Nagpur: Though the government has asked the country’s largest power producer NTPC to add 7 gigawatts (GW) of thermal power capacity, a report has found that getting the stranded thermal plants back and forth between them is a challenge for all stakeholders. Reviving is a better option.
Recently, the Maharashtra The government had decided to replace the two old units of the coal-based Koradi Thermal Power Plant with 660 MW each, for which a public hearing was held. Citizens are opposing it as they cite increase in pollution and health concerns.
As per the analysis done by Institute for Energy Economics and Financial Analysis (IEEFA), NTPC can acquire 6.1GW of stressed thermal assets through partnership with Power Finance Corporation-REC and National Asset Reconstruction Company Limited with minimum investment.
The report identified six plants with this cumulative capacity that are “ready for strategic acquisition by NTPC in partnership with other state-owned companies”.
Highlighting that any new investment in thermal power could potentially give rise to stranded asset risk, Shantanu SrivastavaSustainable Finance and Climate Risk Lead (South Asia) at IEEFA said, “In light of energy security concerns, strategic acquisitions, and subsequent revival of existing stranded power sector capacity in India, adding new thermal assets may be a viable option. Financing new thermal plants will expose domestic banks to another set of potential power sector non-performing assets (NPAs) and higher climate risk on their portfolios.
The report said that the strategy to acquire and revive NPAs of the power sector would also clean the balance sheets of Indian banks, which have been battling high NPAs for more than a decade.
Through case studies, the researchers also argued that by partnering with PPL or NARCL, NTPC could save significantly on upfront investment while ramping up capacity for India’s immediate energy security needs. “It can work on providing coal linkages and power purchase agreements where necessary, while PPL can provide finance for working capital requirements,” Srivastava said.
The study stresses that acquisition and reclamation should be the first step, as adding new or acquired thermal assets would harm the acquirer’s environmental, social and governance profiles.
“NTPC aims to install 60GW of renewable energy capacity by 2030, which will require secured capital from global ESG investors. Therefore, the post-acquisition strategy to take back and reuse the acquired stressed thermal assets for renewable energy generation would align well with ESG investors and prevent future stressed assets on NTPC’s books. The company can also explore the rapidly growing market for carbon credit trading to further improve returns from retrofit projects,” Srivastava said.
Recently, the Maharashtra The government had decided to replace the two old units of the coal-based Koradi Thermal Power Plant with 660 MW each, for which a public hearing was held. Citizens are opposing it as they cite increase in pollution and health concerns.
As per the analysis done by Institute for Energy Economics and Financial Analysis (IEEFA), NTPC can acquire 6.1GW of stressed thermal assets through partnership with Power Finance Corporation-REC and National Asset Reconstruction Company Limited with minimum investment.
The report identified six plants with this cumulative capacity that are “ready for strategic acquisition by NTPC in partnership with other state-owned companies”.
Highlighting that any new investment in thermal power could potentially give rise to stranded asset risk, Shantanu SrivastavaSustainable Finance and Climate Risk Lead (South Asia) at IEEFA said, “In light of energy security concerns, strategic acquisitions, and subsequent revival of existing stranded power sector capacity in India, adding new thermal assets may be a viable option. Financing new thermal plants will expose domestic banks to another set of potential power sector non-performing assets (NPAs) and higher climate risk on their portfolios.
The report said that the strategy to acquire and revive NPAs of the power sector would also clean the balance sheets of Indian banks, which have been battling high NPAs for more than a decade.
Through case studies, the researchers also argued that by partnering with PPL or NARCL, NTPC could save significantly on upfront investment while ramping up capacity for India’s immediate energy security needs. “It can work on providing coal linkages and power purchase agreements where necessary, while PPL can provide finance for working capital requirements,” Srivastava said.
The study stresses that acquisition and reclamation should be the first step, as adding new or acquired thermal assets would harm the acquirer’s environmental, social and governance profiles.
“NTPC aims to install 60GW of renewable energy capacity by 2030, which will require secured capital from global ESG investors. Therefore, the post-acquisition strategy to take back and reuse the acquired stressed thermal assets for renewable energy generation would align well with ESG investors and prevent future stressed assets on NTPC’s books. The company can also explore the rapidly growing market for carbon credit trading to further improve returns from retrofit projects,” Srivastava said.