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NTPC Ltd is exploring options to manufacture solar equipment as part of the state-owned power producer’s strategy to be present across the green energy value chain.

To start with, India’s largest power generator is evaluating a plan to set up a 1,000-megawatt (MW) per annum manufacturing capacity, which may require an investment of 5,000 crore.

The plan stems from the fact that NTPC has to set up 10,000 MW of solar power capacity on its own, along with buying 15,000MW from solar project developers, on behalf of the ministry of new and renewable energy.

“We are evaluating the opportunity. We want to be present across the value chain—from polysilicon to solar panels. We have the money, and the present costs can be reduced. Silicon and quartz are available in abundance in the eastern part of India. A presentation on the subject has been made," said an NTPC executive, requesting anonymity. The plan is at a preliminary stage.

There has been considerable interest in the solar-equipment manufacturing space in India, with US-based SunEdison Inc. announcing its plans to establish a joint venture (JV) with Adani Enterprises Ltd to build a solar, photovoltaic manufacturing facility in India at an investment of about $4 billion.

US-based First Solar Inc. and China’s Trina Solar are among companies that are considering plans to set up manufacturing facilities in India.

With an installed capacity of 45,048MW, NTPC has around a 17% share of India’s power-generation capacity of 272,593MW, and has set itself a target of becoming a 128,000MW power producer by 2032. It plans to raise the contribution of renewable energy to 28% of its planned capacity by then.

“It is the right time to go for manufacturing. We have a large solar power generation commitment on ourselves. Also, in due course, NTPC has the target to reduce its dependence on fossil fuel sources," said the executive cited earlier. “With a focus on renewable, solar is a viable solution."

The government has pushed renewable energy to the top of its energy security agenda and is looking to provide green power at less than 4.50 a unit.

While the current installation cost of a solar project is around 6 crore per MW, economies of scale are expected to drive down the cost to 4.5 crore per MW.

India needs as much as $200 billion ( 12.75 trillion) to meet its target to install 100GW of solar power and 60,000MW of wind power by 2022.

Analysts expect solar power tariffs to fall.

“Solar power is likely to become cheaper than, or equivalent to, conventional thermal energy prices over the next two to three years and reach 4-4.5/kWh by FY18," India Ratings and Research, the domestic arm of Fitch Ratings, said in a 22 July report. “This will be driven by a decline in capital costs (solar modules and other balance of plant), an increase in efficiency, a shift towards large solar photovoltaic projects, leading to the economies of scale and lower return expectations by developers," the report added.

Queries emailed to spokespersons of NTPC, ministry of new and renewable energy, SunEdison and Adani remained unanswered till press time.

The emphasis on solar and wind power is also expected to strengthen India’s standing at global climate change negotiations that culminate in a summit in Paris in December.

The government’s focus on renewable energy is aimed to minimize India’s dependence on coal-fuelled electricity.

While there has been a growing interest from overseas and domestic investors in the Indian renewable-energy space, concerns are being raised over its viability in the backdrop of state electricity boards (SEBs) increasingly showing a reluctance to buy power on account of their poor financial health. With a debt of 3.04 trillion and losses of 2.52 trillion, SEBs are on the brink of financial collapse.

Russia’s OAO Rosneft, the world’s largest publicly traded oil company, is exploring a huge investment in solar energy in India, Mint reported on 14 July.

Also, SoftBank Corp., with Bharti Enterprises Ltd and Foxconn Technology Group of Taiwan, in June proposed to invest at least $20 billion in solar energy projects in India through a joint venture, SBG Cleantech Ltd.

ABOUT THE AUTHOR

Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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