NTPC can acquire stranded thermal power stations instead of funding new projects

IEEFA has claimed that strategic purchases and the subsequent resurrection of stranded thermal power facilities by the state-owned NTPC can aid banks in cleaning up their balance books. All stakeholders, including NTPC, would benefit more from purchasing and reviving stranded thermal power plants, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

The government has requested that NTPC expand 7 GW of thermal power capacity. "We find that the company (NTPC) can acquire 6.1 GW of stressed thermal assets through partnerships with Power Finance Corporation-REC and National Asset Reconstruction Company Limited with minimal investment...acquiring and subsequently reviving stranded thermal plants is a better option for all stakeholders," the IEEFA stated.

The final group of stranded assets on banks' balance sheets will be eliminated through strategic acquisitions and the subsequent resurrection of stranded thermal power plants, according to the report. This will free up bank capital for investments in boosting renewable energy generation while addressing the nation's immediate power needs.

Shantanu Srivastava, Sustainable Finance and Climate Risk Lead, South Asia, IEEFA, strategic acquisitions and subsequent resuscitation of the stranded power sector capacity already present in India can be a workable option to adding new thermal assets in light of energy security issues.

By 2030, NTPC wants to install 60 GW of renewable energy capacity, which would necessitate raising money from international ESG investors. As a result, a post-acquisition strategy to retire and repurpose acquired stressed thermal assets for the generation of renewable energy will be in line with ESG investors' preferences and avoid future stranded assets on NTPC's books, the executive concluded.

NTPC could join with other government-owned firms including Power Finance Corporation, REC, and National Asset Reconstruction Company Limited to strategically acquire six facilities with a combined capacity of 6.1 GW.