We cover the buzz around the green energy sector and what NTPC Green Energy IPO means for the renewable industry.

The News

Today is the second day of NTPC Green Energy IPO. By the end of the first day, the IPO subscribed 33%.

The interesting thing is that it is the third-biggest IPO so far in 2024, raising ₹10,000 crores and it is completely a fresh issue, meaning the whole proceeds of this IPO would go into the company and not to the existing shareholders. 

The IPO also highlights the development of the green energy sector in India, depicting the potential for high growth.

So before I talk about the company and what they have proposed to do with the IPO proceeds, let me give you a snapshot of the overall industry.

India’s Green Energy Sector

India’s electricity consumption per person has increased to 1331 kWh in FY2023 from 957 kWh in FY2014. It is projected to reach around 1600-1650 by FY2029.

To cater to this demand, India has a total installed power generation capacity of ~453 GW as of September 2024, of which 46.3% (~201.45 GW) comes from renewable energy sources.

India’s renewable energy capacity has increased by 165% from 2014 to 2024, rising from 76.38 Gigawatts (GW) to 201.45 GW. The target is to increase capacity to 450 GW by 2030.

The government has set some ambitious goals to bring down carbon emissions: Reduce carbon intensity by 45% by 2030 and attain net-zero carbon emissions by 2070.

It’s quite visible in numbers too. ₹5.2 lakh crore has been invested so far in India’s renewable energy sector since 2014, introducing various schemes such as ‘24×7 Power For All’ and ‘Sahaj Bijli Har Ghar Yojana (SAUBHAGYA)’.

NTPC Green Energy Ltd.

NTPC Green Energy Limited (NGEL) is a wholly owned subsidiary of NTPC Limited, India’s largest power utility company.

The company was established in April 2022 to operate in the solar and wind energy sectors, with over 90% of its revenue generated from selling solar energy. It is also expanding into hydrogen, green chemicals, and battery storage technologies.

The company’s revenue from operations has more than doubled in two years, from ₹9104 crores in FY22 to ₹19,625.98 crores in FY24, and profits have tripled during the same period profits from ₹947 crores in FY22 to ₹3447 crores.

So if a company is already earning good profits, why does it even want to raise money from the public?

Why NGEL is coming up with an IPO?

Value unlocking:
A traditional power company often receives less valuation from investors than renewable energy companies. A separate entity for renewables would attract more valuation.

Repayment of debt:
Out of ₹10,000 crores the company is raising via its IPO, ₹7500 cores would go towards repaying the loan it has taken from its parent company–NTPC.

To Conclude

The NTPC Green Energy IPO is more than just a fundraising event—it signals India’s ambitious push towards a sustainable energy future.

As India approaches its renewable targets, it will be interesting to see how investors respond to such opportunities.