Director (Finance), NTPC
NTPC Green Energy's Management Shares 5-Year Growth Plan and Green Hydrogen Strategy
In an exclusive interview with NDTV Profit, NTPC Green Energy's Chairman, Gurdeep Singh, and Director of Finance, Jaikumar Srinivasan, discussed the company's growth plans and listing of the company. Mr Singh said that the IPO proceeds will be used for debt repayment and capital expenditures as NTPC aims to achieve 60 GW capacity by 2032, with 80% from solar and the rest from wind. The company plans significant expansions, adding 3 GW, 5 GW, and 8 GW in the next three years. They also highlighted future investments in battery energy storage, green hydrogen, and pumped storage systems, alongsid...
Transcript (22 segments)
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Unknown0:01
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Interviewer0:09
We are now in conversation with the management of a newly listed company, NTPC Green. Now, the IPO stood at a total issue size of 10,000 crores, and to speak about the road ahead, we're joined by the Chairman and Managing Director of NTPC and NTPC Green Energy, Mr. GEP Singh, as well as the Director Finance, Mr. Jaikumar Srinivasan. Welcome to the show and congratulations on the listing. Let me start off by asking, how will the 75% of the proceeds be used for debt repayments? How will these debt repayments be carried out?
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Jaikumar Srinivasan0:43
Good morning. Yes, we have indicated about debt repayment initially. Broadly, this 10,000 crores would be utilized for capital expenditure only because we have a huge capacity addition planned. But on a more immediate basis, when we mop up this money, we'll be retiring some of the debts on the balance sheet, and subsequently, when the capital expenditure happens, we'll have to again go for fresh loans.
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Interviewer1:13
Got it. Let's talk about the capacity under construction and under pipeline. 14 GW of contracted capacity, 9.2 under pipeline. What's the kind of mix in terms of solar, hybrid, and other various types of renewable energy projects? And is there a targeted mix that the company aims to get at?
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Jaikumar Srinivasan1:35
The capacity, as was indicated, right now we have operating capacity of 3.2 GW, and we have another 13.58 GW under construction and awarded, and we have a further portfolio in the pipeline of 9.18 GW which we are working on. So there is a visible pipeline of around 26.08 GW. So this is what we are working on. Predominantly, this would be comprising of solar capacity, though you can roughly take a ratio of 80 to 20: 80% will be coming through solar, 20% will be through wind, and there will be some element of storage component in that.
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Interviewer2:18
Got it. And from my understanding, on average, how much revenue does the company earn per megawatt in terms of solar? Can you repeat the question? How much revenue does the company earn or generate per megawatt in terms of solar?
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Jaikumar Srinivasan2:39
Energy, we generate, I can tell you in terms of EBITDA per megawatt, it will be around 65 lakhs per megawatt.
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Interviewer2:50
Got it. And you know, you have all of this capacity lined up. How is the future capacity expansion coming into place? What are the targets and how will the yearly capacity additions take place?
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GEP Singh3:02
See, it is like we have set out a target of 60 GW as a broad plan up to financial year 2032, but on a more immediate basis, I was explaining to you that we have a capacity under construction of close to 13.5 GW, a further 9.18 GW which is under negotiation, and you know, so a total of 26 GW is there. And as far as the commissioning is concerned, this year we'll be commissioning 3 GW, next year we target around 5 GW, and the year next it would be 8 GW. So that would be, by the end of financial year 2017, we hope to have a capacity of 19 GW. Okay, but you know, going further, it will be, we'll be ramping it up to 60 GW.
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Interviewer3:55
Got it, sir. You know, you mentioned the ambitious capacity expansion plans. What kind of CAPEX does the company expect in FY25 and for the next, you know, 3 to 5 years?
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Jaikumar Srinivasan4:07
See, in terms of profitability, our return is around 16%, so that is the kind of. And I mentioned to you about per GW, we are having an EBITDA margin of close to 80 to 90% is our margin. So a similar kind of returns you can expect from the added capacities over the next 2-3 years.
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Interviewer4:35
Got it. And in terms of CAPEX necessary to put up these capacities, what will the company incur in FY25 and going forward in the near term in terms of investment?
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Jaikumar Srinivasan4:51
Capital expenditure to set up these projects, capital expenditure would be, you know, as far as I mentioned, we are maintaining a ratio of 80-20 for this identified capacities, and roughly 5 crores per GW is the capital expenditure as far as solar is concerned. As far as wind is concerned, it would be on an average 8 crores per GW.
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Interviewer5:20
Got it. And you know, the company is also foraying into green hydrogen and battery energy storage. What's the outlook here, and could you give us an update on what the company's working on in these two new energy spaces?
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Jaikumar Srinivasan5:34
See, as of now, if you are just considering, we had been just giving the details about 2030 where solar and wind is predominantly, but now, there is storage capacity which is becoming viable and we have started and building process on that. But going forward, the green hydrogen and green hydrogen based derivatives will start playing its important role, but it's going to take about next four to five years at least. So as of now, we are not showing the major investment into that. We have already acquired 1,200 acres in Pimpa, which is Visakhapatnam, where we have invested around 1,000 crores in that land and we are developing that. So this is the developmental exercise. But if you go forward by 2030, there is a capacity requirement going up to the tune of the 5 lakh crores. The 60 GW itself by 2030 is going to require around 3.25 lakh crores in total investment, and then there will be green hydrogen based molecules, and there will be also the storage capacity which is going to be both in case of battery and pump storage. And we are also working on some other solutions for the storage which is thermal as well as some of the carbon dioxide based like the pump storage on that.
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Interviewer7:05
Got it. So, you know, the company also has an MOU with the Chhattisgarh State Power Generation Company for renewable projects. Could you give us more insight on what the MOU is about?
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GEP Singh7:16
Yeah, I think Chhattisgarh is, as late as yesterday, and it is to start with, it is a small quantity of about 2 GW, but going forward, this will also be 10 GW plus because we are also targeting about the floating solar. There are many reservoirs in that in addition to the land mounted. But as you will be knowing, we have already entered into the joint venture agreement with the state of Rajasthan, state of Maharashtra, and also state of Andhra Pradesh where we are adding 25 GW in Rajasthan, 25 GW in Andhra, and around 20 GW in Maharashtra. So put together, we are also lining up, this is huge land bank and going forward the adding to the capacity. So this is tremendous growth and potential in the sector, and we will be able to work very fast in this area.
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Interviewer8:17
You know, I also wanted to get an understanding on how the bidding pipeline is looking like. What kind of new orders or order inflow does the company expect, and you know, the kind of tenders that have been floating around? What's your outlook there?
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GEP Singh8:30
See, as Director Finance just mentioned, we have the immediate target to commission 3 GW this year by March. Next financial year, we'll be adding 5 GW, and then FY27, we will be adding around 8 GW, and the work is in progress so that we are able to reach 60 GW not by 2032, what we had earlier said, but by 2030 itself. So there is parallel work which is going on, whether it's making the land availability, the evacuation facility, and then going for the bidding process, as we plan then to synchronize the land plus the evacuation facility.
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Interviewer9:13
Yeah. And lastly, I'd like to end with, you know, what are your expectations in terms of your financial performance FY25 as a whole?
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Jaikumar Srinivasan9:22
See, I'm not able to just get you clearly what you said, but I think if it is going to be what you are asking, we had been able to increase our, like in FY22, we had the operating revenue of only 910 crores, which in FY24 it is 1,963 crores, and on the PAT basis also this is increasing from 95 crores to 345 crores. So there is very fast growth in this area because we have made all the available resources ready and then only we had started the work. We are not started something that we are beginning and then waiting for the resources to come in. So we are maintaining a good margin as well as PAT margin, and looking at the growth trajectory, the financials are going to be much better.
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Unknown10:28
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