Mini Ratna NHPC Draws Spotlight with ₹5,500 Crore Investment in Bihar’s Renewable Energy Sector

India’s renewable energy sector received a significant boost as the National Hydroelectric Power Corporation (NHPC) Ltd, a Mini-Ratna public sector undertaking, announced a ₹5,500 crore investment in Bihar’s renewable energy initiatives. This ambitious plan, unveiled at the Bihar Business Connect 2024 event, underscores the government’s commitment to clean energy expansion.

Market Movement: NHPC Stock Takes a Hit

NHPC’s announcement, while forward-looking, did not immediately resonate with the market. Shares of NHPC Ltd were trading at ₹82.41 on Friday, reflecting a 2.43% drop from the previous close of ₹84.46. The stock recorded an intraday high of ₹84.48, and the company’s market capitalization stood at ₹84,840 crore. Despite the dip, the long-term growth prospects tied to this investment remain promising.

Major Announcement: Focus on Solar and Storage

NHPC’s Chairman and Managing Director, Raj Kumar Chaudhary, laid out the company’s vision during the Bihar Business Connect event. The ₹5,500 crore investment will be channeled into solar power, floating solar projects, and storage solutions. Chaudhary highlighted the critical role of Bihar’s state government in facilitating project planning and implementation, reinforcing the importance of public-private cooperation in renewable energy development.

A Memorandum of Understanding (MoU) with the Bihar government is also on the horizon, which is expected to formalize NHPC’s plans and pave the way for smooth execution. This aligns with Bihar’s strides in the energy sector and its ambition to harness its renewable energy potential.

A Closer Look at NHPC: Renewable Energy Giant

NHPC Limited stands as one of India’s most significant contributors to clean energy. Primarily known for its hydroelectric projects, the company has diversified into thermal, solar, and wind energy. Under the Ministry of Power’s ownership, NHPC operates as a vital arm of India’s push toward sustainable and scalable energy solutions.

The company’s core expertise lies in water resource management and the development of large-scale energy generation systems. Its projects across India leverage water resources to create environmentally friendly power, adding substantially to the national grid’s renewable energy capacity.

Future Plans: Scaling to New Heights in Energy Capacity

NHPC’s long-term strategy signals aggressive growth in renewable energy. By FY32, the company aims to achieve a staggering 60 GW of capacity, with solar, wind, and storage projects playing a central role. By FY27, NHPC plans to award contracts for 13.6 GW of additional thermal capacity, further cementing its role in addressing India’s energy security.

The management’s optimism reflects their commitment to meeting ambitious energy targets while aligning with the country’s clean energy goals. This investment in Bihar is just the beginning of NHPC’s broader push into renewable energy technologies.

Financial Snapshot: Mixed Performance in Q2 FY24-25

NHPC’s financial performance has been a mixed bag. Revenue increased by 9.25% year-on-year, rising from ₹3,113.82 crore to ₹3,402.09 crore in Q2 FY24-25. However, net profit took a hit, dropping from ₹1,545.85 crore to ₹908.97 crore during the same period.

Key financial ratios paint a stable picture:

• Return on Equity (RoE): 7.42%
• Return on Capital Employed (RoCE): 7.31%
• Debt-to-Equity Ratio: 0.85

While the decline in net profit raises questions, NHPC’s strong fundamentals and its long-term investments in renewable energy could drive future profitability.

Renewable Energy: A Game-Changer for Bihar

Bihar’s energy landscape is poised for transformation with NHPC’s investment. The focus on solar and floating solar projects taps into the state’s untapped potential for renewable energy generation. Storage solutions further ensure reliability, addressing the intermittent nature of renewable power.

This strategic investment aligns with India’s broader goal of achieving 500 GW of renewable energy capacity by 2030. For Bihar, it could mean improved energy access, job creation, and a reduced carbon footprint.

Key Takeaways from NHPC’s Investment Plan

Here are some crucial points to note about NHPC’s ₹5,500 crore investment in Bihar:

• The investment spans solar, floating solar, and storage solutions.
• NHPC plans to collaborate with the Bihar government through an MoU.
• The initiative supports India’s clean energy targets and energy security goals.

NHPC’s investment in Bihar signals not just a financial commitment but a leap toward sustainable energy innovation. The ripple effects on Bihar’s economy, energy reliability, and job market could be transformative. While the markets reacted cautiously, the long-term outlook for NHPC remains strong, backed by its robust renewable energy portfolio and strategic initiatives.