India’s largest power and oil groups – NTPC and ONGC – plan a renewable energy joint venture that will develop projects including offshore wind farms at home and abroad, in a move analysts said could boost the sector's prospects.

The state-controlled groups signed a memorandum of understanding for the venture that they said would help both achieve big renewable energy targets.

The partners will “explore the setting up of offshore wind and other renewable energy projects in India and overseas. They shall also explore opportunities in the fields of sustainability, storage, E-mobility and ESG … compliant projects”.

The alliance is designed to help NTPC, India’s largest electricity generator, hit a goal of 32GW of renewable capacity by 2030. It currently has less than 1GW in operation, and 2.3GW of in the pipeline, mainly in the solar sector.

“With this tie-up, NTPC would accelerate its renewable capacity addition program and also expand its footprint in offshore wind and overseas renewable energy projects,” said a statement.

ONGC for its part wants to add 10GW of renewables by 2040, adding to a small wind and solar base that’s currently less than 200MW.

Offshore wind boost

No further details of financing, structuring or ownership of the planned JV were given.

The singling-out of offshore wind by the domestic big-hitters could be a boost to an Indian sector that has yet to take off, despite big potential and huge local and international interest.

An expression of interest process in 2018 for a first 1GW project off Gujarat sparked a response from almost every player in the global offshore wind sector, with ONGC putting itself in the frame too.

But a tender for the first project has yet to materialise and a 5GW government goal for 2022 is widely seen as unrealistic.

However, analysts say offshore wind could have a big future in India as available land for onshore development gets scarcer and the land-based grid comes under further pressure.

Sidharth Jain, managing director of India-based research group MEC+, told Recharge the alliance brings two deep-pocketed players together.

“Offshore wind requires large balance sheets to finance projects and these two companies have strong financials,” Jain said.

Potential offtaker

“If India decides to go ahead with a tender, ONGC will have both the technical and commercial tie-up in place. If we were to speculate, this JV with NTPC, which is a large power supplier in India could be interesting if the latter decides to blend the cost of offshore wind with their existing installed base of fossil and renewable plants.

Offshore wind needs large balance sheets and these two have strong financials.

“The cost of offshore wind is set to decline from the current high levels. In order to achieve those cost reductions, a supply chain needs to be built and offtakers need to be found. The prices in India are low, and it might take some time finding an offtaker before the industry matures. We await further clarity on the terms of MoU.”

Jain added that the JV's international prospects would largely depend on its progress in the Indian market, but if that takes off then it “has a lot of future in being a bridge between global and international supply chain and playing a much more strategic role”.

Ashish Nainan, a Mumbai-based renewable energy analyst, told Recharge: “In terms of installation, offshore would be the real game changer for the renewable sector in India.

“NTPC being the country’s largest thermal power generator, has around 3.4GW of renewable assets, the majority of which is under construction and land based.

“In order to ramp up the capacity going forward and to also minimise the hurdle of land acquisition for renewable assets, ONGC would be a vital partner for NTPC with its expertise in offshore operations such as sea-based rigs.

“ONGC in turn gets a major boost [of] a larger presence in the renewable space,” Nainan added.

Transition

India's biggest power and oil groups target offshore wind in renewable energy pact