Coal India marks entry in renewable energy; NTPC remains competitive; JSW Energy wins big in wind | ICICI Securities Highlights

In the latest round of auctions conducted by GUVNL (Gujarat discom) to set up 500MW grid-connected solar PV projects, Coal India made a surprise entry. Out of nine participants, the winners included NTPC, Spring Energy, Coal India and Tata Power Saurya quoting Rs2.2/kWh for a cumulative total of 430MW, and SJVN quoting Rs2.21/kWh for 70MW. Coal India share price today is Rs 135.8, trading flat while NTPC share price today is Rs 109.1, down Rs 0.75 or 0.7%.  

With Coal India’s entry in the renewables auction space, the competitive environment around bids, especially those conducted by financially sound discoms, is expected to heat up further. The latest bids witnessed higher tariff compared to the historic low of Rs1.99/kWh reached during GUVNL’s bids in Dec’20, due to increase in module / panel as well as commodity prices. Further, in the recent SECI-conducted wind auctions, JSW Energy won LoA for 450MW at Rs2.78/kWh. Sharekhan remains positive on NTPC and Coal India.

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Wind bidding restarts after SECI successfully conducts 1.2GW auctions; JSW Energy wins big:

JSW Future Energy, a wholly-owned subsidiary of JSW Energy, has received LoA to set up 450MW wind capacity in SECI’s 1,200MW ISTS-connected wind power projects (tranche-X). The cost of the project is estimated at Rs25bn-26bn at an expected IRR of 13%. JSW’s bid at Rs2.78/kWh was among the four successful bids, the other three being: Adani Renewables at Rs2.77/kWh for 300MW, Ayana RE (300MW) and Evergreen Power Mauritius (150MW) at Rs2.78/kWh. PPA is in progress with Rajasthan.

NTPC’s strength continues to aid its competitiveness:

With the latest success, NTPC has won 1,510MW of solar bids in FY21 – 350MW in Gujarat, 470MW in Rajasthan, 90MW in Kerala, and 600MW in Andhra Pradesh (currently stayed by HC). It has also signed MoUs with five states for setting up 17GW at UMREPPs [Gujarat (4.75GW) and Maharashtra (2.64GW) already signed]. NTPC’s balance sheet strength continues to drive its competitiveness in RE bids.
Coal India’s entry marks its stated decarbonisation intent; may compete on a similar scale as NTPC:

During recent investor interactions, Coal India indicated its intent to diversify with an aim at decarbonisation. With this foray, Coal India has converted its intent into action. Further, with similar balance sheet strength to NTPC, Coal India is expected to be a strong competitor in solar auctions  going forward.