Role of State Owned Enterprises in the Energy Transition

[Podcast intro]

Welcome to the season five of the India Energy Hour podcast. This podcast explores the most pressing hurdles and promising opportunities of India energy transition through an in depth discussion on policies, financial markets, social movements and science. Your hosts for this episode are Shreya Jai, Delhi based energy and climate journalist and Dr. Sandeep Pai, Washington based energy transition researcher and author. The show is produced by 101 reporters, a pan India network of grassroots reporters that produces original stories from rural India. If you like our podcast, please rate us on Spotify, Apple Podcasts or the platform where you listen to our podcast. Your support will help us reach a larger audience.

India’s foray into renewable energy (RE) started with its thermal power giant NTPC Ltd.

In the mid-2000s, NTPC, which is also the country’s largest power generator, formed a division that would bundle RE with thermal and sell it together. Cut to 20 years later, NTPC has become the first public sector enterprise (PSEs) to publicly list its dedicated RE company.

Most of the paradigm shifts in the Indian economy have been invariably led by PSEs, which Nehru called the Temples of Modern India. From coal mining to power generation, mega hydroelectric dams, and now green transition.

To understand the history of energy policy making in India and the role of government and government-owned entities, we talked with Mohit Bhargava, former CEO, NTPC Green Energy Ltd.

Bhargava, a career NTPC executive, has been involved with key responsibilities in the organisation, the last and most significant being expansion in the RE sector. Bhargava has served in several departments and plant locations of NTPC, earning him rich experience. He is known for his deep insights on policy, corporate strategy, and energy transition.

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[Podcast interview]

Shreya Jai: Welcome to India Energy. Thank you so much for joining us on our podcast. We are so looking forward to hearing your insights. get a peek into the ringside view of the power sector that you have from your years of experience and service in the sector. So thank you so much again and welcome.

Mohit Bhargava: Thanks Shreya, thanks for having me.

Shreya Jai: Before we start today’s discussion, I would want our audience to know about your journey. you have been an NTPC lifer. You started your career there and your last role was something very unique and a first time you retired as the CEO of NTPC Green Energy Ltd. a very recent company that NTBC floated. It is listed also. Congrats on that. You paved the way for it. but we would want to know how did you land up in ntpc? Were you dabbling careers and just NTPC just happened or did you choose it? you must have also Traveled across the country as any NTPC executive does serve different roles. So can you tell us about your professional journey?

Mohit Bhargava: Okay, thank you very much and hi Shya and hi Sandeep. Good to connect and thanks for having me on this. I’ve heard a lot of good things about this show and a lot of my friends and acquaintances have been speaking highly about the Indian Energyr. So I have been an NTPC life and that’s what I was trying to share earlier as well. after graduating from the college I mean among the many we used to give these tests to get into various PSUs those were among the I would say among the good jobs available at that point of time. So NTPC was one of those which I was able to crack and then I was able to land this job. it wasn’t specifically that we are looking at NTPC at that point of time but the one advantage I think we felt and my family also felt pos that this is a very good and upcoming company and a lot of good opportunities we will have. So I joined NTPC through what was then known as the Executive Engineering Training Program EET as they used to call it. since then it’s been NPC all along. however I must say that within ntpc I was able to get a lot of opportunities in being able to be part of different work areas. And so for initial 15 years or so I was at two of its project sites which gave me an opportunity to work initially in the project construction and then the project operation and maintenance, then in procurement, then in planning and system. So so these are all varied and different experiences which I must say help me along the way because as you move along you have these opportunities and opportunities to learn and then try to see whether you can use them or implement them or improve them. So basis this after these 15 years or so in the sites in which we worked at a totally virgin site like Gundachal which today is the largest power station in the country. And I was also at Dadri, which has a unique distinction of having both a coal station, a gas station and of course subsequently most of the NTPC projects also have solar plants. So these were unique in themselves. But then Most of the NTPCs have quite unique features and I’ll probably need a lot of time to actually explain about NTPC if I try to go there. then I got a transfer to the corporate office and I ended up in the corporate planning department for the last almost 20 odd years, 20 plus years I was at the corporate office. A large part of that was in corporate planning. Again I had opportunity to work in various functions of corporate planning and more importantly I also get an opportunity to look and work closely with the chairman of the company. During my tenure I had the opportunity to work closely with almost five or six chairman managing actors and of course the different board members. So that in itself was quite a learning experience. everyone had their own style, their vision, their approach to working and you tend to learn from all of them which I must say at some point would have probably also helped me graduate into my role as the CEO of NTPC Green andc Renewables in corporate planning for example it was a period when I looked at the strategy planning part. I was involved in helping develop the long term corporate plans was also involved in doing the annual plans, the internal plans. I also handled the corporate affairs for quite a bit. So that gave me an opportunity to actually interact with the government departments and in a way exposed me to the government working as well because that is important for the people who are not aware NTPC still is a state owned enterprise majorly owned by the government. So the government is the owner and we have to continuously interact with the government for getting various I mean not only from review purposes, performance review purposes but sometimes also helping them with getting some policys tweaks, helping them with collection of data and doing analysis for them. So a lot of this work also was done during my period in the corporate planning. Towards the end of course this role expanded and I was also working closely with the current chairman quite a bit. So I think ultimately at some point he felt that I have done a long stint in corporate planning and giving a lot of ideas in strategy and he thought that maybe I’m a good fit to actually execute one of those strategies which was to shift very very strongly into the renewable space. And that is how although we had already created the renewable energy department in ntpc and we had had a couple of guys who had those department before me but I think one of the thrust areas for chairman because I think moved when I moved there in 20 19 the idea was that we now need to take very clear and strong steps, a lot of clarity and how to build this group how to take NTPie’s vision in the renewable space forward, how to ultimately create a totally independent portfolio and as you mentioned earlier one of the Steps has been to ultimately list this entity. NTPC Green was listed in the month of December and MSA has s been a reasonably good debut so far. what it has done is that it has helped I think set aside lot of myths about what a PSU can do and cannot do. Maybe we can discuss that as we go along but it was a very enriching and fulfilling experience in ntpc and I must say it’s not only this period but the entire period has been pretty good and exciting most of the way. subsequent to my retirement in 2024 I’ve been advising entities in the green space both in the public sector as well as private sector as a, as also ah, academic institutions with like the University of California Berkeley.

Sandeep Pai: I could take you in many directions here. So many strands to kind of double click on. but one thing I just wanted to start off by saying that NTPC and NTS PC has been very central to India’s own thinking about energy historically really relying on coal and you know, I mean it’s still. Coal is a reality and we’ll talk about all that in detail. But when there was an advent for renewables, you know this became a mainstream topic post 2010. how is your own journey starting off as somebody who’working with a thermal power company to a one which is becoming more and more diversified. Were you initially like resistant? Were you initially skeptical, then you changed your mind or you were all along like look it’s time will come so we should embrace it? How has your own thinking evolved over the years as India’s energy story is also evolving?

Mohit Bhargava: so incidentally I mean I could actually dwell on this question a bit because when the National Solar Mission came along in fact the JNNSM that was, I think you’re right 2010 I believe was the time when it was launched. so I would say for government’s view, for the lack of any other alternative the government decided that NTPC and more precisely NTPC didaragam it was identified as the nodal agency and I must say I was in the room when that decision was taken. So that is a role which was given to NTPC to help kickstart the National Solar Mission. And once that role came into play there was always I would say some kind of a dilemma with NTPC that since we have this role of being the implementation agency and we are conducting the auctions on behalf of the government. So when and how we can actually become part of these auctions. Initially what has happened is that we have done very small solar projects at our power stations where we had some additional land. Then after discussing with governments various governments over periods of time we were able to also do a few projects in the solar parks but mean I would partly agree to your point that yes there was a kind of a dilemma at that point that what is the direction NTPC should take. So one good thing which happened along the way was that although SEKI I believe was formed earlier but in due course government started creat taking second to that direction that they should become the nodel agency for conducting the auctions and procurement of power How SEI has helped so that initial role was with NTPC then when SEI came into the picture then I think around 2018 odd we actually had a discussion at the board level and ah where we were also inverted as part of the corporate planning to make presentations all I think then we were able to actually sit down that o so now is the time we can actually start withdrawing from the auction process and focus entirely on building a portfolio I must add to this that prior to this already when we had done a corporate plan I think in the year 2016 which I had also handled we had very clearly identified that we will build a reasonably large renewable capacity and the logic was very clear I m. It wasn’t as if people do tend to assume that phu don’t listen or don’t follow things happening around But I think there was a lot of awareness within the organization that ultimately the fossil fue we have to gradually start moving away may not be like it’s happening in Europe but definitely at its own pace at some point of time and we’very clear that as long as the country needs power we’ll have to ensure that we are making that power available in its cleanest form May not be renewable form but with all the environmental safeguards which are in place and whatever for coming up but we also have to develop and build a large non fossil pipeline for the simple reason that the for the company has to keep growing. It wasn’t as if NTPC would stop once the countries has stopped using coal so we had to keep moving forward which is why the corporate plan talked about hydro we talked about renewable we also talked about investing more into trading. At one point we’also looking at electric mobility if it makes sense so all these opportunities were evaluated and then it was a very clear and conscious decision that will go down the route of renewables. And that is when it became clear that because NTPC has operated in a regulated regime on the thermal part, by then basis what NTPC had done started doing we were clear that now if we have to do the renewables projects will have to be part of the market. We just cannot go and say I am NTPC, give me 1000 net quar of solar projects to execute. No one is going to willing to agree to that. That is when we decided internally that we have to actually create a whole structure and ecosystem within the organization to go to the market. I’m not saying go to the market as most of the managementultants say. It was very clear thinking that if we don’t do that we won’t get projects. So we had to compete. And I must say that m and as probably everyone has seen in renewables is the only space where in true sense there is a competition where private sector did very well. But I must say that the PSU have also been able to do quite well and have given the private sector quite a good competition.

Sandeep Pai: One more kind of more reflective question before we get into like the topic which we want to discuss is like you’ve spent so much time with NTC and NTPC is a really interesting example of a business diversification. It’s still of course you know, playing out what do you think makes a psu? like what are the advantage of a PSU when it comes to diversification? What could be like some disadvantage when you compare that with a private sector company where they can take a decision and venture big. But maybe here the levers are different. You have to get a lot of permission. So I’m curious as to how different would a PSU diversify business versus a private sector. This is also a big topic globally like role of state owned enterprises and in the energy transition. So I’m just asking, especially from an NTPC perspective or from your experience at ntpc.

Mohit Bhargava: You see a PSU has its own set of advantages and I’m sure you have enough knowledge about that. So if I may say the one or a couple of big advantages a PSU has of course, particularly if it’s a PSU which has been doing well and we’re talking about diversification here. So for example NTPC has done quite well in building capacity, has done quite well in terms of serving the needs of the country, has done Quite well commercially that they’ve been able to actually supply power at reasonable costs, has been able to realize the dues from the states, albeit with the support of government or whichever way you want to say it. But we created systems so that is the advantage a PSU has that PSU invariably will have to create systems, will have to create very very clear delegations and lines of power what a person can do. So a ah, young officer can do so much, a middle management can do so much and the decision making is never delegated totally because we believe that a lot of decisions which will require a good amount of analysis or due consideration need to be taken at appropriate levels. This is a strength and this is also a weakness because the typical weaknesses if I may say a PSU has are in terms of decision making time. if there is a decision to be taken, how to take that quickly, that’s the challenge for us. So similarly the other challenges we have for example is in recruitment, in hiring because we have to follow a process. So we have to ensure that the process is very, very clear, streamlined, transparent. Everyone gets an opportunity so it will take its own time. any other procurement decisions, change in procurement decisions. So these are all typical challenges. But having said that it is also important and it’s good that Most of the PSSs must say it’s not only NTPC. I’m sure lot of other PSUs have also been able to adapt to the requirements, changing requirements of the business facilitation. But I think probably the most important thing which comes into play is also to realize that what is shackling us so in the case of ntpc that is what happened. So we were able to actually look at NTPC because we’re all insiders. So one advantage we had that we knew what is required to be done. If I want to do well in a new business area where we had to change, it is important that the entire top management is able to commit to that which is what happened in ntpc. If for some reason it’s not happening in other psu, maybe the things take some more time. But if that conviction is there, if that commitment is there, then these changes can be actually undertaken. It might take some time. for example in the case of ATTPC Green we actually created a totally new set of authorizations, delegations of power. So of course we can discuss this in more detail going forward but those are things we had to literally undo a lot of things which we had learned there as a thermal Power which is still a very good business to be in and do things which are required in a renewable business. So any business diversification commitment, total commitment from the top most level to the people who are doing it and ensuring that whatever changes and mechanisms because it cannot be done. Like I’m not just one guy, you just cannot go and say I’ll come and change. It’s not like a system how it works in private sector. I would assume that if you’re able to get for example a very good CEO maybe he can drive the entire business here. We need to have a good CEO, we need to have a good team, we need to have a system in place so that when that’s your retires the other you can actually seamlessly move in and continue to deliver. So I think that’s one of the key things.

Shreya Jai: I really like the part where you said that at NTPC green energy you had to undo from top to bottom to get out of this thermal mindset or thermal way of doing things. and something that we keep discussing with not just national and global expert is that you know the whole power system in India is built around coal, be it how transmission is planned, the Electricity act itself, section 62, 63, everything. So anyone entering into re especially a public sector company would have to reimagine almost everything, from contracts to awards to land acquisition. and this is happening when there is so much pressure on India to reduce his reliance on coal. So you have been, you have taken a ringside view of the whole system in India. How realistic do you think this pressure is in short, medium and long term and what kind of concerns emerge from it especially around India’s energy security.

Mohit Bhargava: Kra you need to understand and I think which is a simple math if you look at renewable has certain set of challenges, I mean which are quite distinct from Of course there are a lot of advantages. It’s clean, it’s relatively cheap upfront in terms of per unit cost but not on a whole system cost. So these are things which are there. But then the challenge is typically land is a major challenge because the amount of land required to produce the same amount of electricity, the same amount of energy is fore x which is why the number of transmission system or the amount of transmission system you need to create also is almost 3x4x. Then of course the whole ecosystem has to come into play because typically as you know permitting is a challenge not only in India, in fact in the US what I have been told recently, There are. And Sandeep, you are re sitting there. So the permitting for transmission has a queue which is I believe some 20 years long. Now that’s something like it’s running into decades. So compared to that the Indian planning for transmission and execution is still only looking at four, five, six years which I would say is a reasonably good time because execution does take time. So land is a challenge. Land, getting land. What has happened is that initially everyone thought that everyone will go into Rajasthan and Gujarat. You have this large areas, wasteland not inhabited by people. But then there are challenges there. So it’s not as if every piece of land which is not inhabited by people is, can be used. So you have to look at whether it makes sense. How do you evacuate power? Typical example is Ladakh. We have ve been talking about it for what like last five, six years. Coal, desert, huge amount of land available. But evacuation of power from Ladakh to the mainland because there’s not enough consumption possibility in Ladakh. That’s a challenge. Which is what the government has now decided totake on their own, that they will do the transmission system so that people can actually go and set up the RE capacity there. So from that angle, moving into re, doing more RE is always a new thing. As a psu, I totally agree. If I can give, just take, discuss one example for thermal power stations. And I think still that is largely the norm. The land acquisition is done through the government. So what we do is that most of the land is procured through a government agency. So we file applications there. Government, they all follow that. The Land Acquisition act which was enacted in 2013, if you look at the process there, 50 months is the time which is the minimum time required to actually acquire land. So if I look at a 50 month cycle under the Land Acquisition act, acquiring land for renewable, then I will not start my business for the next 50 months. Here we have to actually as a system look at not only government land but also private land. How we can get that quickly because here we are required. If I am taking part in an auction to build a renewable project, I have to do it in 24 months, 21 months, 25 months. I have to have as a principle change. What we have tried to do is how do we acquire land. So that has become a totally new thing which was not there, not required in a thermal power project. So this is something which is totally new. And I must say, and this is something we all look at with of pride and NTPC that probably among the PSUs we actually created most of the templates which I believe a lot of other PSUs are following now. And there’s a lot of privates also following some of the templates we put in place. I’m not saying we are re the pioneers in everything but we did a lot of new things in the public sector and in fact the creation of a wholly owned subsidiary for renewables and then ultimately listing is something I read in the newspaper that a lot of other puss are also planning to do the same now. So yeah, a lot of these things have been happening right Just from.

Sandeep Pai: A long term point of view, I’m just wondering what role do you think PSUs can play in the RE story in kind of like the long term horizon. So curious about your thoughts. I mean I think the participation right now is solid but as you said this is a sector where there’s a very stiff private sector competition. So what role do you see? Not just NTPC but across the board especially state gencos and stuff who may not have the same balance sheet as NTPC play in this.

Mohit Bhargava: Yeah so I mean we have to look at in different buckets most of the central PSUs who are participating in the RE sector. And now of course you also have non Pass sector PSUs like ONGC and even coal companies like Coal India, NLC who are getting the power sector because it provides a growth opportunity. It provides for these companies to meet their green or sustainability goals. Wherever they are re setting those goals it helps them move forward. this is not the story in PUS alone. For example, if you look at most of these oil companies like the Shellves and bp all of them sitting a lot of cash so they all think that probably renewable is one good area to invest. Gives me the right kind of messaging and the right boxes are ticked that okay so this company is now moving away from hydrocarbon alone to having a so that’s what I believe OGC is doing. That’s what Indian oil is doing. A lot of these companies are doing. but the fact still is that PSUs have a lot of role to play. If you look at India for example we are talking about 500 gigawatts of non fossil capacity out of which I think almost 430, 440 would be renewable capacity. And if you look at 2047 when we are talking about VIX in Bhara we’talking about close to 1,000 gigawatts. The PI is actually too large for only the private sector or only the PSUs to do that is something probably everyone has realized that it doesn’t necessarily have to be only one set of people who do this. So you need a lot of money, you need resources both financial in terms of execution in terms of people. So everything has to be put in place for these targets to be achieved. And when you are actually taking this forward in the adjacencies like green hydrogen and green ammonia and so on so forth so even more convergence is happening. So you actually have the oil companies and the power companies now the footrtilizer companies, all the steel companies, everyone looking at and now of course even data centers and all everyone wants to try to get some capacity of their own. Part of it of course is driven by some of the rules like the captive rules in the country. But otherwise there’s also an urgent need where they look at Microsoft or Google they all want to have green power from their own angle. So the role of psu I would assume is still large. the only thing which I think is that they will have to think and execute more as private sector or any normal company. I they have to kind of create systems within the organization which helps them move forward quickly.

Shreya Jai: and just very quickly wanted to address the financing question. you know currently if you look at PSUs, most of the leading PSUs are cash rich, we understand that. But you know when it comes to prioritizing re ah vs fossil fuel how do you think PSUs will go forward? I’ll come to the next question of returns but let’s just address on how much prioritizing of financing and planning is happening across PSUs in AR versus fossil fuel Ali versus coal.

Mohit Bhargava: So s I think I partly answered this when I said I, I did not answer a financing question but I did say that if any business diversification has to happen there has to be total commitment. For example NTPC set itself a target of doing 60 gigawatt of renewable capacity by 2032. That means when we did that plan and when the board approved that plan so the financing requirements also worked out. It was also a broad brush arrangement was made that how the equity would be put in how the debt would be raised. So unless until there are some very dire consequences or some extremely typical events which force you to kind of change courseuse in most cases the good PSUs, like NDPC, have kind of already apportioned or prioritized the allocation. So even when today NTPC is being asked to do thermal capacities they are able to move forward without sacrificing any one for the other and which is the right thing to do. Similarly I assume the same is for the other PSU also The thing we need to keep in mind is also that in the power sector for example the choice is not if between I have to do renewable or fossil. I think everyone is quite happy to do both. There’s value in both and that is how the growth has to happen. Otherwise at some point if you follow only one tragedy you might actually see I mean you don’t find yourself growing at all.

Shreya Jai: if I might steer the same financing question in a different direction, there is so much of global interest and global money ready to flow into the green energy energy transition of developing nations. we are yet to see what impact Trump will have on that. But still there are so many global investors which are interested to invest in India’s green energy growth Stor and PSUs are the best vessel. You are sovereign rated. there is sovereign backing. Are PSUs the large PSUs, do you think that they have realized it? Are they mindful of this, this kind of opportunity available? And do you see in the PSU universe a ah larger shift happening in that direction? So you see how does funding come around? I’ll not get into how the private sector does it because for them probably it’s much easier. A lot of these large fund houses in any case have their own platforms in the country. and every other day you keep reporting in your papers that someone or the others is up for sale and someone else is grabbing it. in the case of PSU is typically the NGL listing, the NTPC Green listing is a typical example because when the team has gone out I’m not fully privy to all the details because I was not there on the team then. But as I understand there was a very very large interest as we read in the newspapers also from most of the major fundouss or people who want to invest. and that’s how it has happened. So the subscription I mean as I understand in 24 this was among the top three largest equity IPOs which happened it was fully subscribed much easily to that extent the participation of these large foreign funds into PSUs will probably happen through IPOs. of course prior to this we also did look at one possibility of doing a strategic ST sale which did not work out. But the idea there was to bring in a strategic investor. That route is also available to anyone who wants to do it. Depends on what route a company wants to follow and what kind of the offer they’willing to accept or give to the people who want to invest. So yes, I totally agree. there’s a lot of interest and vehicles are available. So whether it’s a PSU vehicle like NTPC or maybe some other guys want to go to the market, maybe sometime this year, next year and of course private sector be in any case, keep reading. A lot of transactions keep happening. Great.

Sandeep Pai: I have one question which is we talked about NTPC Green and its target for 60 gigawatt et cetera. my first question is are most of these targets for greenfield projects or is there urposing, in the mix and is repurposing actually a reality? I mean there’s so much interest as you know people, especially in the west, they’re obsessed with repurposing of coal fired power plants. So I just wanted to understand if repurposing is, is in the mix to achieve that 60 gigawatt target. Like is it like cost effective, is it real or is it more of a bubble like from your point of view.

Mohit Bhargava: You see repurposing, I totally agree with you, is something as a concept. most of these Western think tanks and a lot of institutions are pushing for coal plants. but having said that sunindeepa also think that there is now a reasonably good realization, especially among the major agencies, energy agencies globally. They realized that in the case of India the requirement of energy is so high. So it’s probably being very, very I think you’re being very ambitious when you say that, okay, shut down the coal plant. So India will probably need coalill all other options also come into play and which are available reliably and obviously commercially affordably. So that is why if you see the trajectory in India is not to stop coal because if you look at three years ago, the power demand had gone up very very strongly and there was not enough power in the grid and we were literally living hand to mouth. and which is also happening on many days in a year. So renewables has been is being pushed, it’s being given the leadership position. But India also needs to ensure that the coal bas power or for that matter any other power possibility, should be kept in place. So that’s why I feel that repurposing in the case of India will not probably happen anytime soon. And in any case we feel that repurposing as a concept or as a construct has its own limitation. One of the things which we touched upon earlier was also that renewables request lot of land. So in the best case scenario a thermal power project may be hypothetically have 1,000 acres of land or for anything close to 1,500 to 2,000 megawatt power plant will be on 1,000 acre plot of land. I’m being generous here in terms of the land, all that can accommodate a 1000 acres is 200 megawatt. So it doesn’t really have great economic value except for the fact that it satisfies a group of people who says repurposing has been done to that extent. probably it might happen 15 years, 20 years down the line when everyone is now like for example all the agencies are comfortable that yes, India now has enough energy resources to meet its requirement. But till then I don’t see that happening. But yes, another part of your question, all the renewable capacity I see happening is greenfield and we are not the only ones. Yes, but what we have definitely looked at is repurposing of old wind turbines. So that’s one part which I’m not sure you’very keen to discuss. But that is something we have been saying because the earlier generation wind turbines were like 400 kilowatt, 500 kilowatt and today you are onshore wind turbines have gone up to 5 megawatts. Probably it makes sense to look at these resource rich locations to relocate, reower or whatever you want to call it. but I don’t see repurposing of coal plants to solar or renewable happening much easily now.

Shreya Jai: but is re bringing similar or almost similar returns as coal for investors across the board, public sector, private sector. And do you think in recent years central policies have helped to bridge the gap, in terms of you know, tariff, in the reverse bidding or the socket tariff or the cost of building an AR plant in general. You by and large the return profile is similar, of course, and that is on the portfolio basis of course you might have a one typical project where you probably try to reduce your return by say a few basis points or five 100 basis points to ensure that and this typically happens when there is a new entrant in the market. So what they generally try to do is that they have to at least get off the mark as we say. That o we should at least capture some capacity in the next auction. So they are willing to a bit quite low in terms of the IRR they want to earn but by and large on a portfolio basis I don’t see a difference in the return profile. In fact one of the advantages renewable has today in today’s context is also that renewable is market driven. So if you have a balanced profile where you also have some exposure to for example the CNDI customers or the marketplace, you can actually look at maybe having some kind of a top up in terms of returns which is not purely linked to the auction based pricing. To that extent there is a limited upside also available which I understand there are quite a few players, the smaller C Andi players who are looking at only doing so andi they don’t participate in the auctions at all. So I would assume their return profile would be definitely better than what a pure play sky auction based IPV might be having. So that’s how it is. But on a portfolio basis it’s not too different.

Sandeep Pai: one just kind of a side question before we continue on this line of discussion is that there’s also a big, I’m bringing in all the kind of global debates here and would love to. There’s also a big kind of as you know debate discussion about RE jobs versus thermal jobs. it comes also in the context of repurposing and I wanted to ask that question but I thought I’ll ask it separately. There’s always these debates there’be ten times more jobs in RE and so on. I mean in your experience like I mean renewables are probably good. It’s good for climate, it’s good for everything. But is it good for employment in terms of especially even just from a generation side, what has been your experience?

Mohit Bhargava: So you actually have to look at it slightly differently and this is I mean you didn’t use the word but just transition is somewhere I think around the corner. So yes, in terms of, I mean at ah that point of time in future when actually the coal plant shut down. So definitely whether the renewable will be able to give the same amount of jobs difficult to answer. for one simple reason that geographically many of the coal based plants in India are actually on the eastern side and most of these renewal capacities is actually coming on the western side. So the mining jobs or mining related jobs or thermal power related jobs may or may not actually translate into RE jobs. Having said that that’s how transition happens. 20 years ago, we used to have guys who used to repair radios and television sets and there used to be skill development programs to help people do that or they were doing early kind of computer programs and all. Today you don’t see those kind of jobs actually anywhere anyone repairing, in fact even mobile repair shops, I see quite a few because more and more these mobile companies, as smart as they are, they try to force you into changing or upgrading your mobile rather than actually getting it repaired. In terms of the job profile, and this is what I must say at ntpc, this is something we realized very early on, not only from the perspective of transition for the people, but when we actually did RNR activities and CSR activities. One of the things which NTPC has done was that they set up a whole lot of itis. The idea was that you keep on trading people in various trades. Initially a lot of people were actually getting traineders, technicians, masonry, carpentry, which has now moved on to coding and all these kind of things. So the idea is that you keep on training and skilling people for newer kind of job. Because today if you ask any, anyone to actually do masonry trading, people are not interested. If you ask a young kid, he’ll be quite happy trying to do some kind of coding that I will be better off learning some kind of coding. So these are things which are case always in transition. So from that angle, yes, but purely from the perspective of having the number of jobs during the construction phase, in fact the number of people deployed it as R side is actually more than what you are deploying at the thermal site. But since the duration of the RE is smaller compared to thermal, but since the volume of RE is much more so I think the amount of people getting employed is the same at onem phase. Yes, the RE deployment is relatively m lower. But since if we talk about 200 gigawatts of thermal and we’re talking about 1,000 gigawatts of ARI, I would say the number of jobs will not be too different. With a totally different kind of skill set. Not similar skill sets.

Shreya Jai: but quickly, as a recruiter, how challenging it is to find skilled workforce specifically for green energy sector. I asked this because it is becoming a sectoral problem. You talk with you know, other companies and they say that be it managerial or a technical level, it is so difficult to find people for green energy sector. And this sector is expanding now. There is green hydrogen, there is battery storage, pump storage, you know, something that is not in the curriculum of IITs or IIMs or was not till some years back. As a recruiter what was your challenge? I’m sure it continues to be.

Mohit Bhargava: You’re absolutely right and I don’t think there are any easy answers because and I think that’s what I mentioned earlier, for a psu, recruitment is a big challenge because we don’t have the bandwidth to actually pay a huge amount of money to put someone from another good company to get him at any cost. So that’s definitely a challenge. And you’re absolutely right that since the kind of growth which is being seen in the renewable sector, the requirement of people is huge exponential. if you just look at the numbers I would assume there are at least 100 odd IPP, in the AR sector today, if not more. And I may be off the mark here also, everyone wants to create at least some kind of capability building within their organization. So whether you talk about people who have the design capabilities in the re, people who have the capabilities of execution in the re, people who have capabilities in the OM space in the RE and of course the regulatory space as well, so there’s a huge challenge, and I think all of us are trying to I would say do the best of whatever we can. In the case of ntpc, for example, one advantage we had was that we had people who knew electrons so we could start from there. So it wasn’t as if I am going out of the market and trying to find people who know the generation space or not. So we knew the el electricity space, we knew the generation space, we knew how to design and implement electrical systems andsible systems. So, so to that extent it was relatively easier I might say. But it was also important for us to get people who knew the new technologies. And you’re absolutely right, I mean for people like companies who want to get into the hydrogen and ammonia space or the battery storage space, it’s continuous. Learningically in NTPC we have had hydrogen systems since I joined ntpc. We’ve had batteries since we joined ntpc but not at the scale we are talking now. We used to have small electrolyysers. We have known electrolyzers since we were fresh out of college. We have known battery systems since we are fresh out of college. But today it’s all gigawatt scale. So how do you operate them with the kind of efficiencies, with the technology advancements? So these are things which I believe are continuous learning which is why we have to invest not only in learning, training, learning and development, in many cases we are actually getting people who have some experience in the power sector or with some other companies and then we put them through quick trainings also or where we are able to get some good people who want to make a move. So, so this is a continuous exercise and I think it is literally the same everywhere. I mean all these companies were now entering or trying to grow, so the pool is small and everyone is trying to actually dip in.

Sandeep Pai: Right. I just want to keep you in that same line of thought. You talked about batteries and all. So I mean I’m just trying to understand in the beginning sort of you really nicely explained what are some things that are good when a PSU tries to diversify. What are the sorry, advantages and disadvantages. It was really eye opening sort of discussion in that context. And in the context of you know, lack of skilled workforce. Is it better for an NTPC to just focus on let’s say one or two sectors for diversification rather than like get into nuclear, get into battery, critical minerals. I mean and this, you could answer this in the context of NTPC or generally but like is it better to just focus on one or two and just make it big rather than try to stretch into like 10, 15 different sectoructs where each, each of these subsectors have their own challenges and just market dynamics, et cetera.

Mohit Bhargava: See this is something which has I think no perfect answer. so you can always say whether it’s NTPC or any other PSU for that matter. I mean if you take NTPC as an example, so lot of adjacencies like I said are therepc. So we know electricity, we knew electron, we know how power is generated, we know how power is dispatched. So these are things. So anything related to I would say I’m not saying this is the best answer or this is not the best answer. So I would assume if NTPC wants to expand into any adjacent spaces related to power generation, that should be kosher. There should not be too much of an issue there. And I don’t see nuclear differently. Nuclear is probably as different as RE was from thermal to that extent. an NTPC has been working on the nucleide also or hydro for that matter. It’s not as if NTPC has not expanded, it has touced everywhere. But yes, can always question why a company enters. If you say critical minerals, I don’t know whether it makes sense when PC or Not the current dispensation will probably take a call but if on a strategic basis it is fair that yes maybe strategic minerals will make sense but on this I’ll also probably like to talk about what things we did not do and I’m not saying that is a final decision. For example one of the very common things which was discussed in the case of NTPC was getting into manufacturing. First it was manufacturing of solar panels and manacturing. Now all these things have been discussed at various points of time. When we did these analysis internally we were able to realize that probably that is not something NTPC will be able to do. I’m not saying that’s a permanent st. Tomorrow NTPC can decide and do whatever they want to do but we felt that manufacturing of solar panels and solar cells is something which we may not be able to do because there are a lot of other angles which come into play. But when you talk about battery for example so battery we are looking and again like this is not 20pc alone for every PSU who’s in the power sectorer space. So unless until you keep on trying to expand your offering to meet actually what the market requires today for example battery has reached a stage where people don’t want to buy plain vanilla solar and when but people are willing to buy, the states are willing to buy solar plus storage which probably gives them a reasonably good relief particularly during the peas and so that is now what is selling. So if you look at it from that angle, what the market wants, what the custom wantnds you have to try and be ready to give it. If you don’t then probably you end up like Nokia and all these guys right?

Sandeep Pai: So then I have one more kind of follow up question. We talked about obviously all the energy and related broadly defined sectors. I mean I can even imagine a big PSU like an NTPC or a coal India or ONC with so much land and guest houses and hospitals and all these different things getting into non energy space as well is that something I mean that’s what globally if I read the literature the globalglomerates have gotten into every sector whether it’s kind of through a horizontal diversification vertical or so I’m wondering if is that ever a consideration or it’s just stick to your own space or is that going to be a challenge if somebody wants to do that?

Mohit Bhargava: This is really a hypothetical because I honestly cannot give a good answer to this as far as you’re concerned Yes, I totally agree. I mean if you look at Tata for example so I would they into everything and people do keep writing salt to software conglomerate kind of thing they Honestly I don’t know whether a PSU can do that because the kind of I mean if you look at it how they have done it so they have been very clear in how they operate these various entities and each have very clear freedom in terms of what they do their have clear allocations and for all practical purposes apart from the equity holding by whoever is the hold cor I don’t know whether it’s start ornds or whatever these are all operating independently so whether you look at Berkshire Hathaway or you look at anyone so they’re across the board Most of the PSUs I know do not have that kind of profile whether they can do it theoretically yes practically I’m not so sure because in most cases the focus or the specialty which yesu does evolves has been built over a lot of years. So if they want to really diversify from that into totally like you said hotel or hospitality industry or hospitals, I don’t think that’s going to be a good fit having said that. But if someone wants to do, if someone has a good CEO who wants to actually do it all the best.

Shreya Jai: taking forward what you just said you know if you compare a PSU and a private sector company which is operating in the green energy sector private sector seems to have a lead and I am not talking about in just gigawatt terms say a supply chain, for example Tata. It is from solar cell module manufacturing to being an IPP consultant warall and everything and in terms of you know capacity growth also it were the private investors, private companies which first entered into the green energy space. So the reliance to do business with private sector is a lot if I can understand it correctly so how easy or challenging it is for you know PSUs such as anyone NTPC Co, India, NGC who are entering into the green energy sector to do business with the private sector for their re project.

Mohit Bhargava: So you asked slightly different question from the perspective that mean if you look at the track record of whether it is startup par or anyone else I would say NTPC today is literally among the leaders NTPC green so there are probably only one or two private sector who has a bigger pipeline then NTPCO probably NTPC has the biggest as far as I. So to that extent it is not a challenge how NTPC could do it is very simple because when we got into this business wholeheartedly and with full commitment then in a very small amount of time we were able to actually demonstrate that we are here, we are able to do it at the lowest cost, we are able to do it for in a competitive environment and we can do it with anyone. So to that extent I don’t see too much of a challenge whether it is NTPC or anyone else, any psu. But yes, one of the things Most of the PSUs has is that they have to follow a set of rules and some of those are government mandated rules which are very clear that they have to be transparent. They should not be doing anything which in any way seem to be favoring a particular entity or a group of entity. And then there are of course restrictions. For example two years ago the government put a ban on procurement by PSUs from countries adjacent to the countries having border adjacent to India. So these are challenges which are typical to psu. Then of course there’s a lot of scrutiny I it’s not just the scrutiny by the company, by SEBI and all these we also have scrutiny from various, whether it’s a legislative, through the parliament, through the executive and so on and so forth and through the various government agencies. So to that extent it is very important for a PSUs to ensure that they have the highest levels of integrity in whatever they do. The governance levels have to be very very high. This is both are strength and to a certain extent it also pulls you back but then you have to ensure that you do all this and then do the right thing. So to that extent I’m sure the public sector in the AR space now has reasonably demonstrated that they can run a good race and win. Some of them may not be able to win a few of them but wherever I remember when NTPC actually entered into the bidding I think probably one year down the line we actually got feedback that the private sector is actually approaching the government trying to ask them and this is probably on a lighter way asking them to restrain NTPC from participating because they were saying that NTPC is not allowing private sector to win anything. So that’s the kind of, I would say the respect, I can only call it respect and not fear the private sector actually had for ENTTPC at that point of time that yes if they are there then it’s going to be a good challenge.

Shreya Jai: that brings me to the second trickier part in the supply chain which is states, how difficult it is to get states on board for opting renewable energy, be it for setting up projects or buying green energy. And I specifically want you to focus on buying green energy because you must have also experienced it now reading as well, how challenging it is for RE companies to get a power purchase agreement or a power supply agreement with the state governments. what do you think is the situation is? Why do you think that situation is? And have you witnessed any change say in the last decade or last five years?

Mohit Bhargava: So as far as the commitment of states in buying ARR power I don’t think there is much now because of basically I think two things. One of course everyone realizes that RE is the default way to go mean you’always probably require reliable power for your normal requirements. But we have to go down the route of renewables. So that is I think widely accepted. I don’t think I’ve ever heard any state officials say that I don’t want to do wor. And second is also the fact that in over a period of time from when we first did the auctions in 2011 or 12, I think that was the first round of the Jawala Nairo National Solar Mission Auctions. Then the prices discovered of 15 or 16 rupees and today we are at 2 rupees 40 pais 2 rupees 50 peiss. So I think there’s very clear case economically also that this makes sense. The challenge is that a lot of these states also have to look at their own finances, which is actually equally important. I mean if you’re running a business and they have to supply power to all the residents of the state whether it’s an agriculture, or residential or commercial or industrial. So they have to meet all the requirements. So they have to keep on doing a lot of planning. I must say over the years the central government as well as the state governments have done a lot of work. So there have been enablers historically. one of the first things the government did was to declare AR as Maran. Then they declared the waiver of the Interstate Transmission System. Charges were waived off. So all these things helped push. And then of course the auctions were conducted through first NTPC like I said and then SE Key and so on and so forth. So it also helped the private sector to come in a big way that there was a sovereign entity in between to ensure that there were no issues on the payment challenges. Having said that, land is still a fully state subject but that is a place where actually the states have to come forward. And in most cases I’ve seen that states have been willing to provide land but more and more now the government land available is actually shrinking because most of that has already been given away or very little of that is left. The owners has now actually shifted towards of private land. But yes, still wherever possible governments are looking and I’m sure they should. I mean it’s my simple session that wherever feasible with the state governments. One of the good very successful models if I may say was the solarpar model. Because that not only helped the problem or solving or resolving the challenge of land acquisition, it also addressed the challenge of transmission, evacuation. You didn’t have to do too many transmission lines. If you create a solar power for 5,000 or 5 gigawatt capacity, then transmission lines or the evacuation system could be actually much more simpler. That is something which should be looked at again I don’t know whether the government is looking at it now but they should definitely look at it. PPA signing is a totally different ballgame. And this is where the state government’s own analysis comes into play. What the central government has done and their heart is in the right place obviously. So they have set out very strong RPO targets. They have created a strong pipeline of auctions. But the challenge is that once the auctions are done, if you look at it the normal cycle, procedural cycle is that once a key or NTPC approaches the state with the outcomes of an auction. So the state will need at least another six to eight weeks to actually put pen on paper. Even if they are willingly in principle on day one to do it. Because that’s the process. They have to take approvals, they have to take approvals from the state regulator. They have to take approval from depending on how the system is, either the cabinet or whatever. This is a lengthy process, regulatory process included, which is why it’s very normal I would say that this time would be taken, one of the options could be and which is what I believe was earlier that you already take the consent of states upront before doing the bidding. What that will do is that more and more states will convey that this is what my requirement is and then you do the auctions. Even better option I would say now in today’s context is for more and more states to actually start doing the bidding themselves because many states have started doing it. You see Gujarat, you see Maharasht, Madhya Pradesh. It was Done earlier by Andhra, it was done by up and many of these states are doing and they’re doing with I would say pretty decent results. I mean the tariffs of the state auctions are in some cases better or almost at par with what the results are in the SE auctions or NTPC auction. So even states would actually doing wherein once they’re doing an auction they know that this is what I want. Probably the time gap between the auction and the PP would be much smaller. But we need to keep in mind that whatever we think is required, whether the state is probably not right states have their own systems in place, they do their own analysis. Now as we have seen recently, many of the states have actually started forming the resource adequacy reports that will probably give them a good idea of what their actual requirement is and that is how they should go on procuring whether that is fully aligned with the 500 gigawatt goal or not. I’m not sure I’not seen those reports forly. I hope they are but then we need to also understand that when we are trying to push auctions a particular state and this is just something which we touched upon earlier in this 50 gigawatt auction annually, the program which was created by the central government there was a whole bunch of solar, a whole bunch of wind, then hybrid and then some fdr. Now as we understand most of the states are actually not keen to buy solar. They’re not too keen to buy wind. Also in many cases they are now looking at solar plus storage because their requirement is not for those eight hours during the daytime. Their requirement is more in the evening hours when they have to pay very high prices on the exchange. So then the whole idea of having conducted auctions for a large quantity of solar remaining unsold is not very surprising. Probably will go away gradually or may not go, I don’t know. So it is important to take into account what the states actually want and then do the auctions. Great.

Sandeep Pai: This has been such a great conversation. I just want to end with one more like a question I think which who answer maybe many will benefit. First, first of all I, because you have been part of this NTPC’s journey and NTPC has been a leader in the power sector. I’m just wondering, I mean now that it’s almost every PSU that we interact with they’re trying to diversify. Some are like NTPC have maybe let’s say a decade of experience at least from the process point of view. Some have just started, you know. So I mean, what would your advice be for other PSUs who are just starting to embrace this idea? And there’s so many. I mean we also, in my day job, we do this work interacting with other pus. And many of them are just kind of starting to figure out like, okay, how do we even do this? Like, how do we do strategic planning? So everybody is at different stages. So if there’s any like, advice that you can offer for sort of people in other PSUs who are just starting this journey, that’be great.

Mohit Bhargava: I think I’ll have to get into management consultancy with all these guys and then have to start charging if I have to give advice. But it was in a lighter way. You see, I think a lot of people have been saying this and many of the management gurus have at various points of time that you have to keep evolving. So to that extent, strategy, I honestly feel, is not something, which can be done very simply by excel sheets and PowerPoint presentations alone. You need to be very sure. One, you should first and foremost understand and accept the fact that your business will never be, something which will keep on giving you returns for the next 200 years. I don’t think there’s any business. So you have to keep on evolving with the changing times, what the society is looking at, what the people are looking at. And it can be any business, whether it’s this business of power or oil or coal or even any other business. So diversification or adapting to the changing times is something very, very real. And it’s much better to actually be in with it rather than to wait for it to happen. Which is why constantly and continuously reviewing your business and continuously looking at what’s happening around the world and then trying to align yourself to those kind of things, that’s how I think strategy. I’m not saying this is how we have been doing strategy, but I think this is a broad way everyone needs to look at, whatever consultants you engage with will probably also give you variants of this and probably bring in some experience from what they’ve done with the other companies and organizations. And of course, what goes without saying, and this is what we are saying everywhere, is the pace of change is now very fast. So ultimately, whether it’s a psu, or you want to move away from what you’re doing today, you have to be ready to actually move quickly if in that space. And this is what probably we touced upon earlier also that we had to undo a lot of things which were very good in NTPC for the green business. I’m not saying any of that was wrong. that has actually helped become NTPC what it is today, and they continue to do that even today. But if you have to get into a new business, then you have to play by those rules or you have to be ready to actually react to those rules which are in play there. So this is how it’s probably going to happen.

Sandeep Pai: Thank you so much. This has been such a great conversation.

Mohit Bhargava: Thank you.

Sandeep Pai: I really enjoyed a lot. I’m sure Share had it too.

Shreya Jai: Yes, absolutely. Thank you so much. It was great talking with you as it has always been. But thank you for coming here and, you know, talking in length about so many issues on which only a person like you could have provided a ringside view. So thanks again. Thank you so much.

Mohit Bhargava: Thank you. Thank you so much. It was my pleasure.

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