Keen to step up own production, NTPC to stop buying, re-selling renewable power

Company to commission 500 MW of solar power next fiscal year NTPC Ltd wants to completely shift away from the business of procuring renewable energy and then selling it at a small margin to State governments.

According to officials in the know, NTPC now wants to focus on increasing its renewable energy generation capacity and leave the renewable power procurement responsibility to the Solar Energy Corporation of India (SECI). NTPC and SECI had independently started calling for bids from renewable energy project developers to build confidence for achieving the clean energy goals of the centre. These two Central government agencies would procure power from the developers and then sell it to a power distribution company (DISCOM) at a margin of around 6-7 paisa per unit.

The move would insulate the clean energy project developers from haggling with State government controlled DISCOMs that are notorious for delaying payments and renegotiating signed contracts.

According to officials, NTPC has commissioned around 3,600 MW of projects from where it procures power and another 3,000 MW if such projects are under implementation.

The plan next year is to bid out just 1,200 MW of projects under this model, unless specifically asked by the government.

Solar power generation
“The company’s focus in the next financial year will be commissioning 500 MW of NTPC’s own solar power generation capacity. The power generator wants to focus on having a larger renewable energy portfolio and eyes a clean energy generation capacity as large as its thermal portfolio sometime in the future,” a top company official said.

NTPC currently has over 900 MW of commissioned renewable energy projects comprising 11 solar photo-voltaic projects with a capacity of 870 MW and one wind energy project of 50 MW. The total installed power generation capacity of the NTPC group stands at 57,356 MW.

Analysts had also starting picking holes in the power purchase agreements (PPAs) that NTPC and SECI had signed with project developers. In July this year, an India Ratings and Research report said the two are lowering their obligations towards payments to renewable energy companies in the PPAs they are signing if the DISCOM defaults.

Earlier this year, the Central Electricity Regulatory Commission also refused to approve the trading margin charged by SECI for these projects. Both NTPC and SECI are since then expected to negotiate their trading margins with the states for each such project.