NTPC Limited

Instrumental role in growing the country’s renewable footprint

India’s largest power generating utility, NTPC Limited has emerged as the leader in driving the country’s energy transition from coal to solar. As of June 2017, it had 845 MW of in-house commissioned solar capacity. Apart from building its own renewable energy portfolio, the Maharatna utility is emerging as a major offtaker of solar power produced by private developers, whose aggressive bids have made solar tariffs cheaper than thermal power tariffs. Of the country’s 12,000 MW of installed solar capacity, NTPC owns/ handles power offtake for 3,600 MW.

In the wind energy space, it commissioned its first turbine of 2 MW in April 2017, at the 50 MW Rojmal wind farm in Gujarat. The company’s commitment to renewable energy development is likely to grow further as it assumes greater responsibility in achieving the government’s target of 175 GW of renewable energy capacity by 2022.

A look at NTPC’s current operations in the renewable energy space…

Project portfolio

In the EPC mode

NTPC has an operational capacity of 51,635 MW and another 19,917 MW is under construction. Ranked the twelfth largest power generator in the world, NTPC ventured into the renewable energy space in 2010 with a ground-mounted solar power installation and has since commissioned 845 MW of capacity at 11 different sites. Of these, six projects are attached to its existing thermal power projects. These are 5 MW projects each at Dadri (Uttar Pradesh) and Faridabad (Haryana); 10 MW projects each at Ramagundam (Telangana), Unchahar (Uttar Pradesh) and Talcher Kaniha (Odisha); and a 15 MW project at Singrauli (Uttar Pradesh). The remaining five have been set up as stand-alone projects. These are a 5 MW project at Port Blair, Andaman & Nicobar Islands; a 50 MW project at Rajgarh, Madhya Pradesh; a 200 MW project at Anantapuramu, Andhra Pradesh; a 260 MW project at Bhadla, Rajasthan; and a 250 MW project at Mandsaur, Madhya Pradesh.

While the six thermal-attached installations were commissioned before 2015, the stand-alone projects were commissioned subsequently. The most recent of these is the Mandsaur project, which  was commissioned on June 17, 2017. Of its total 250 MW capacity, 225 MW was commissioned using domestically manufactured cells and modules. The engineering, procurement and construction (EPC) contractors were Lanco for two plants of 50 MW each, Vikram Solar and Bharat Heavy Electricals Limited for 50 MW of capacity each, and the Tata Group for the remaining 50 MW.

The 260 MW project at Bhadla consists of four 65 MW plants, of which two were awarded to Vikram Solar, and one each to Jakson and the Tata Group. For the Anantapuramu project, which is a part of the 250 MW Stage I Anantapuramu ultra mega solar power project, the winning bidders were Vikram Solar, Jackson and the Tata Group, with a capacity of 135 MW, 65 MW and 65 MW respectively.

NTPC is looking to add 2,820 MW of solar capacity during the period 2018-20. Of the total capacity, 1,000 MW is to be developed at the Pavagada Solar Park in Tumkur, Karnataka. This project has been tendered under two different categories – 250 MW under domestic content requirement (DCR) and 750 MW under open access. Under the DCR category, it will undertake five projects of 50 MW each, which are currently open for bidding, while under open access, it will undertake six projects of 125 MW each, which have already been tendered but the bid results are still awaited.

Similarly, an 8 MW project is being developed at Chidiyatapu, Andaman & Nicobar Islands, along with a 3.2 MWh battery energy storage system. The project has already been tendered and the bid results are awaited. Another project of 17 MW at Manglutan, Andaman & Nicobar Islands, will be tendered with a 24 MWh battery storage system. Bids for the project are expected to be opened on August 3, 2017.

Other planned solar projects include 350 MW of capacity at Harshad, Gujarat; 660 MW at Barethi, Madhya Pradesh; 250 MW at Bilhaur, Uttar Pradesh; 150 MW of floating solar capacity; 240 MW at existing gas stations; and 145 MW at existing thermal stations.

Projects to be developed post 2020 are either under discussion by NTPC with the respective state governments or are being explored for their feasibility, especially in Rajasthan, Madhya Pradesh, Odisha, Haryana and Uttar Pradesh.

In implementer mode

The Ministry of New and Renewable Energy (MNRE) has appointed NTPC as the implementing agency for the selection of developers under the National Solar Mission (NSM) Phase II Batch II for 15,000 MW of capacity. The company is currently implementing 3,000 MW of capacity, under a state-specific bundling scheme. This 3,000 MW comprises Tranche I of NSM Phase II Batch II (2014-17). The project consists of 2,020 MW of solar capacity under the open access category, 250 MW under the DCR category and 730 MW of non-solar power capacity. While notices inviting tenders have been issued for the entire capacity, power purchase agreements (PPAs) have been issued for only 2,750 MW. The PPA for the remaining 250 MW, to be developed at the Kadapa Solar Park in Andhra Pradesh, is yet to be signed.

Meanwhile, NTPC is working with the MNRE on the guidelines for Tranche II (2015-18), comprising 5,000 MW of capacity, and Tranche III (2016-19), comprising 7,000 MW. With NTPC becoming a part of the programme, the credibility of the scheme has increased significantly.

Notably, NTPC’s role as a major offtaker of solar power is contributing considerably to the historic low solar tariffs. According to a report by the US-based Institute for Energy Economics and Financial Analysis, the record low levellised tariff of Rs 3.15 per unit achieved in the Kadapa solar auction in April 2017 was largely owing to the fact that NTPC was the offtaker. As a state-owned entity with a strong balance sheet, NTPC is the strongest renewable power offtaker in India and its derisking presence is conducive to securing longer-duration loans at the most competitive borrowing rates, which, in turn, lowers tariffs.

The report notes that NTPC maintained a five-year (2011-12 to 2015-16) average earnings before interest, taxes, depreciation and amortisation margin of 24.5 per cent and an average return on equity of 13.4 per cent. The company’s strong balance sheet is in contrast to alternative offtakers such as state distribution companies, which implies that NTPC’s financial derisking presence helps private companies achieve their aggressively low tariffs.

New initiatives in solar

Besides the development and implementation of power stations, NTPC is actively engaged in research and development (R&D) activities across the industry. It has collaborated with two German institutes, the DLR Institute of Solar Research in Cologne and Fraunhofer ISE in Freiburg, for solar energy research. The NTPC Energy Technology Research Alliance has undertaken studies on efficiency improvements through tracking systems and module degradation. It has also promoted the installation of robotic dry-cleaning systems at the 4 MW solar photovoltaic (PV) plant and wet-cleaning systems at the 1 MW solar PV plant at NTPC Dadri.

A 100 kW floating solar PV plant at Kayamkulam has been developed in collaboration with the Central Institute of Plastics Engineering and Technology, Chennai. NTPC is planning to set up another 1 MW of floating solar capacity in 2017. It has also installed a 150 kWp canal-top solar PV system on a cooling water channel on the premises of its 2,320 MW Mouda thermal power project near Nagpur in Maharashtra. The project is an excellent example of land and water conservation due to reduced evaporation, increased PV generation due to cooling and reduction in dirt. The company is determined to execute India’s first-ever solar-wind hybrid with 2 MW of wind and 1.7 MW of solar capacity in October 2017.

In addition, NTPC has developed a centralised day-ahead generation forecasting solution for nine of its solar PV plants. This solution enables it to study the impact of local weather conditions on solar generation.

Key issues and challenges

The challenges faced by NTPC are intrinsic to the industry as a whole. Solar tariffs have fallen by half, from Rs 5.05 per unit in July 2015 to Rs 2.44 per unit in May 2017. This is a cause for concern for NTPC as it affects its returns and, in many cases, raises questions regarding the viability of plant deployment.

Further, the state discoms lack the motivation to shift to green energy sources as there is no incentive for them to do so. Policy initiatives by the government also affect the health of developers like NTPC. The impact of new taxes such as the goods and services tax will lead to an increased cost of installation while the PPAs have already been signed at a particular fixed price. This not only affects the health of the company but also demotivates it from undertaking new projects.

In sum

NTPC has been expanding and diversifying its operations in the renewable energy sector in a big way. With new R&D initiatives and the acquisition of renewable energy projects, the company is looking to grow its presence in this space.

Going forward, the company seems to be strongly committed to the sector and aims to add 10,000 MW of renewable energy by 2022 through its own equity. Given its financial strength, solid background and vast experience, it should not be difficult for the company to achieve this target.

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