About NTPC Green Energy Limited

NTPC Green Energy is a wholly owned subsidiary of NTPC Limited, a ‘Maharatna’ central public sector enterprise. They are the largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity as of September 30, 2024 and power generation in Fiscal 2024. Their renewable energy portfolio encompasses both solar and wind power assets with presence across multiple locations in more than six states which helps mitigate the risk of location-specific generation variability. Their operational capacity was 3,220 MW of solar projects and 100 MW of wind projects across six (6) states as of September 30, 2024. They are strategically focused on developing a portfolio of utility-scale renewable energy projects, as well as projects for public sector undertakings (“PSUs”) and Indian corporates. Their projects generate renewable power and feed that power into the grid, supplying a utility or offtaker with energy. For their operational projects, they have entered into long-term Power Purchase Agreements (“PPAs”) or Letters of Award (“LoAs”) with an offtaker that is either a Central government agency like the Solar Energy Corporation of India (“SECI”) or a State government agency or public utility.

As of September 30, 2024, their “Portfolio” consisted of 16,896 MWs including 3,320 MWs of operating projects and 13,576 MWs of contracted and awarded projects. As of September 30, 2024, their “Capacity under Pipeline, for which a memorandum of understanding (“MOU”) or term sheet has been entered with joint venture partners or offtakers but where definitive agreements have not yet been entered, consisted of 9,175 MWs. As of September 30, 2024, their Capacity under Pipeline together with their Portfolio consisted of 26,071 MWs. As of September 30, 2024, they had 17 offtakers across 41 solar projects and 11 wind projects. 

As of September 30, 2024, the Company's workforce comprised 232 employees, and they utilised the services of 45 contract labourers. The Bankers of the NTPC Green Energy are Axis Bank Limited and State Bank of India.

Overview of the Indian Power Sector
India witnessed robust growth in capacity addition over the past decade, led by delicensing of the powergeneration business through the Electricity Act, 2003, followed by strong government thrust on RE through favourable policies and regulations.

The total installed generation capacity as of September 2024 was ~453 GW, of which ~109 GW of capacity was added over fiscals 2018-25. The overall installed generation capacity has grown at a CAGR of ~5.0% over the same period.

Coal and lignite-based installed power generation capacity has maintained its dominant position over the years and accounts for ~48% as of September 2024. In the last few years, RE has been the focused area for capacity additions which is evident from the fact that RE installations (including large hydroelectric projects), have reached ~201 GW capacity as of September 2024, compared with 114 GW as of March 2018, constituting about 45% of total installed generation capacity. This growth has been led by solar power, which rapidly rose to ~91 GW from 22 GW over the same period.

India's electricity requirement has risen at a CAGR of ~8.4% between fiscals 2021 and 2024, while power availability rose at ~8.5% CAGR due to strong capacity additions, both in the generation and transmission segments. As a result, the energy deficit declined to 0.5% in fiscal 2023 and further reduced to 0.3% in fiscal 2024 from 0.7% in fiscal 2018. Also, strengthening of inter-regional power transmission capacity over the past five years has further supported the fall in deficit levels as it reduced supply constraints due to congestion and lower transmission corridor availability. During fiscal 2025, the deficit was reduced to 0.1% as of September 2024.

Peak electricity demand in India has grown from 164 GW in fiscal 2018 to 243 GW in fiscal 2024 clocking an average growth rate of 6.8% in the past six years. In fiscal 2025 (as of September 2024) the peak demand further increased to 250 GW during the month of May 2024. Prior to the pandemic, electricity demand in India usually peaked in August-September, mostly covering the monsoon season. This spike in peak demand was primarily due to an increase in domestic and commercial load, mainly space cooling load due to high humidity conditions. However, during post pandemic years, annual peak demand occurred in the summer season (April-July), due to extreme heatwave conditions.  

Overview of solar sector in India
In the renewable energy basket (including large hydro) as of September 2024, solar energy accounted for a share of 45%. Growth in the solar power sector over the last five years has been robust. As much as ~69 GW capacity was added in the segment over fiscals 2018-25 (as of September 2024), registering a CAGR of ~24.7%, although on a low base.

The GoI imposing solar RPOs across Indian states in 2011, coupled with the sharp drop in capital costs, led to most states releasing solar polices. This resulted in a spur in solar sector investments. Till fiscal 2012, only Gujarat and Rajasthan had state solar policies. After the success of Gujarat’s solar policy, other states such as Andhra Pradesh, Tamil Nadu, Karnataka, Madhya Pradesh, and Telangana introduced their respective solar polices.

The National Institute of Solar Energy estimated the country’s solar potential at 748 GW, assuming solar PV modules cover 3% of the geographical surface. India is a perfect location for solar energy because of its location. It has 300 days of sunshine each year, with daily peak electricity use being in the evenings and a seasonal peak in the summer.

The daily average Global Horizontal Irradiance (GHI) in India is around 5 kWh/m2 in north-eastern and hilly areas to about 7 kWh/m2 in western region and cold desert areas. The annual GHI varies from 1600 – 2200 kWh/m2 . States like Gujarat, Rajasthan, Madhya Pradesh, Andhra Pradesh, Karnataka, Tamil Nadu offers more solar irradiance as compared to other parts of India which makes them desirable for installing solar projects. 

The global average solar module price, which constitutes 55-60% of the total system cost, crashed 73% to $0.47 per watt-peak in 2016 (average for January-December) from $1.78 per watt-peak in 2010. In fact, prices continued to decline to $0.22 per watt-peak by end-August 2019, owing to technology improvement, scale benefits and a demand-supply gap in the global solar module manufacturing industry.

CRISIL MI&A Consulting expects that post the reapplication of ALMM; the domestic module prices are expected to inch up on a quarterly basis as demand for domestic module grows. However, the fall in cell prices will mean that the domestic prices will still be 10-15% down on year in fiscal 2025 to Rs 0.21-0.23/wp. On the other hand, the international module prices are expected to register a higher fall of 20-25% owing to oversupply.

Overview of Wind sector in India
India has a vast wind energy potential, estimated at 695.5 GW at 120 meters above ground level (AGL) as per estimates by the National Institute of Wind Energy.

India has the fourth largest installed wind power capacity in the world, with ~47 GW as of 30th September 2024. Wind power accounted for nearly 10.5% of India's total installed utility power generation capacity. India’s wind power installed capacity increased at a CAGR of approximately 7% from 26.8 GW in Fiscal 2016 to 47.4 GW in Fiscal 2025 (As of September 2024). Wind power capacity is mainly spread across the southern, western, and northwestern states of India. Leading states in wind power installations include Tamil Nadu, Gujarat, Maharashtra, Rajasthan, and Karnataka. Wind capacity additions

Wind power has witnessed a healthy capacity addition of ~1.48 GW in six months of fiscal 2025 vis-a-vie ~3.25 GW in Fiscal 2024. In fiscal 2023, ~2.28 GW wind power capacity was installed on the back of commissioning under several schemes that have been pending - SECI Tranche IV, V and VI. The rising trend of hybrid power (solar plus wind) projects coupled with moderation and stabilisation in key commodity prices has also supported growth. 

The top five states (Gujarat, Tamil Nadu, Karnataka, Rajasthan, Maharashtra) make up ~84% of the installed wind capacity (as of 31 March 2024), with some regions within these states accounting for most wind power projects. Since April 2021, ~80% the new capacity additions have happened in 3 states – Gujarat, Tamil Nadu, and Karnataka.

The weighted average discovered tariffs for allocated capacity of competitively bid projects for FY24 is Rs 3.4/kWh as against Rs. 3.1-3.3/kWh tariff required for earning 10-13% equity IRRs. The weighted average tariff of allocations in FY 2023, have averaged at Rs 3.0/kWh, providing an indication that developers are factoring in increased commodity costs and other execution related risks. The latest auctions held in Feb 2024 recorded a weighted average tariff of Rs 3.63/kWh.

Overview of Wind Solar Hybrid sector
WSH is fast becoming the preferred RE option in India. Although the MNRE has not yet set a generation target, the nascent sector has received strong support from SECI and several state governments. There are two types of WSH projects — pure-play ones and those with storage. There are also projects that may come up under the government’s RTC power scheme, which has a mandatory 51:49 blend of RE and thermal.

India has introduced RTC generation tenders, including hybrid tenders to strengthen clean generation combining solar, wind and storage technologies. The MNRE introduced the National Wind-Solar Hybrid Policy on May 14, 2018. The main objective of the policy is to provide a framework for the promotion of large grid-connected windsolar PV hybrid systems and efficient utilisation of transmission infrastructure and land. It also aims to reduce the variability in renewable power generation and achieve better grid stability. As on April 30, 2024, hybrid projects of aggregate capacity 15022.82 MW are under construction in the country. It is expected that India will witness 15-17 GW of WSH capacity addition in the next five years (fiscal 2025 to fiscal 2029), of which around 6-7 GW will be from wind.

Review of Large hydro Power generation in India
In the last 6 years (fiscal 2018 to fiscal 2024) India has added only ~2,450 MW large hydro capacity. Central sector has led the capacity additions with commissioning of 600 MW of Kameng HEP, 330 MW Kishanganga followed by Private sector with 99 MW of Singoli Bhatwari HEP, 100 MW Sorang HEP, 180 MW Bajoli Holi HEP, 113 MW of Rongnichu HEP. No capacity has been added as of September 2024 in fiscal 2025.

The reassessment study (regarding basin-wise reassessment of hydroelectric potential in the country) was carried out by CEA during the period 2017-23. As per the study, the assessed hydropower potential from major / medium schemes (i.e., schemes having capacity above 25 MW) is about 133.4 GW. As of March 2024, 46.93 GW (35%) has been developed and 18.08 GW (13.6%) is under construction out of 133.4 GW of potential. Presently 38 no. of hydroelectric project (above 25 MW) totalling to 15,273.50 MW are under implementation. Out of these, 29 no. HEPs totalling to 14,037.5 MW are under active construction and 9 no. HEPs totalling to 1236 MW are presently stalled.

Outlook on hydro capacity additions in India
CRISIL MI&A Consulting expects 11-12 GW of hydro power capacities to be commissioned (out of 14 GW presently under construction) over fiscals 2025-29 as against ~2.5 GW added during fiscals 2018-24. CRISIL MI&A Consulting further believes the central sector (NHPC and NTPC) will lead capacity additions in hydro power with 4-5 GW additions, followed by the state sector (Andhra Pradesh, Tamil Nadu, Himachal Pradesh, Uttarakhand) amounting to 2-3 GW and about 3 GW would be installed by other JV utilities such as SJVN, THDC, etc. Several private projects with aggregate capacity of 390 MW are also in the advance stages of construction and are expected to get commissioned by fiscal 2026.

Investments by hydro power giant NHPC rose by a staggering 52% to Rs 108.57 billion in fiscal 2024 from the revised estimates of Rs 71.29 billion for fiscal 2023. This is expected to provide the much-needed push to hasten the completion of hydro projects.

Overview of Small Hydro sector
Hydro Power projects are classified as large and small hydro projects based on their sizes. In India, Hydro Power plants with capacity of 25 MW or below are classified as Small Hydro. As per MNRE, the estimated potential of small / mini hydel projects is 21,133 MW from 7,133 sites for power generation. Of the total 21.1 GW of potential, over 60% lies in these five states namely, Karnataka, Himachal, Arunachal Pradesh, Jammu & Kashmir and Uttarakhand which includes over 45% of the total 7,133 sites.
As of September, 2024, the installed capacity of SHP is 5075.75 MW. In the last 5-6 years only ~483 MW of capacity was added at a CAGR of ~1.9%. Of the total potential, only 26% has been tapped so far.

SHPs are environmentally friendly as they do not encounter the problems of large-scale land acquisition/deforestation and displacement of human settlements. Being located in remote locations and at the tail end of the transmission network, they help in improving voltage levels and can also feed into the local grid in case of a major grid failure, thereby avoiding complete black out. They improve the socio-economic condition of the adjoining areas as well as a large chunk of the investment made in the project feeds into the local economy. Moreover, Micro Hydel Projects (MHP) and Watermills also have the potential to meet the power requirements of remote areas, helping the local people in developing small scale industries.

Despite various benefits, SHP projects in general faces various implementation challenges. Developing an SHP involves complex procedures and requires diligent steps to decide the site, unit size and generating equipment. Many SHPs are scrapped due to low consumption of electricity and sometimes very small size SHP adversely affect the plant’s viability. Usually, the life span of SHP is 35–50 years but some SHPs are closed down even before the end of the expected life due to faults in design and construction, obsolete equipment or non-availability of grid extension.

The river flow changes with season thus, measurement of flow rate should be carried out throughout the year in order to obtain proper discharge data. However, the absence of genuine data causes improper estimate of the power potential. Sedimentation is another issue that is often faced in developing hydropower projects. Absence of geological and sedimentation data has resulted in wrong design and caused closure of many hydropower projects. Problems are faced in acquiring land due to delays in obtaining permission from community or from government department like forest and environment.

NTPC GREEN ENERGY LIMITED COMPETITIVE STRENGTHS 
1. They are promoted by NTPC Limited, which has extensive experience in executing large- scale projects, longterm relationships with offtakers and suppliers and financial strength 
2. They have a Portfolio of 16,896 MWs solar and wind projects as of September 30, 2024 with diversification across geographies and offtakers
3. Experienced team in renewable energy project execution and procurement as well as operating and maintenance
4. Growing revenues along with strong credit ratings that enable a low cost of capital employed
5. Experienced Management Team

NTPC GREEN ENERGY LIMITED STRATEGIES
1. Continue to grow project pipeline through prudent bidding and strategic joint ventures with PSUs and private corporates
2. Focus on projects in new energy solutions like green hydrogen, green chemicals and storage
3. Drive efficiency and cost reductions in project execution and operating & maintenance

NTPC GREEN ENERGY LIMITED RISK FACTORS & CONCERNS
1. There is a concentrated pool of utilities and power purchasers for electricity generated by their plants and projects. 
2. The business and profitability is substantially dependent on the availability and cost of solar modules, solar cells, wind turbine generators and other materials, components and equipment for their solar, wind and other projects.
3. In the six months period ended September 30, 2024 and in Fiscal 2024, 62.20% and 61.74%, respectively, of their operating renewable energy projects are concentrated in Rajasthan.
4. They are dependent on their relationship with their Corporate Promoter, NTPC Limited.
5. They face significant competition from both traditional and renewable energy companies.
6. There is a time gap between making significant upfront investments in their solar, wind and other renewable energy projects.
7. The generation of electricity from solar and wind sources (including their capacity utilization factor) depends heavily on suitable meteorological and climate conditions.
8. The renewable energy market in India is at a relatively early stage of development and trends in the renewable energy industry are based only on limited data and may not be reliable.