IEEFA Recommends NTPC Acquire 6.1GW of Stranded Indian Thermal Assets

A new report by the Institute for Energy Economics and Financial Analysis argues that NTPC, India's largest power producer, should acquire and revive 6.1 gigawatts of stranded thermal power plants rather than build 7 gigawatts of new brownfield thermal capacity as directed by the government. The strategy would address India's short-term energy security needs, clean up non-performing assets from bank balance sheets, and preserve NTPC's ESG credentials with global investors.

The IEEFA report identifies six stressed power sector assets with a cumulative capacity of 6.1GW that are suitable for acquisition by NTPC in partnership with government entities including Power Finance Corporation, REC, PFC Projects Limited, and the National Asset Reconstruction Company Limited. Using NARCL's 15:85 model — whereby the acquirer pays 15% of consideration upfront and issues sovereign-guaranteed security receipts for the remaining 85% — NTPC could add significant capacity with minimal initial capital outlay. NTPC can simultaneously provide coal linkages and power purchase agreements while PFC Projects Limited supplies working capital financing.

The report warns that any new investment in thermal power risks creating another generation of stranded assets, given the clear and improving economics of renewable energy over coal. Financing new thermal plants would expose Indian banks — which have spent a decade managing high non-performing assets — to fresh power sector NPAs and increasing climate risk on their loan books. Acquiring stranded assets rather than building new capacity is assessed as the superior option for all stakeholders, including the banks that currently hold these NPAs.

IEEFA recommends that NTPC adopt an 'acquire-retire-repurpose' strategy for the acquired plants: use them to meet near-term energy security needs, retire them in an orderly fashion, then repurpose the sites for renewable energy generation. This approach would protect NTPC's ESG profile as it pursues its stated target of 60GW of renewable capacity by 2030, a target that requires sustained access to global ESG capital markets. The company could also explore carbon credit revenues from the repurposed sites to further improve returns.

Key figure — 6.1GW — cumulative stranded thermal power capacity that IEEFA identifies as available for strategic acquisition by NTPC