We have set a target of 60GW of renewable by 2032: NTPC Green's Bhargava

"The broader objective is that our renewables portfolio should be as large or as close to our coal-based portfolio by 2050," said NTPC Green Energy CEO Mohit Bhargava

NTPC Green Energy CEO Mohit Bhargava, an electrical engineer by trade, says that India’s biggest generator wants to dramatically increase its renewable portfolio to match that of coal-fired power. The power sector is the biggest polluter, accounting for 34 per cent of India’s emissions, a Mckinsey report has said. Being India’s biggest generator, NTPC has set a goal to increase its share of renewable generation at par with its thermal production to reduce its carbon footprint, and by extension contribute to India’s 2070 net zero target.

During Bhargava’s tenure, NTPC also set a benchmark of the lowest tariff in India by winning a solar bid of Rs 1.99/kWh, setting a new sectoral benchmark. But tariffs have since escalated, thanks to the rising cost of modules, higher funding costs, and an overall inflationary environment.

NTPC, with an installed capacity of over 70GW (65GW coal and gas), plans to become a 130 GW firm with a diversified fuel mix and boost generation to 600 billion units (kilowatt hour) from around 350 billion now by 2032. The fledgling RE business has commissioned a little over 3GW of capacity as part of a 20GW project pipeline. Edited excerpts:

How does NTPC see itself as a clean power generator given its storied past as India’s biggest supplier of coal-based power?

The target which we have set for ourselves is to do 60GW of renewables by 2032. The broader objective is that our renewables portfolio should be as large or as close to our coal-based portfolio by 2050. So that's the broader plan on which we are working.

What kind of break-up will the planned 60GW of renewable capacity have, you know, in terms of wind, solar or biomass?

Solar and wind will be the main component. We are not looking at biomass per se as part of the 60GW. We have about 20GW in the pipeline, out of which 3.2GW is already operational. Another close to 4.8GW is under construction. And almost another 10-12GW is on the drawing board, a big chunk of which we plan to start work within the next few months.

Up until now, wind has been a very, very small component. But as we are getting into building a pipeline that is looking at providing power round the clock basis, the role of wind increases significantly. What we are looking at is that out of this 60GW around 40GW would come from long-term agreements. Almost 15 to 20GW would come through the short or medium-term, which might include commercial (C&I) customers. It might include even exchange-based trading, and about 5GW would be as of now dedicated for the production of green hydrogen. We'll also be doing a lot of storage.

What kind of investments are we looking at for your green ventures?

On a ballpark basis, if I have to do 60GW, then I'm basically looking at almost close to $40 billion. Those are the kind of numbers.

Given billions of dollars in project expenses, you'll need to have investors. What kind of response do you see from banks in India for lending money for such projects. Second, what about investor interest, especially from overseas?

On the debt side, we have received very good response whenever we have gone to the market to raise funds. Generally, if the projects are bankable, lenders are quite happy to lend. On the equity side, we carried out an exercise last year. The idea was to get on board an investor. That has not been very successful. So that process is more or less closed. But right now we have a commitment from NTPC to provide equity up to a certain level. Which should be OK for some time, but we'll probably need to go to the market either soon or sometime later this year.

 

What about green bonds? Will they help?

Yes, green bonds are something that we have discussed earlier also, but incidentally in India, there is no greenium (green premium) per se versus the other bonds, while internationally there is. Some difference between the interest rate you get there, but here it's almost the same so. But yes, if the green tag helps and when we have, like I said, all the green credentials. But right now, whatever we have raised are direct loans.

Is it because of the global environment climate that you are not getting funding (investors)?

It's not easy for me to answer that question, but yes, you're right, I mean globally. So actually one part is that a lot of these global funds are already invested in various platforms in India. For them, it's also a choice whether they want to expand further. They are keen to look at projects which are bankable and make long-term sense for them, particularly pension funds. So I mean, if we do go to the market, we are hoping that as and when we do, obviously, we'll have to ensure that the timing is right and all these things happen.

Are renewable project costs increasing because of higher module costs? Do you see a rise in tariffs?

All these tariffs are reflective of the input costs, including the cost of debt. In fact, in the recent auction which I believe Gujarat had, the tariff was almost Rs 2.75 per unit (Kwh). This is a reflection of how the market is at that point of time. I'm not saying Rs 2/Kwh will not happen.

What about spending plans for green hydrogen and green ammonia? You have a venture with Greenko for supplying a green ammonia project and and you have also tied up with IOC for some projects.

In both the cases that you refer to  - IOC and Greenko  - we will be supplying green power. So we are not setting up the facility for ammonia. We have launched a pilot for green hydrogen. We started blending green hydrogen into the city gas pipeline at our station in Gujarat. We have started doing 5 per cent, then we'll gradually go up to 10-15 per cent. Similarly, sometime in September, we'll be launching the green hydrogen bus in Lucknow. We also recently signed an agreement with the Indian Army where we'll be providing them hydrogen-based power supply solutions. On the supply of green hydrogen and green ammonia, we already have two or three discussions going on. It's not appropriate for me to actually give out the names at this moment, but these are on a commercial scale. One of the other things we are doing separately is the creation of a hydrogen hub in Andhra Pradesh. The government has actually identified that they'll be supporting two green hydrogen hubs. The idea is that we create a large setup where people can come in and set up not only an ammonia production facility but also say, for example, an electrolyzer manufacturing facility and a service production facility. We already had a large piece of land in Andhra Pradesh which we identified for a coal project earlier.

In India's case, around 30 per cent of RE capacity is solar and wind, but generation wise it is hardly 12 per cent. So in your overall generation mix of a 600 billion unit target, which you plan for 2032, what kind of role will renewables play in generation?

Up until now, it was solar and wind on plain vanilla basis. But now, in terms of the contracts we have signed or the bids we have won, which is about 20GW, that includes hybrid, and hybrid plus storage. So we will be supplying Round The Clock (RTC) renewable power. For example, we recently won a bid for railways to supply 500MW of RTC power.

Will you use thermal power also for RTC?

No, this is pure-play renewable. That's why when we signed agreements with large C&I customers adding up to almost 2000 MW (and 500MW with railways) it will actually entail setting up a capacity of almost close to four times this number. So 10GW of solar plus wind I'll have to create because a large chunk of that will go into storage. So these two capacities will not only supply power whenever they are available, but large chunks will also go into storage.

Isn’t storage very expensive, more of a kind of a pilot proposition rather than, you know, commercially viable?

No, I will not say that. In fact, recently we concluded a bid for 3000 MWhour of energy storage. We are in the process of taking the final internal approvals. The lowest number I would say is pretty decent by today's standards. The lowest offers come from pump storage, pretty acceptable to the buyers.

So coming to storage again, what kind of tariff are you looking at for renewables plus storage.

The per unit cost of power using battery storage is almost twice or close to double of what we get through the pump storage, so commercial utilisation of battery is still some time away. After concluding the 3000MW hour tender, we have recently issued another bid for 9000MW-hour of storage. So there again, we are open to trying any technology as long as they can be the most cost competitive.

What kind of tariffs are you looking at in RTC?

Ideally, the aim is to beat the tariff of any other competing option. The latest round of bids, which the railways conducted for RTC power, came in at almost Rs 4 per unit.

That is much cheaper than gas-fired power?

Gas is not in competition at all. We have to import all the gas. I will say the one thing which is in favor of renewables compared to fossil fuels and that is - there will be no price escalation on the renewable side and while it will always be there on the fossil fuel side. So we are almost there, even on RTC basis.

Will you be adding only renewable capacity from now on? No more coal-fired facilities?

No. Actually, that may not happen. Initially, that was the idea, but recently, as you might have seen, the government is also keen to increase the coal-based portfolio baseload in the country because demand has grown significantly over the past year. For example, last year the demand growth for electricity at the national level was more than 10 per cent. Keeping that in mind and looking at the possibility of demand increasing significantly, and assuming the fact that much of this demand, ie peak demand generally comes during the evening we need to reiterate the role of coal. Some coal additions will happen. So that's why I said the initial idea was to actually have similar capacities, but now probably we'll try to do closer to that (thermal) capacity.

What are the challenges for India’s plans to tender 50GW every year given the overall slowdown in the last three years?

Our challenge is the challenge of land, the challenge of evacuation, the challenge of supply chain, and the challenge of finance. The project doesn't start until the PPA is ready. So these are all the challenges. The government, for example, is now looking at a pool-kind of mechanism for discoms to absorb renewable generation. Maybe it will be easier for the discoms to do PPAs.