NTPC

Introduction
NTPC Limited, formerly known as National Thermal
Power Corporation Limited, is an Indian statutory
corporation. It engaged in generation of electricity and
allied activities. It is a statutory corporation incorporated
under the Companies Act 1956 and is under
the ownership of Ministry of Power, Government of
India. The headquarters of the company is situated
at New Delhi. NTPC's core function is the generation
and distribution of electricity to State Electricity Boards
in India. The body also undertakes consultancy and
turnkey project contracts that involve engineering,
project management, construction management, and
operation and management of power plants.
The body has also ventured into oil and gas
exploration and coal mining activities. It is the largest
power company in India with an electric power
generating capacity of 67,907 MW . Although the
company has approx. 16% of the total national capacity,
it contributes to over 25% of total power generation due
to its focus on operating its power plants at higher
efficiency levels (approx. 80.2% against the
national PLF rate of 64.5%).NTPC currently produces 25
billion units of electricity per month.
NTPC currently operates 55 power stations (24 Coal, 7
combined cycle gas/liquid fuel, 2 Hydro, 1 Wind, and 11
solar projects). Further, it has 9 coal and 1 gas station,
owned by joint ventures or subsidiaries.
It was founded by Government of India in 1975, which
now holds 51.1% of its equity shares (after divestment of
its stake in 2004, 2010, 2013, 2014, 2016, & 2017)
In May 2010, NTPC was conferred maharatna status by
the Union Government of India, one of only four
companies to be awarded this status. It is ranked 400th
in the Forbes Global 2000 for 2016.

History

NTPC, India's largest power company, was incorporated

on November 7, 1975 to accelerate power development
in India. Today, it has emerged as an ‘Integrated Power
Major’, with a significant presence in the entire value
chain of power generation business.
With a current generating capacity of 30,144 MW, NTPC
has embarked on plans to become a 75,000 MW
company by 2017. NTPC is emerging as a diversified
power major with presence in the entire value chain of
the power generation business. Apart from power
generation, which is the mainstay of the company,
NTPC has already ventured into consultancy, power
trading, ash utilization and coal mining.
The total installed capacity of the company is 30, 144
MW (including JVs) with 15 coal based and 7 gas based
stations, located across the country. In addition under
JVs, 3 stations are coal based & another station uses
naptha/LNG as fuel. By 2017, the power generation
portfolio is expected to have a diversified fuel mix with
coal based capacity of around 53000 MW, 10000 MW
through gas, 9000 MW through Hydro generation, about
2000 MW from nuclear sources and around 1000 MW
from Renewable Energy Sources (RES). NTPC has
adopted a multi–pronged growth strategy which includes
capacity addition through green field projects, expansion
of existing stations, joint ventures, subsidiaries and
takeover of stations.
NTPC has been operating its plants at high efficiency
levels. Although the company has 18.79% of the total
national capacity it contributes 28.60% of total power
generation due to its focus on high efficiency.
In October 2004, NTPC launched its Initial Public
Offering (IPO) consisting of 5.25% as fresh issue and
5.25% as offer for sale by Government of India. NTPC
thus became a listed company in November 2004 with
the government holding 89.5% of the equity share
capital. The rest is held by Institutional Investors and the
Public. The issue was a resounding success. NTPC is
among the largest five companies in India in terms of
market capitalization.
At NTPC people before Plant Load Factor is the mantra
that guides all HR related policies. NTPC has been
awarded No.1, Best Workplace in India among large
organizations for the year 2008, by the Great Places to
Work Institute, India Chapter in collaboration with The
Economic Times.
The concept of Corporate Social Responsibility is deeply
ingrained in NTPC's culture. Through its expansive CSR
initiatives NTPC strives to develop mutual trust with the
communities that surround its power stations.
Right from social to developmental work of the
community and welfare based dependence to creating
greater self reliance; the constant endeavour is to
institutionalize social responsibility on various levels.
Presently, NTPC generates power from Coal and Gas.
With an installed capacity of 30,144 MW, NTPC is the
largest power generating major in the country. It has
also diversified into hydro power, coal mining, power
equipment manufacturing, oil & gas exploration, power
trading & distribution. With an increasing presence in the
power value chain, NTPC is well on its way to becoming
an “Integrated Power Major.”NTPC was the first among
power utilities in India to start Environment Impact
Assessment (EIA) studies and reinforced it with Periodic
Environmental Audits and Reviews.

Objectives
 Business portfolio growth
• To further consolidate NTPC’s position as the leading
thermal power generation company in India and establish a
presence in hydro power segment.
• To broad base the generation mix by evaluating
conventional and non-conventional sources of energy to
ensure long run competitiveness and mitigate fuel risks.
• To diversify across the power value chain in India by
considering backward and forward integration into areas such
as power trading, transmission, distribution, coal mining, coal
benefi ciation, etc.
• To develop a portfolio of generation assets in international
markets.
• To establish a strong services brand in the domestic and
international markets.
 Customer Focus
• To foster a collaborative style of working with customers,
growing to be a preferred brand for supply of quality power.
• To expand the relationship with existing customers by
offering a bouquet of services in addition to supply of power –
e.g. trading, energy consulting, distribution consulting,
management practices.
• To expand the future customer portfolio through profi table
diversifi cation into downstream businesses, inter alia retail
distribution and direct supply.
• To ensure rapid commercial decision making, using
customer specifi c information, with adequate concern for the
interests of the customer.
 Agile Corporation
• To ensure effectiveness in business decisions and
responsiveness to changes in the business environment by: -
Adopting a portfolio approach to new business development. -
Continuous and co-ordinated assessment of the business
environment to identify and respond to opportunities and
threats.
• To develop a learning organisation having knowledge-based
competitive edge in current and future businesses.
• To effectively leverage Information Technology to ensure
speedy decision making across the organisation.
 Performance Leadership
• To continuously improve on project execution time and cost
in order to sustain long run competitiveness in generation.
• To operate & maintain NTPC stations at par with the best-
run utilities in the world with respect to availability,
reliability, effi ciency, productivity and costs.
• To effectively leverage Information Technology to drive
process effi ciencies. - To aim for performance excellence in
the diversifi cation businesses. - To embed quality in all
systems and processes
 Human Resource Development
• To enhance organisational performance by institutionalising
an objective and open performance management system.
• To align individual and organisational needs and develop
business leaders by implementing a career development
system.
• To enhance commitment of employees by recognising and
rewarding high performance.
• To build and sustain a learning organisation of competent
world-class professionals.
• To institutionalise core values and create a culture of
teambuilding, empowerment, equity, innovation and openness
which would motivate employees and enable achievement of
strategic objectives.
 Financial Soundness
• To maintain and improve the fi nancial soundness of NTPC
by prudent management of the fi nancial resources.
• To continuously strive to reduce the cost of capital through
prudent management of deployed funds, leveraging
opportunities in domestic and international fi nancial markets.
• To develop appropriate commercial policies and processes
which would ensure remunerative tariffs and minimise
receivables.
• To continuously strive for reduction in cost of power
generation by improving operating practices.
 Sustainable Power Development
• To contribute to sustainable power development by
discharging corporate social responsibilities.
• To lead the sector in the areas of resettlement and
rehabilitation and environment protection including effective
ash-utilisation, peripheral development and energy
conservation practices. • To lead developmental efforts in the
Indian power sector through efforts at policy advocacy,
assisting customers in reforms, disseminating best practices in
the operations and management of power plants etc.
 Research and Development
• To pioneer the adoption of reliable, efficient and cost
effective technologies by carrying out fundamental and
applied research in alternate fuels and technologies.
• To carry out research and development of breakthrough
techniques in power plant construction and operation that can
lead to more efficient, reliable and environment friendly
operation of power plants in the country.
• To disseminate the technologies to other players in the sector
and in the long run generating revenue through proprietary
technologies.

Business divisions

Hydro Power: In order to give impetus to hydro power

growth in the country and to have a balanced portfolio of
power generation, NTPC entered hydro power business
with the 800 MW Koldam hydro project in Himachal
Pradesh. Two more projects have also been taken up in
Uttarakhand. A wholly owned subsidiary, NTPC Hydro
Ltd., is setting up hydro projects of capacities up to 250
MW.
Coal Mining: In a major backward integration move to
create fuel security, NTPC has ventured into coal mining
business with an aim to meet about 20% of its coal
requirement from its captive mines by 2017. The
Government of India has so far allotted 7 coal blocks to
NTPC, including 2 blocks to be developed through joint
venture route. Coal Production is likely to start in 2009–
10.
Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.'
(NVVN), a wholly owned subsidiary was created for
trading power leading to optimal utilization of NTPC’s
assets. It is the second largest power trading company
in the country. In order to facilitate power trading in the
country, ‘National Power Exchange Ltd.’, a JV between
NTPC, NHPC, PFC and TCS has been formed for
operating a Power Exchange.
Ash Business: NTPC has focused on the utilization of
ash generated by its power stations to convert the
challenge of ash disposal into an opportunity. Ash is
being used as a raw material input for cement
companies and brick manufacturers. NVVN is engaged
in the business of Fly Ash export and sale to domestic
customers. Joint ventures with cement companies are
being planned to set up cement grinding units in the
vicinity of NTPC stations.
Power Distribution: ‘NTPC Electric Supply Company
Ltd.’ (NESCL), a wholly owned subsidiary of NTPC, was
set up for distribution of power. NESCL is actively
engaged in ‘Rajiv Gandhi Gramin Vidyutikaran
Yojana’programme for rural electrification and also
working as 'Advisor cum Consultant' for Ministry of
Power for implementation of Accelerated Power
Development and Reforms Programme(APDRP)
launched by Government of India.
Equipment Manufacturing: Enormous growth in power
sector necessitates augmentation of power equipment
manufacturing capacity. NTPC has formed JVs with
BHEL and Bharat Forge Ltd. for power plant equipment
manufacturing. NTPC has also acquired stake in
Transformers and Electricals Kerela Ltd. (TELK) for
manufacturing and repair of transformers.
 Subsidiaries
1. NTPC Hydro Ltd
2. 'NTPC Vidyut Vyapar Nigam Ltd
3. NTPC Electric Supply Company Ltd
4. Pipavav Power Development Co. Ltd. (PPDCL)
5. Kanti Bijlee Utpadan Nigam Limited
6. Bharatiya Rail Bijlee Company Limited
Apart from this the company is having 13 different
Joint ventures as well.
1. PTC India Limited
2. Utility Powertech Limited (UPL)
3. NTPC–SAIL Power Company Pvt. Ltd.
4. NTPC–Alstom Power Services Private Limited
5. NTPC Tamil Nadu Energy Company Ltd.
6. Ratnagiri Gas and power Pvt. Limited
7. Aravali Power Company Private Ltd.
8. NTPC–SCCL Global Venture Pvt. Ltd.
9. Meja Urja Nigam Private Limited
10. NTPC BHEL Power Projects Pvt Ltd.
11. BF–NTPC Energy Systems Limited
12. Nabinagar Power Generating Company Private
Limited
13. National Power Exchange Limited

Awards
 Golden Peacock Environmental Management
Award: NTPC's National Capital Thermal Power
Project, Dadri was awarded the Golden Peacock
Environment Management Award for the year 2010.
 CII Sustainability Award: NTPC's Talcher Thermal
Power Station bagged the prestigious
 'Commendation Certificate' for strong commitment
under Sustainability Awards Scheme instituted by
CII for sustainable performance of the station in the
areas of Environment, Society and Economics.
 3rd Green Globe Foundation Awards: Green Globe
Foundation is partnered by knowledge partners
TERI and Wizcraft International Entertainment.
Award ceremony took place on 2nd February, 2011
at the Taj Palace in New Delhi.
 The Sunday Indian Special Mega Excellence –
“India’s Best Environment Driven Company Award –
2009: NTPC awarded The Sunday Indian Special
Mega Excellence – 'India's Best Environment
Driven Company Award–2009'. This award is a
special award to recognize and applaud the
commitment of NTPC Limited towards environment
and ecology
 NTPC awarded for Excellence in HR 2013NTPC
has been conferred three Awards by the World
HRD Congress & Star group at the 4th Asian’s Best
Employer Brand Awards held at Singapore on 31st
July,2013.  The company has been Awarded for
Talent Management, Award for Excellence in HR
through Technology and Asian’s Best Employer
Brand Award (RANK 14th).Three Awards by the
world HRD Congress and Star Group NTPC has
been conferred three Awards by the world HRD
Congress & Star group at the 4th Asian’s Best
Employer Brand Awards held at Singapore on
31.07.2013.The company has been given Award for
Talent Management, Award for Excellence in HR
through Technology and Asian’s best employer
Brand Award (RANK 14th).NDTV Leadership Award
 2013 for NTPC NTPC awarded as Business Leader
in the Power Sector at the NDTV Business
Leadership Awards held yesterday in New Delhi.
The award was presented by Shri Montek Singh
Ahluwalia, Deputy Chairman, Planning Commission
of India in the presence of Dr Prannoy Roy to Shri
Arup Roy Choudhury, CMD, NTPC. India’s top
business leaders were awarded on the
occasion.Top honors for NTPC at Best Companies
to Work for 2012 in India Ranked 3rd overall , First
amongst the PSUs , First in Manufacturing and
Production Industry Segment
 NTPC Limited received the recognition ‘Significant
Achievement in HR Excellence’ at prestigious CII
National HR Excellence Award–2011. NTPC ranked
19th by the GPTW for 2011 amongst 25 top Best
Companies in India
 NTPC wins Star TV Talent Leadership and HR
Award: NTPC received the HR Excellence Award
for PSU Sector for Innovative HR Practices at the
World HRD Congress at the Star TV Talent
Leadership and HR Awards.
 Two Awards for NTPC at Asia Best Employer Brand
Awards: NTPC bagged two awards at the Asia Best
Employer Brand Ceremony held at Singapore
recently for Best HR Strategy in line with Business
and Award for Talent ManagementOverall 7th in
‘India’s Best Companies to Work for 2010’, 1st
amongst the PSUs and 1st in Manufacturing &
Production Industry Segment: NTPC has been
ranked 7th overall in ‘India’s Best Companies to
Work for 2010’, a study by The Great Places to
Work Institute India and The Economic Times.
 Great Places to Work Award 2010: NTPC, New
Delhi has been ranked 7th in the Top 10 Great
Places to Work (GPTW) and has the distinction of
being only PSU in the Top 10 Best Companies to
Work For.
 NCPEDP–Shell Helen Keller Award 2009: NTPC
was awarded for NCPEDP – Shell Helen Keller
Awards 2009 in the
Category'C':Companies/organizations /institutions
who share NCPEDP's vision and through their
policies and practices demonstrate their belief in
equal rights and gainful employment for persons
with disabilities.Vishwakarma Rashtriya Puraskar
(VRP) – 2007: 22 NTPC employees were awarded
Vishwakarma Rashtriya Puraskar for the year 2007.
 Best Companies to Work For – 2009: NTPC has
been ranked Second in the Core Sector with Index
Score of 98 out of 100 and ranked 21st in the 25
toppers list based on a survey of 8,742 respondents
in 1000 organizations across 800 cities.
 SCOPE Meritorious Award for Best Practices in
Human Resource Management– NTPC has been
awarded the Gold Trophy for SCOPE Meritorious
Award for Best Practices in Human Resource
Management for the year 2008–09.
 Corporate Governance Awards:
 Earth care Award 2012 to NTPC for Climate
Change Initiatives
 NTPC has been bestowed the honour of being most
respected company in Power Sector for the year
2011 by Businessworld
 Golden Peacock Global Award for Excellence in
Corporate Governance – 2009 .
 ICSI National Award for Excellence in Corporate
Governance 2009
 Performance Awards:
 Top Liner Maharatna Award to NTPC
 SCOPE Excellence Award to Shri Arup Roy
Choudhury, CMD, NTPC
 PSU Excellence Award for NTPC
 Enertia Awards for NTPC Projects & Shri D K Jain,
Director (Technical), NTPC Ltd receives award for
Excellence in Nuclear, Thermal (Conventional
Energy)
 Vishwakarma Award for 12 NTPC Employees
 Prime Minister’s Shram Award to NTPC’s Misri Lal
Choudhary
 India Pride Awards – Energy and Power Category
 SAFA Best Presented Accounts Awards 2008
 Enertia Award 2010
 SAFA Best Presented Accounts Awards 2008
 CII–EXIM Excellence Award, 2010
 National Awards for Meritorious Performance
 CSR Awards:
 2nd India Power Awards 2009
 CII ITC Sustainability Award
Ntpc financial performance
For financial year (FY) 2015-16, NTPC reported a group
profit after tax of Rs10,183 crore (US$1,589m) on a
consolidated basis, up 2% on the prior year. In its standalone
FY2016-17 halfyear financial disclosure as at Sept. 30, 2016,
the company reported increased profit before tax of Rs6,296
crore (US$983m), up 53% against the prior year on a 10%
increase in gross sales. NTPC has maintained a five-year
average EBITDA margin of just under 25% and an average
return on equity (ROE) of 13.4% over the same period (refer
to Figure 5 below). In addition to running a consistently
profitable operation, NTPC maintains a solid balance sheet
with a low net debt to equity ratio and a more than adequate
interest cover (earnings before interest and tax was 3.2 times
interest expense in FY2015-160.
NTPC Key Metrics Source: Thompson Reuters, IEEFA
estimates The company is clearly a robust and profitable
operator, one whose sensible gearing allows it to achieve the
sustainable returns profile required to underpin the decades-
long heavy investment program required within its industry.
The strength of NTPC’s balance sheet is highlighted by
comparison to one of India’s private thermal power plant
operators, Adani Power Ltd. compares selected metrics of
NTPC and Adani Power Ltd, an operator of coal-fired power
plants that is in a considerably different financial position than
NTPC. Financial losses at Adani Power have led to negative
ROE in four of the last five years. The state of Adani Power’s
balance sheet is currently a pressing worry for its lenders31.
The company’s net debt to equity ratio (7.2 in 2015-16) stands
in stark contrast to NTPC’s and its interest cover of 1.3 (its
highest in five years) raises understandable concerns over how
Adani Power will be able to service its huge debt. Such
concerns have only increased since an Indian Supreme Court
ruling went against Adani Power32; under that ruling the
company will be required to write off hundreds of millions of
U.S. dollars of previously booked revenue, degrading its
balance sheet and profitability further still and leaving the
company on the edge of a financial precipice. Adani Power
reported a positive ROE in FY2015-16 for the first time in
five years. However, FY2016-17 will be a return to negative
ROE once the impact of the revenue write-off (possibly as
much as US$540m33) takes place. Whilst the future of Adani
Power is increasingly questionable, the stability and strength
of state-owned NTPC is precisely what India requires from its
major electricity generator as its economy rapidly expands.
The financial strength of the company is borne out by its latest
oversubscribed bond issuance. NTPC has become the only
state-owned enterprise (SOE) to issue masala bonds (bonds
issued outside India in rupees) for a second time. The Rs2,000
crore (US$312m) raising was priced at a coupon of 7.25%, the
lowest of any issuer of masala bonds to date34, with an
investment grade BBB- rating.35 Figure 6: NTPC Ltd Vs
Adani Power Ltd - Key Metrics Source: Thompson Reuters,
IEEFA estimates Its strong financial position aside, NTPC’s
heavy reliance on coal-fired power generation has created
balance sheet risks. Power utilities around the world that have
not reacted quickly enough to a global energy transformation
undermining outdated business models (refer to Global
Utilities: Industry Trends and Energy Transition on page 30),
run the risk of significant shareholder wealth destruction.
There are indications that NTPC could be faced with similar
headwinds if it does not further its alignment with Indian
government energy policy.
After four years of climbing revenues, 2015-16 saw revenue
growth stall whilst return on equity, although still above the
industry median of 11.5%, has declined from levels achieved
in the early part of the decade. Figure 7 below helps explain
the erosion of profitability at NTPC (as well as the dire
financial situation at some private thermal power plant
operators). Capacity factors at Indian coal-fired power plants
have fallen consistently since 2010, with the Indian average
standing at 62% in FY2015-16 and below 60% through the
first nine months of FY2016-17. Many power plants cannot be
operated profitably at this utilisation rate. NTPC’s average is
better than the overall Indian figure but the company’s
average capacity factor dropped below 70% for the first time
in FY2015-16, down from over 90% in FY2009-10. The fall-
off in capacity factors has been driven by lower-than-expected
electricity demand, which has failed to keep pace with thermal
power capacity additions37. The Central Electricity Authority
(CEA) is now forecasting that peak demand by FY2021-22
will be 235GW, 17% lower than it had forecast. For FY2026-
27, 317GW is forecast, 21% lower than the previous figure.
The lower-than-expected demand is already calling into
question the viability of thermal power plants in parts of
India. Water impacts are also playing an increasingly
important role in assessments of coal- power plant viability.
Thermal power plants use 3.8 cubic metres of water per MW,
compared to 0.1 cubic metres/MW for solar and almost zero
for wind power39. Conflicts with communities over water are
only going to increase going forward for thermal power plant
operators. Adani Power was forced to temporarily shut down
2.6GW of coal-fired power in 2016 due to water shortages.40
The increasing penetration of renewable energy in India is
also an important factor in driving down coal-fired capacity
factors. Importantly, with renewables targeted to reach
175GW by 2022 and 275GW by 2027, IEEFA sees no respite
for coal-fired plant capacity factors. NTPC’s capacity factors
will continue the downward trend along with the rest of
India’s coal-fired electricity industry, which will undermine
the sustainability of any business models based on coal-fired
generation.

Generation capacity

Thermal capacity
NTPC has direct ownership of 38.8GW of coal-fired
generating capacity with interests in an additional 5.2GW
through subsidiaries and joint ventures (refer to Annexure II).
NTPC’s total capacity of 44GW makes it by far the largest
coal-fired power generator in India, four times the size of the
second largest, Adani Power. NTPC’s newest coal-based plant
is the 660MW Solapur power plant in Maharashtra state,
commissioned in April 2017. With the latest National
Electricity Plan making clear that no new coal-fired
generation will be needed beyond what is already planned,
new NTPC coal-fired generation will largely replace old
plants as they shut down. The Power Ministry. has made it
clear that 11GW of NTPC’s older coal-fired plants will be
shut down over the next five years, to be replaced by 54
http://www.ntpc.co.in/en/media/press-releases/details/ntpc-
now-50498-mw-company new, super-critical plants in an
effort to increase efficiency and reduce India’s carbon
footprint.55 NTPC has 6GW of gas-fired capacity, including
joint ventures and subsidiaries, in its generation portfolio.
Renewable capacity
Despite its history as a fundamentally coal-based power
generation utility, NTPC is now rapidly rolling out in-house,
utility-scale solar projects, and it is signing power purchase
agreements for off-take of solar power from private solar
operators. As at May 1, 2017, NTPC had a total of 620MW of
in-house solar capacity. In addition to seven projects with a
capacity of 15MW each or less, the NTPC Bhadla solar
project has a currently installed capacity of 260MW56, the
Rajgarh project has 50MW of capacity and the Ananthapuram
solar park project has a capacity of 250MW. The record low
levelised tariff of Rs3.15/kWh achieved at the Kadapa solar
auction in April 2017 was achieved to a great extent because
NTPC was the off-taker. As a state-owned entity with a strong
balance sheet, NTPC is the strongest renewables power off-
taker in India, and its de-risking presence is conducive to
securing longer-duration loans at the most competitive
borrowing rates, which in turn lowers tariffs57. Kadapa was
the last of 3GW of solar tenders placed by NTPC. Including
offtake, NTPC is responsible for 3.6GW of the current 12GW
of solar capacity in India. NTPC is also leading the way with
less well-developed forms of solar energy. For example, the
company inaugurated India’s largest floating solar PV plant in
March 2017, a 100KW installation at the Rajiv Gandhi
Combined Cycle Power Plant in Kerala58. NTPC reservoirs
alone have potential for floating solar capacity of 800MW or
more. The company is already working on scaling up the
technology for megawatt-sized installations. In April 2017,
NTPC commissioned the first turbine of what is currently its
only wind power plant (the Rojmal Wind Power Project in
Gujarat). Upon completion, the plant will have a total capacity
of 50MW5.
Hydro capacity
NTPC entered the hydropower segment in 2015 with the
commissioning of the 800MW Koldam hydro-electric power
station60. The company currently has further hydropower
plants under development (refer to Development Pipeline
section on page 22). It has been reported that NTPC is
intending to buy the Indian government’s 64.5% stake in
hydropower producer SJVN Ltd61. That stake is valued at
around Rs87bn (US$1.3bn). SJVN Ltd owns two hydropower
plants with a combined capacity of 1.9GW and has plans to
build a 900MW hydro plant in Nepal. In addition, SJVN owns
a 48MW wind power plant in Maharashtra state. The
acquisition would help NTPC achieve its target of reducing
reliance on fossil fuels for power generation to 70% by 2032,
down from the current 97%.

Future plans
While the list of under-development power-capacity projects
shown in Annexure IV includes only three renewable energy
projects totalling 306MW, the list only represents projects
already under way in one form or another. Further, it does not
include private renewables projects in which NTPC will be
the electricity off-taker, an area where NTPC will have a
major impact on the future of renewable energy in India
thanks to its strong balance sheet, which de-risks private
projects. Importantly, the current development list does not
encapsulate the scale of NTPC’s renewable energy targets.
The Indian government has a target of 175GW of renewable
energy capacity by 2022, including 100GW of solar. NTPC
has previously committed to contributing 10GW of solar
capacity to the overall 100GW64 government national target.
The great majority of the projects that will contribute to
meeting this target are not yet on the development list due to
the short turnaround of solar projects. The company also has
an initial wind power target of 1GW, up from no wind
capacity at all until very recently65. In addition, NTPC has a
long-term ambition to achieve 12866 to 130GW67 of total
capacity by 2032, of which 28% would be renewable capacity
(around 36GW) up from just over 1% currently. Although this
is a long-dated target, scaling up toward 36GW of renewable
capacity from a very low base would represent a major
turnaround for NTPC, whose original name, after all, was the
National Thermal Power Corporation. NTPC, in short, stands
to be a cornerstone in India’s national electricity
transformation NTPC has launched a tender process at what is
reportedly India’s largest solar park68. Six blocks of 125MW
each are being offered to developers at the Pavagada solar
park, which is to have an eventual capacity of 2.7GW when
completed. NTPC has now tendered for a total of 1GW of the
park’s capacity, although the process was not without delays.
The capacity was originally tendered in February 2016 but
infrastructure delays led to a retendering in March 201769.
This is among the projects have yet to appear on NTPC’s list
of projects under development (Annexure IV). NTPC also
plans to expand its floating solar installations at the site of its
Kayamkulam gas-fired power plant. 70 The existing floating
solar installation of 100kW is already the largest in India. The
company has plans to extend floating solar capacity to
175MW, including through further use of water bodies around
the plant. This move would transform the output of the
seldomused Kayamkulam gas-fired power plant, which
generates at a high cost and has only been utilised over four
days in the past year. The plant currently survives on a
subsidy in the form of a fixed capacity charge. The Indian
solar market is dominated by private developers who are able
to achieve lower tariffs than public companies like NTPC. As
a result, NTPC is often finding it difficult to find offtakers for
its own solar installations in competition with private
companies, which are increasingly backed with overseas
funders who can bid very aggressively. 71 This is despite
NTPC being able to attract financing as low as 7.25% for its
masala bond issuances. Whilst at the moment this is slowing
NTPC’s progress toward its 10GW-by-2022 solar target,
NTPC is still able to make a major impact on Indian solar
growth by acting as an off-taker to private solar projects. The
company’s strong balance sheet is in contrast to alternative
off-takers such as state distribution companies, meaning that
NTPC’s financial de-risking presence helps private companies
achieve their aggressively low tariffs. NTPC is aiming to
become the off-taker of 15GW of renewable generation
capacity in addition to its target of installing 10GW of its own
capacity.72 NTPC’s involvement as an off-taker helped
Engie’s Indian arm Solairedirect bid Rs3.15/kWh for the
Kadapa solar project in Andhra Pradesh, the lowest levelised
tariff yet achieved in India and the second under-five-U.S.-
cents/kWh73 tariff. Another recent announcement also from
April 2017, was for a 118MW solar project from Azure Power
and Hareon Solar; again, NTPC is the off-taker. 74 The
company’s first foray into wind power, announced in April
2017, will only be the beginning. Once completed, the under-
construction Rojmal wind power plant will have a capacity of
50MW. Beyond this, NTPC has an initial target of reaching
1GW of wind power75. The Indian government is targeting
60GW of wind power as part of its target to achieve 175GW
of renewable energy by 2022. After India’s first, record-
breaking wind power auction, in February 2017, the
government is now stepping up the pace with a target of 4GW
of wind power auctions in FY2017-18. 76 The government
asserts that 5-6GW of wind power can be added each year,
allowing the 2022 target to be met. It is clear that NTPC is
having a significant impact already on the uptake of
renewables in India in the medium-term, and well ahead of its
own 2032 target date for installing 36GW. Figure 12 below
outlines the status of renewables at NTPC over the past few
years and estimates the 2022 renewables capacity figure,
including the capacity for which NTPC is the off-taker and its
target of 10GW of solar capacity and 1GW of wind. Its
ongoing hydro projects are expected to be complete by this
time too, almost doubling NTPC’s hydro capacity. In Europe,
offshore wind has made significant strides as rapidly-
increasing capacity has driven record low tariffs through
economies of scale. In a landmark development in Europe, the
latest auction for offshore projects in Germany attracted bids
of $0/MWh, meaning that developers will receive no subsidy
at all and only receive the market price for the electricity they
produce77 (currently around €30/MWh). Major countries
around the world, including China, the U.S., and Japan, now
look set to gain from the progress made in Europe. Indian
Energy Minister Goyal has stated a desire to begin research
and development on offshore wind projects and has
mentioned NTPC as a likely vehicle to lead such efforts. The
ambition is to establish major offshore capacity that makes
use of the higher capacity factors achieved by offshore wind
whilst avoiding the social impacts of land-based energy
generation78. NTPC is also beginning research and
development projects for concentrated solar thermal (CSP). In
November 2016, NTPC awarded the first contract for an
integrated CSP plant in Asia. As an integrated project, the
installation will be connected to NTPC’s existing Dadri coal-
fired power plant, increasing its efficiency. Whilst standalone
CSP plants are still expensive relative to the rapidly declining
cost of solar PV, a wave of similar projects around the world
is serving to bring down the cost via learning-by-doing gains.
Countries such as China, South Africa, Morocco80 and now
Australia81 are pushing CSP developments forward. Global
CSP developer SolarReserve has already secured a project in
Chile at a generation cost of US$63/MWh. Whilst CSP in
India is very much in the R&D and demonstration phase,
knowledge and cost reductions gained elsewhere over the next
the next five years will materially change the role of CSP in
India. IEEFA expects CSP to play an increasingly important
grid-stabilisation and balancing role by 2025 as renewables
become a more significant part of the overall generation mix
of India. NTPC is also weighing up geothermal technology.
NTPC has signed a memorandum of understanding with the
government of Chhattisgarh state with a view to developing a
geothermal plant at Tattapani. Feasibility studies for the
project are reported to be under way involving the Geological
Survey of India83. In addition to offshore wind and CSP
development, NTPC is preparing for the rollout of the next
generation of technology, which is beginning to approach
price parity and will further drive electricity generation away
from fossil fuels. NTPC has signed a memorandum of
understanding, for instance, for the installation of 50MW of
solar with battery storage on Andaman and Nicobar islands84.
Construction has already begun on 25MW85, and this is in
addition to the 5MW of solar without storage that NTPC
already has on the islands. India has fallen behind countries
like China in realising the transformative potential of battery
storage and electric vehicles (EVs) on electricity systems86.
However, this now looks set to change. NTPC is seeking to
set up EV charging stations to capture the significant potential
for EVs in India whilst securing further demand for its
electricity production87. The Indian government is hoping to
develop a major uplift to the EV market, which can assist with
grid balancing and storage in an electricity market with higher
renewable energy capacity. It will also lower India’s need for
fossil fuel imports. EV sales in India are currently low, but the
government is targeting six million EVs and hybrids on the
road by 2020 under its National Electric Mobility Mission
Plan (NEMMP) 2020 and the Faster Adoption and
Manufacturing of Hybrid and Electric Vehicles (FAME)
initiative. More recently, Energy Minister Goyal has stated an
ambition for all vehicles sold in India to be electric by
203088. In contrast to the plans of other countries, India is
proposing doing away with subsidies in favour of a battery-
leasing scheme that would involve the sale of EVs without
batteries (currently the most expensive component of EVs).
India’s EV strategy, expected to be initiated in 2017, counts
the respected energy efficiency and technology advocate
Amory Lovins of the Rocky Mountain Institute amongst its
advisors.

Conclusion
NTPC, India’s biggest electricity generator, is increasingly
choosing to pursue future capacity growth through renewable
energy. However, with coal-fired power plant utilisation rates
in structural decline in India, NTPC would do well to
accelerate its renewable energy roll-out and to step up its
facilitation of the Indian government’s ambitious renewable-
energy targets. As a state-owned utility in a developing
country, NTPC must of course prioritize the provision of
power to its citizens and support India’s rapidly developing
economy. Whilst the case could have been made in the past
that this responsibility meant that a continued focus on, and
expansion of coal-fired power generation was necessary,
times have changed—indeed 2017 has already seen several
watershed moments that have signaled a new era in India’s
electricity sector. With the average new solar tariff in 2017
below NTPC’s coal-fired power tariff for its existing fleet, it
is clear that renewable energy offers a cheaper way to provide
power. Importantly, solar is now cheaper than coal-fired
power even before taking into account the externalities of coal
(pollution, emissions and water use) that have held back the
nation’s development. While it is true that NTPC’s current
new capacity development list is dominated by coal-fired
projects, this list represents the company’s past more than its
future. These coal-fired developments have been in the
pipeline for years due to the long implementation timeframes
required for coal-fired power plants. As these projects are
completed and drop off the list they are unlikely to be
replaced by new coal projects now that the Central Electricity
Authority has made it clear that no further thermal projects are
required before 2027 at the earliest. Instead, an increasing
number of renewable energy projects will come and go from
the list as they are completed in the shorter timeframe that
such projects require. NTPC’s impact on the rise of
renewables in India will continue to be magnified by its role
as an off-taker of power from private renewables installations.
NTPC’s backing of such projects will facilitate further
renewables tariff reductions as clean generation technology
leaves coalfired plants even further behind on cost. If NTPC is
to maximize its role of key facilitator to India’s renewable
energy transition, IEEFA recommends a review of some the
company’s corporate objectives outlined in the introduction of
this report. Indeed, NTPC’s commitment to continuous
assessment of the business environment in a way that allows a
prudent response to opportunities and threats, requires such a
review. NTPC will do well to continue broad-basing its
generation mix via what have historically been considered
non-conventional energy sources, although IEEFA would note
that solar PV, wind and, increasingly, offshore wind and
concentrated solar thermal should no longer be consider non-
conventional. Such energy sources are now either fully
mainstream or rapidly approaching that status. Meanwhile,
NTPC’s goal of further consolidating its status as India’s
leading thermal power generator can be de-prioritized in a
market where the government sees no need for new coal-fired
capacity before 2027 at the earliest. NTPC can narrow the
focus of its goal to develop a portfolio of generation assets
overseas so that it is concentrating on renewable energy
projects. With major investors now seeking opportunities in
renewable energy globally, NTPC will find overseas
expansion in this sector is not encumbered by the headwinds
facing thermal power developments. Setbacks in NTPC’s first
two attempts at expansion into overseas coal-fired power—the
cancellation of the Sampur project in Sri Lanka and ongoing
delays around the Rampal project in Bangladesh— are
indicative of a growing trend. Going forward, coal-fired
power projects will be faced with considerable challenges
around environmental concerns and responsible-investment
standards regardless of whether those projects are in
developed or developing countries. By taking such steps and
further embracing the energy transition happening now,
NTPC can become the single most important facilitator in
achieving India’s ambitious renewable energy targets. By
doing so, it will also go a long way toward fulfilling its
company objective of maintaining and enhancing financial
soundness.