NTPC at the forefront for India in global energy transition

  • Industry News
  • May 27,17
Energy Minister Piyush Goyal's plan to cease thermal coal imports by the end of this decade is being led by NTPC which has already ceased them this past fiscal year. Coal exporters that are looking to India to prop up volumes as China continues to reduce coal consumption are going to be disappointed.
NTPC at the forefront for India in global energy transition

May 2017 – NTPC is poised to facilitate India's drive toward ambitious national renewable energy targets and is leading the global energy transition.

"Despite its deep historical connection to coal-fired electricity generation technology, NTPC has recently moved to the forefront of India's energy transition and stands to be the country's key new energy enabler," said co-author of the report Tim Buckley, Director of Energy Finance Studies Australasia at Institute for Energy Economics and Financial Analysis (IEEFA).

"The role NTPC is now playing in transforming the Indian energy sector in its ongoing shift away from the increasingly stranded assets of the fossil fuel industry can not be underestimated," said Mr Buckley.

With economic growth at 7-8 per cent annually, India is the world's fastest growing major economy. As a state-owned power utility, NTPC's priority is to underpin that growth.

Whilst this responsibility has arguably required expansion of coal-fired power generation in the past, this has changed. 2017 has already seen several watershed moments that have signaled a new era in India's electricity sector.

"With the average new solar tariff in 2017 below NTPC's coal-fired power tariff for its existing fleet, it is clear that renewable energy offers a cheaper way to provide power," said Mr Buckley.

The ongoing Indian electricity transformation, which can be increasingly spearheaded by NTPC, will have global ramifications not least for the thermal coal sector which faces a technology driven structural decline.

Energy Minister Piyush Goyal's plan to cease thermal coal imports by the end of this decade is being led by NTPC which has already ceased them this past fiscal year. Coal exporters that are looking to India to prop up volumes as China continues to reduce coal consumption are going to be disappointed.

Utilities in many countries are at various stages of business-model transformation in response to a rapidly-changing technology environment. Early movers such as Enel SpA of Italy and NextEra Energy Inc in the US have become transition leaders.

NTPC must ensure it does not follow the well worn path towards shareholder value destruction taken by E.On and RWE of Germany, plus Engie in France. By beginning their transition too late they have significantly underperformed financially.

The transformation of the Indian electricity sector is happening right now under Energy Minister Piyush Goyal's leadership, and the rate of change is accelerating as renewable costs come down and technology innovation continues.

"Global capital inflows to India are clear endorsements of this program. NTPC, as well as India itself, stand to gain from an acceleration of its renewable energy roll-out and further facilitation of the Indian government's ambitious renewable energy targets," concluded Mr. Buckley.

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