Aim for 60-40 ratio, where 40% is green, rest is fossil by 2032: NTPC CMD

NTPC arm NTPC Green Energy, with the launch of its initial public offering (IPO), looks to utilise the proceeds for its capital expenditure (capex). Gurdeep Singh, chairman and managing director of NTPC and NTPC Green, spoke with Amritha Pillay in an interaction in Mumbai. He discussed capacity expansion plans and how the company would balance presence between fossil and green sources of power. Edited excerpts: 

 

You mentioned you plan to use the IPO proceeds as capex, and share your plans to increase capacity in the long term?

 

The plan is to take it to 60 gigawatt (Gw) by 2032, for which we would need about Rs 3-3.5 trillion. For the current phase of 9 Gw, we need close to Rs 1 trillion, of which the 20 per cent equity requirement will be met through this IPO. With plants getting commissioned, there is a cash flow of around Rs 65-70 lakh per megawatt. So, we will be quite comfortable to commission this 19 Gw.

 

Give us details on which segments will the IPO proceeds be used as capex?

 

We will be using the IPO proceeds for mainly solar, some amount of wind and to a small extent our energy storage project, on which we have not put up the figure as there is a price correction. And so, we are waiting for it. There will be a small, initial requirement for the green hydrogen hub as well. 

You will also need to bring down NTPC’s stake to meet the minimum public shareholding regulation. What is the plan there?

 

We have to come below, and we have to reach the 25 per cent public offering. So, we will achieve that and most likely, that will go through a new series (fresh equity). We do not want to, and at present do not foresee a dilution of stake from NTPC.

 

So the new series would be future growth, specifically green hydrogen?

 

The new series and proceeds will go towards growth. The point is to create an avenue for more value and premium for a new set of early investors. There is a visible pipeline of 19 Gw and plans for 60 Gw.

 

NTPC Green Energy is being pushed as the home for non-fossil energy sources – solar, wind, storage and green molecules. Give us an update on the green hydrogen business?

 

Hydrogen will come in slightly after the 60 Gw plan. The 60 Gw plan, some of it, say 5-7 Gw, will feed the hydrogen business. However, we will go whole hog (on green hydrogen) three years from now, when we know the economics of the hydrogen fits in.

 

Parent company NTPC recently bid out contracts for setting up three thermal power units. What is the ideal mix between the two will you aim for?

 

The country’s energy needs are increasing, with a place for all kinds of energy. We were earlier considering 50:50, we had to revise that. By 2032, we should reach a 60:40 ratio where 40 per cent is green. But after another five years, it could reverse.

 

On the IPO risk factors, you mentioned concentration of off-takers, in this case Telangana, and concentration of projects, which are in mainly Rajasthan. Would you look to diversify, de-risk receivable issues or transmission and distribution (T&D) congestion issues?

 

It is an investment decision. Until we are happy and we are sure that it is the number one choice, we do not start. In Telangana, we do not have any problem with payments. And, I think the Telangana power requirement is also increasing. The share (in off-takers) will automatically change as we go for a higher capacity.