Clean Energy Powers Up NTPC

PUBLIC SECTOR NTPC MEETS one-fourth of India’s electricity requirements through its diverse portfolio of thermal, hydro, solar and wind power plants. Though it has always been a big player in the energy sector, its FY23 performance stands out for the pace of transition towards renewable energy (RE) without compromising immediate energy needs of the country.

For the first time, organic non-fossil capacity addition surpassed fossil capacity addition. FY23 has been historic for NTPC on several other counts as well — it recorded highest ever annual generation of 399 billion units (BU), 11% more than 361 BU in FY22; doubled RE generation and reported highest ever RE capacity addition; registered highest ever net profit of ₹16,913 crore; and recorded 30% increase in annual income to ₹1,78,906 crore as against ₹1,37,580 crore in FY22. “Despite a challenging economic environment, NTPC demonstrated strong growth and achieved remarkable financial results. This growth was primarily driven by increase in generation from existing assets and newly commissioned units, including renewable,” says Gurdeep Singh, chairman & managing director, NTPC.

NTPC and subsidiaries have 89 power generation facilities, including 35 coal-based plants, 29 solar PV stations, 11 gas-based facilities, 11 hydro plants and three wind power stations. Such broad mix helps NTPC leverage renewable and clean energy technologies while providing reliable power supply to the nation. Experts say identification of new sources of fuels while entering into long-term supply contracts is the reason NTPC could ensure uninterrupted operations at plants during FY23 despite supply chain disruptions due to geopolitical developments.

On May 19, the day it announced its FY23 results, NTPC also declared its intent to lead the nation’s energy transition efforts. It signed MoU with HPCL Mittal Energy Ltd. (HMEL) to collaborate in renewable energy through sourcing of 250 MW round-the-clock electricity for HMEL and exploring opportunities in green hydrogen and its derivatives green ammonia and green methanol.

In FY23, NTPC and its subsidiaries and joint ventures added 3,952 MW of commercial capacity. As on March 31, 2023, its commercial capacity was 72,254 MW. “We are proud of our accomplishments and look forward to exciting opportunities that lie ahead in shaping a cleaner, greener and more prosperous energy future,” says Singh.

Broking firm ICICI Securities says planned renewable capacity addition of 16,000 MW over FY24-26 is a positive for the stock. “The per year addition of 4,000-5,000 MW renewable capacity and strong growth in regulated equity in conventional thermal portfolio” are key triggers for NTPC shares in coming years, says ICICI Direct analyst Chirag Shah. NTPC plans to spend ₹80,000 crore to produce additional 10 gigawatt (GW) conventional energy in next three years. It also plans to spend ₹85,000-90,000 crore to add 16 GW renewable capacity.

Broking firm Sharekhan estimates 14% CAGR in PAT over FY23-25 on account of ambitious commercialisation targets. “NTPC aims to add more than five GW commercial capacities annually in next couple of years which we believe will drive a decent 10%/14% CAGR in regulated equity/PAT over FY23-25E. The management has guided for robust growth in regulated equity, which makes us optimistic about earnings growth over next couple of years. Moreover, a potential reduction in overdue amount from discoms will strengthen NTPC’s balance sheet,” the firm said in an investor note in August.

The company’s sustainability initiatives are also being keenly watched. Globally, coal-based power generation is facing criticism for polluting the environment. NTPC says it is developing a net zero roadmap in collaboration with government think tank Niti Aayog. It has put in place a sustainability strategy called “Brighter Plan” with clear key performance indicators and targets. NTPC says it has planted 38 million trees in and around projects to act as carbon sinks and is in the process of developing a mega eco park at Badarpur in Delhi. Spread over 884 acres, it will be one of the largest man-made parks in India and bigger than New York Central Park, which is spread over 842 acres. The company has implemented zero liquid discharge at 19 stations and plans to make all plants compliant by the end of FY24. Addressing the 19th annual analysts and investors meet of NTPC on July 31, the CMD said the company is incorporating additional sustainability standards and ESG frameworks. “Commencement of our first air-cooled condenser at North Karanpura plant is expected to save around 75% water compared to the conventional water-cooled condenser. Our ash utilisation has increased to 83% in FY23, reflecting our commitment to sustainable waste management practices,” he said. CSR is another focus area. NTPC spent ₹353 crore on CSR in FY23. Its flagship CSR project, Girl Empowerment Mission, invites 2,000-2,500 girls to its townships for a month to provide them a life-changing experience and make them self-reliant and confident.

With India’s GDP expected to grow significantly over next two decades, its current low per capita consumption of electricity is projected to more than double to 3,000 kWh by 2040. This will drive growth of the power sector. With 17,463 MW capacity under construction and 39,513 MW in various stages of feasibility studies, NTPC is expecting its generating capacity to touch 1,30,000 MW by 2032.

“The Indian power sector is undergoing a significant transformation driven by government policies. Ongoing power sector reforms are addressing the challenges and creating a conducive environment for growth. With economic activities gaining momentum, leading to increased energy demand, as the largest utility in the country, we will play a crucial role in meeting the growing power requirement,” says Singh.

In the S&P Global Commodity Insights Top 250 Global Energy Company Rankings-2022, NTPC was ranked No.1 independent power producer and energy trader globally. Its first overseas unit was commissioned in Bangladesh in May 2023. Executed in collaboration with Bangladesh-India Friendship Power Company Pvt. Ltd., a foreign joint venture company of NTPC, the project has seen addition of 660 MW capacity out of planned 1,320 MW at Maitree Super Thermal Power Plant in Bagerhat, Bangladesh. It is developing a 50 MW (extendable to 135 MW) solar power project in Sri Lanka. NTPC will also help 12 countries of Africa & Latin America set up projects with a cumulative capacity of 6.5 GW.

In spite of future-readiness, the company and the power sector are not completely free from external shocks. Broking firm Geojit Financial Services has taken note of the challenges. “We believe sustained capacity addition would drive growth in coming years. However, volatility in prices of coal and domestic availability of the fuel would impact NTPC management’s ability to adapt to changing market conditions and maintain operational efficiency in the future. Moreover, looking at the recent rally in the stock, valuation appears to be expensive,” the brokerage said in September.

What matters though, is that optimism about NPTC’s performance overshadows pessimistic views. On October, BOB Capital Markets asserted its confidence in NTPC’s ability to power India’s economy. “Considering a thrust on renewables and simultaneous enhancement of thermal capacity, we believe the company is well positioned in the power generation space,” it says. The mix of conventional and renewable power generating capacities did help NTPC in FY23. It is to be seen how it leverages this mix in the future.