power and the increased competiveness of renewable energy particularly solar energy, the company has increased the mix of solar energy and reduced thermal power generation. This is a good move by the company and keeping up with the times. Thermal power capacity has a great risk of becoming stranded in my view and it makes sense for the company to increase the RE mix.

NTPC has already built 300 MW of capacity, while 3000 MW of capacity is under construction. The company also plans to build 800 MW of solar capacity in the water reservoirs of its existing thermal power plants, which will substantially save costs of land acquisition.