Indian state utility National Thermal Power Corporation (NTPC) plans to build 15GW of solar projects, which will be made more competitive by bundling the electricity produced together with electricity from some of India’s oldest coal-fired power plants, according to an earnings conference call released on NTPC’s website in August.
The move comes under orders from India’s central government to remove power generated from coal plants that are more than 25 years old from their existing power purchase agreements. The remaining power will then brought together with new solar power generation and sold at a bundled rate.
In the earnings conference call, Kulamani Biswal, NTPC finance director, said that the Singrauli coal plant is the first project to be bundled with solar. A total of 1.7GW of capacity, excluding 15% unallocated share, will be bundled with 3GW of upcoming solar capacity where PPAs are yet to be signed.
The measure will reduce the price distribution companies (discoms) pay for solar power, but also ensures that they take on more renewable energy. India also has its own renewable generation obligation (RGO), which mandates thermal power producers to generate a certain amount of power from renewable energy technology.
However, Jasmeet Khurana, senior consulting manager at analyst firm, Bridge to India, told PV Tech: “[The RGO] has not yet been enacted into law. Therefore, on insistence from the government, [NTPC] is going above and beyond any future obligation.”
Khurana said the initiative raises two key questions: Many of these thermal projects will have to be retired, so how long can power be bundled? What will happen to solar projects if NTPC invests after the thermal projects retire and there isn’t sufficient thermal power for bundling?
Importantly, Khurana said that, while being a welcome move, the additional solar capacity put forward by NTPC may worry private developers, because such a significant portion of the future solar demand will be met just by NTPC. This will reduce the role of private developers in the Renewable Purchase Obligation (RPO) market.
This reiterates findings from Mercom Capital Group's latest quarterly report on India where solar developers, manufacturers and investors all expressed concern over government-owned entities such as NTPC and SECI entering the solar industry and increasing direct competition with private businesses.
NTPC has already started work on a 250MW project and has put out EPC tenders for an additional 1,260MW, added Khurana.
India's power ministry (MNRE) recently announced the country had surpassed 4GW of solar installations.