NTPC and ONGC for Joint Venture for Renewables

The JV which was signed by both entities on Thursday aims to help both companies to achieve their targets in the renewable energy space in the country

ONGC (Oil and Natural Gas Corporation Ltd.) and NTPC (National Thermal Power Corporation) have signed an MOU (Memorandum of Understanding) to form a Joint Venture (JV) company in the realm of renewable energy.

The JV which was signed by both entities on Thursday aims to help both companies to achieve their targets in the renewable energy space in the country. The two Maharatna companies signed the MOU in Delhi on May 21, 2020. The MOU was signed by ONGC Director (Finance) and In-charge Business Development and Joint Ventures, Subhash Kumar and Director (Commercial) NTPC, A K Gupta.

According to the MOU, NTPC and ONGC with collaborate on establishing renewable energy assets including but not limited to offshore wind energy projects in India and abroad. The entities with together explore opportunities in sustainability, storage, electric mobility and ESG (Environmental, Social and Governance) related projects.

“The MoU will enable both companies to achieve their targets in renewable energy business,” an ONGC statement said.

With this collaboration in place, ONGC intends to fulfil drastic growth in the renewable energy industry in adherence to its Energy Strategy 2040 document.

ONGC, a Maharatna company, is the biggest crude oil and natural gas company in India. The company contributes to 75% of India’s domestic crude production. Crude oil is the raw material used by downstream companies to produce petroleum products used in many industries such as transport and domestic sector. ONGC has a renewable portfolio of 176 MW which includes 153 MW of solar. This collaboration between NTPC and ONGC intends to bring about significant growth in renewables for both entities.

NTPC is India’s largest energy conglomerate with has become a major player in India’s power sector having businesses in the entire power sector value chain. From fossil fuel based power generation the entity has gravitated toward energy generation from renewable sources such as hydro, nuclear and solar. NTPC is a Maharatna company. It is ranked second under Independent Power Producers (IPP) under Platts Top 250  Global Energy Company rankings. NTPC has 920 MW of installed renewable energy capacity in its portfolio with 2300 MW of renewable energy projects in the construction phase. The company intends to reach a renewable portfolio of 32 GW by 2032. This ambitious target will benefit from the recent JV by expanding the company’s footprint in offshore wind and other renewable assets.

Solar tariffs in India are almost 30% lesser than existing thermal power costs. The solar costs which have stabilized at around Rs.2.50 to 2.87 per kWh are 30% less than the cost of electricity from thermal power and half the cost of new coal-based power. These tariffs are a far cry from the initial feed-in tariffs of more than Rs.12 that were the norm during the initial days of the solar industry in India. The drop in tariffs and Chinese spot module prices makes the prospects of investing in solar energy all the more alive. Therefore, the new JV between NTPC and ONGC focusing on renewable energy should gravitate towards solar power establishments in the country. Not only this, the country’s focus on solar parks, ultra-mega solar parks and subsidies for the solar sector make solar power a lucrative business to thrive in during the coming decade.