NTPC acquiring stranded thermal power plants over new ventures: IEEFA
In a recent analysis conducted by the Institute for Energy Economics and Financial Analysis (IEEFA), it has been suggested that state-owned NTPC’s strategic acquisition and revival of stranded thermal power plants could offer multiple benefits, including alleviating the burden on banks’ balance sheets.
The report from the research firm emphasizes the benefits of directing attention towards the acquisition and rejuvenation of financially troubled thermal power plants. This approach presents a favorable strategy for all entities involved. In alignment with the government’s directives, there is a pressing need for NTPC to enhance its thermal power capacity by 7 gigawatts (GW).
According to the research conducted by IEEFA, it is suggested that a significant capacity of approximately 6.1 GW of financially troubled thermal assets could be obtained by entering into collaborations with Power Finance Corporation-REC and the National Asset Reconstruction Company Limited. This acquisition could be achieved with minimal investment. By undertaking the acquisition and subsequent revival of these stranded thermal plants, favorable results can be anticipated for all stakeholders involved.
The strategic acquisition and subsequent revival of stranded thermal power plants offer a promising solution to address the issue of lingering non-performing assets on banks’ balance sheets. This approach would unlock significant capital for banks, enabling them to invest in expanding renewable energy generation while simultaneously meeting the country’s short-term power demands.
Highlighting the importance of energy security, Shantanu Srivastava, Sustainable Finance and Climate Risk Lead, South Asia, IEEFA, suggests that strategically acquiring and reviving the currently underutilized power sector capacity in India could serve as a viable alternative to constructing new thermal assets.
The company has established an ambitious target of installing 60 gigawatts (GW) of renewable energy capacity by 2030. Achieving this goal would require securing capital from international Environmental, Social, and Governance (ESG) investors. Therefore, it would be beneficial to adopt a post-acquisition strategy that involves retiring and repurposing the financially troubled thermal assets for renewable energy generation. This approach would align with the expectations of ESG investors and also serve as a proactive measure to mitigate future risks associated with stranded assets, safeguarding the company’s interests.
As per the IEEFA report, there are six power plants collectively capable of generating 6.1 gigawatts (GW) that hold promising potential for strategic acquisition. These acquisitions could be facilitated through partnerships between various government-owned entities such as Power Finance Corporation, REC, and the National Asset Reconstruction Company Limited.
Exploring these possibilities would not only assist the banking sector but also propel the advancement of renewable energy in India. This, in turn, would contribute to a sustainable and reliable energy future for the nation.
NTPC Limited, previously recognized as the National Thermal Power Corporation, is an Indian government-owned central Public Sector Undertaking. It operates under the Ministry of Power, Government of India, and is involved in electricity generation and related endeavors. The company’s headquarters are located in New Delhi.
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