State-run NTPC is scouting for strategic investors in its wholly-owned subsidiary NTPC Renewable Energy (NREL), a senior company official aware of the development said. To meet the government’s asset monetisation target, NTPC is planning to float initial public offerings (IPOs) of some of its subsidiaries, including NREL, and the “strategic investors are expected to be brought in before the IPO,” the person added.
The company will aim to have reputed global investors as partners in its significant green energy capacity expansion plan, which can also potentially make NREL more attractive for an IPO.
As FE reported earlier, the IPO process of NREL is expected to be complete in FY23. NTPC had incorporated NREL to focus on its green energy business in October 2020, and its IPO is seen to unlock significant value, given the market performance of other renewable energy companies which have much lower capacity addition targets.
The company aims to attain 60,000 megawatt (MW) of green capacity by 2032 from the current level of around 1,300 MW, and wants to have 8,000 MW of installed renewable energy base by FY23.
Partnering with NTPC is seen to be an attractive investment route into the country’s renewables sector for players such as financial investors or investment trusts. In April, special US presidential envoy for climate John Kerry had called India a “red hot investment opportunity” because of the country’s efforts to increase the share of renewables in the energy basket. India has set a target to raise the capacity of installed renewable energy generation plants from the current level of 104 gigawatt (GW) to 500 GW by 2030. The company will likely infuse about 15%-20% equity in the renewable energy projects, while the rest of the expenditure will be made from debts. “Gradually NTPC’s stake can come down even below 50% in the subsidiary,” the aforementioned person stated.
NREL has already received the Union ministry of new and renewable energy’s approval to set up a 4,750 MW renewable energy park at Rann of Kutch in Khavada, Gujarat, which will be the largest solar park to be built in the country. The company had quoted the lowest tariffs of Rs 1.99/unit and Rs 2/unit in 2021 solar auctions, buoyed by its relatively lower costs of debt owing to its government-backing and positive ratings. It also recently quoted the lowest tariff Rs 2.17/unit for building 500 MW of solar projects Rajasthan in the auction conducted by the Solar Energy Corporation of India.
NREL has also has invited expression of interest from domestic module manufacturers to procure 15,000 MW of solar panels for its projects over the next five years, and intends to issue the request for proposal for the same in the “in the next two months,” another senior company official said. Keeping in mind the company’s future renewable energy capacity addition plans, NREL “desires to enter into long term sourcing partners for solar photo voltaic modules to develop its renewable energy portfolio either by way of direct sourcing tie ups or through a contract manufacturing,” the company said.