The state-run NTPC will conduct an initial public offering (IPO) for NTPC Green Energy (NGEL) in FY24 after talks with three companies failed to materialize about a strategic investment in the green energy space.
The country’s largest power producer, with an installed capacity of 71.6 gigawatts (GW), was in talks with three investors including state-owned Malaysian oil and gas company Petroliam Nasional Berhad or Petronas, sources said.
“Only Petronas has reached the final stages. Discussions about valuation and investments, however, remained fruitless. Petronas was interested in investing around $500 million for a 20 percent stake, while NTPC wanted a better valuation. So it withdrew,” sources said.
NGEL’s IPO in FY24 aims to sell up to 25 percent of the shares in accordance with capital market norms. NGEL currently has around 3 GW of installed capacity, with 5 GW under construction and another 10-11 GW in the pipeline.
A back-cover calculation suggests that NGEL will need about ₹40,000 to ₹50,000 crore for projects in the pipeline, considering the normative cost of ₹4 to ₹4.5 crore per megawatt (MW) for solar power.
NTPC declined to comment on the matter.
Declining investor interest
Another problem in attracting investment for domestic renewable energy projects is the lack of interest from foreign investors, who are eyeing the US and European markets and have established their own green energy subsidy policies.
The official explained that interest from foreign investors has “diminished” in recent months following the launch of two major green energy support schemes. The EU introduced the REPowerEU plan while the US launched the Inflation Reduction Act (IRA).
“For example, the IRA allocates around $370 billion in new spending and tax credits and addresses all major energy demand sectors, which has led many investors to eye the US renewable energy sector versus Asia. This is worrying,” the official added.
A senior government official said India is already evaluating the IRA and exploring opportunities to export green energy products to the US. The government has launched a study to examine sectors that will benefit from the IRA and to draw up a list of products where India can seek preferential treatment.
In addition, domestic manufacturers of solar modules face customs barriers when importing products. To verify this, the Department for New and Renewable Energy (MNRE) decided last month to hold in abeyance the Approved List of Models and Manufacturers (ALMM) for solar photovoltaic (PV) modules for FY24. It gives manufacturers a breather, as solar modules can now be imported without restrictions until April 2024.
Another problem for domestic manufacturers is rising interest rates.
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