Energetica India Magazine -October 2020

POWER SECTOR IEEFA believes that NTPC will likely dis - continue its 7.4GW of pre-construction capacity. There is also a clear risk of underperformance on its 11.7GW of un- der-construction power plants – evident in the consistently declining utilisation rates in the five years to FY2019/20 due to the addition of new capacity well ahead of demand growth. Under continuing pressure from defla - tionary renewable energy tariffs, India’s coal-fired fleet’s utilisation rates have collapsed to an unsustainable low of below 60% for the last three years. The thermal power sector is also fac- ing difficulties with getting domestic coal linkages, water unavailability, en- vironmental litigation, financial stress of state-owned discoms and delays in construction. As a result, the sector has accumulated US$40-60 billion in stranded assets. Global Finance Moving Away from Coal Governments, investors and utilities across the globe are rapidly moving away from coal as they realise the need to accelerate the transition to a low-cost, low-emission and sustainably profitable energy economy. To date, 142 major financial institutions including multi-lateral development banks, insurers, export credit agencies and private banks have announced coal-exclusion policies. In the last week of September, KB Fi - nancial Group became the first South Korean financial entity to renounce coal when it retracted plans to invest in coal- fired power projects. The company has decided instead to direct finances to low-carbon and renewable energy proj- ects. This followed news from Poland, one of the world’s top coal-producing coun- tries, that the state-owned bank PKO BP had adopted a coal policy in 2020 that rules out financing new coal and lignite mines and coal plants. The poli- cy also commits Poland’s largest bank to a gradual reduction in financial sup - port for existing companies in the coal sector but does not set absolute targets for reductions. Leadership in the Transition to Clean Energy NTPC is contributing to the Indian gov- ernment’s long-term ambition to reduce thermal coal imports towards zero. It has managed to drastically reduce thermal coal imports from 9.7 million tonnes (mt) in FY2015/16 to 2.8mt in FY2019/20 by increasing its own an - nual in-house coal mining capacity to 16.8mt in 2019/20. Expensive energy imports are detri- mental to India’s trade account deficit, undermining the currency, boosting inflation and hence interest rates, and weakening energy security. Prudent planning and investment for emission-control implementation is an- other key area in which NTPC is setting an example for India’s other thermal power operators to follow. In FY2019/20, NTPC placed orders for implementing emission-control systems for 25.8GW of its coal-fired capacity. This will make NTPC’s entire coal-fired power fleet compliant with environmen - tal regulation norms. Even as renewable energy delivers all the incremental electricity demand growth of India in the coming decade, thermal power will remain a key part of India’s energy mix, increasingly relied upon for peaking power supply. NTPC, with its financial and operational capa - bilities as well as its political clout, is one of the last entities in India that can still procure sufficient capital access to risk building new coal-fired capacity amidst the ongoing distress and loss of competitiveness in the thermal power sector. Even so, the company’s focus on more renewables, particularly its intention to build an ultra-mega solar park in Gujarat, will be a major facilitator of India’s electricity sector transition. NT- PC’s target of 32GW of renewables by 2032 represents a material component of India’s overall clean energy target, driving both deflation and progressive decarbonisation while working to re- duce air pollution and water scarcity pressures, as well as providing a much needed clean energy investment and job stimulus as India starts to recover from Covid-19. 42 energetica INDIA- October_2020