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12 July 2018
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Table of contents
Organization transformation –
1.
framework & principles
2. Context
4. External Assessment
5. Internal Assessment
6. SWOT Analysis
7. NTPC in 2032
8. Vision of NTPC
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1. Organization
transformation –
framework and
principles
Framework & Principles
Financial outcomes,
structuring, investment &
capital allocation 1.
Driving strategy
2.
development
9. Aligning the
from financial
Markets Prioritizing by
outcomes
CEO, leadership
materiality and and management
Business criticality team to the
Model strategy
Propositions & brands
8.
3.
Identifying
Aligning the
and managing
Clients & channels
+
financial,
intended and
business and
unintended
consequences 9LoV operating
models
Core business Principles
processes
Operating 4.
Operational, infra & Model 7. Engaging
technology Managing fin., business &
interdependencies operating model
constituencies
Org structure, 6.
Determining an
governance & controls organisation’s
5.
Thinking
capabilities and inductively
Information and Key readiness to
Performance Indicator People & culture execute
Dashboard for
Investment Decision
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Business Model
… Includes …
The 9LoV Markets
Financial outcomes, structuring,
investment and capital allocation
Geographies Sectors Segments
Markets
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2. Context
Context
Evolving power market and emerging opportunities call for a fresh look at the
corporate plan, to enhance the shareholder value
1 • Efficiency
• Value creation
2 • Sustainability
• Employer of Choice
Source: BSE
• Is there a need to focus on new markets – Africa, South East Asia etc.?
New Markets
• How to augment existing systems and processes?
• What are the technologies that will shape the power sector?
Technology
• How can NTPC leverage technology to increase business value?
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3. Methodology
Methodology
NTPC has detailed a comprehensive scope for the corporate planning
exercise; we have structured it to align with intended purposes
Phase IV
Execution Road Map /
Implementation Plan
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Methodology
Corporate plan will be based on extensive analysis of the external and
internal environment and stakeholders expectation
Selection of strategic
Strategic Blueprint options based on
specific criteria
Actionable Plan and
Corporate Plan Responsibility Matrix
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Methodology
Scenarios on key external factors will be presented to allow NTPC to
objectively assess the opportunities and threats
External assessment is intended to detail out the potential scenarios in which power market in
India can evolve and the implications it hold for NTPC in terms of opportunities and threats
External Factors for review Tools
Implication for capacity addition, and supply Fuel supply scenario and the risk it poses to • FGDs / Interviews with
mix NTPC’s operations key stakeholders
• Regulators / Policy
Sustainability Skill availability / ‘Fight for Talent’ makers
Issues related to community development, • Customers
Competition for talent and implication on
local empowerment, R&R operating model and HR practices • Competitors
• OEMs and
Emerging Technologies Networks Technology
In power generation, energy storage and Network access, open access, regional providers
other disruptive technology integration of grid etc.
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Methodology
Internal assessment is intended to assist NTPC in identifying strengths and
areas of improvement
Internal assessment is intended to do evaluate the key challenges faced by the departments and
the planned responses in view of the existing targets
Internal aspects for review Tools
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Approach
Functional
Strategy
Internal /
Multiple discussions with Workshop
External Data
Analysis Department Heads, Cross-
functional Task Force, MCM,
Internal mtgs ~ 30 (over 250 people) Functional Directors
External mtgs ~10 (over 20 people)
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4. External Assessment
External assessment
Potential trends which will shape the strategy and related actions
Emission Emission norms tightened; May see last of the coal Fresh coal capacity likely to
control increases env mgmt costs capacity breaking ground be stopped
Actual Forecast
2000 1904
1390
2206
1000 1354
1631
1206
861 935 996 1002 1069 1114
0
2011 2012 2013 2014 2015 2016 2017 2022 2027 2032
Note: It is understood that under 19th EPS, the estimated demand for 2027 is 2132 BU
Source: CEA Power Supply position, World Bank, Dun & Bradstreet, KPMG Analysis, 18th Electric Power Survey
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1. Power supply scenario
In line with the demand, Installed capacity is estimated to reach 825 – 850 GW
by 2032
Installed capacity
As on March, 2016 2025 (E) 2032 (E)
in GW
IC* PLF IC PLF IC PLF
Coal 185 62% 274 55% 389 60%
Gas 24 23% 24 23% 24 23%
Large Hydro 43 33% 58 35% 65 35%
Solar 7 18% 147 21% 245 21%
Other RE 36 24% 64 28% 87 27%
Nuclear 6 74% 11 75% 24 75%
Total 302 579 834
* IC – Installed Capacity Source: Ministry of Power, MNRE, Niti Aayog, KPMG Analysis Assumptions
Bucket-filling
Proportion of power supply from coal is expected to fall from 72% in 2015 to 63% in 2032; that
of solar will increase from <1% to 15% in the same period
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1. Power supply scenario
Other agencies have similar perspective on power demand-supply scenario
Hydro 65 90 85 52
Nuclear 24 30 24 11
Other RE 17 10 20 -
While there are different views on the success of RE , that on coal are largely similar; Barclays
has assumed demand projections similar to Niti Ayog estimates
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2. Renewable energy
Solar tariffs have been consistently coming down and its competitiveness
against other sources has improved significantly
Rs./kWh
4.6 4.6 4.7
4.4 5
MW
800
4
600 500 500 500 500 500 500
420 3
400 350 350
300 2
250 215
200 170
200 150 150
100 1
0 0
KA TL PB NTPC UP MP TL Gp TL Gp PB UK HR UP KA JH AP AP AP RJ KA TL
AP 1 2 DCR
Capacity on offer Wt. avg. tariff (INR/kWh)
• The tariffs received in some of the recent bids are fairly close to tariffs discovered in coal
based CASE I bidding
• Tariffs discovered under NSM have been typically lower than that in state bids
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3. Fuel
Domestic coal is likely to be adequate
1,200 1 BT
4
107 51 147 188 • Power: Incremental capacity, FY 16-
130 65 106
50 25: ~118 GW; FY 25-32: ~120 GW
600 1,156 1,156
735 781 827 • Non-Regulated: CPP growth ~6%;
611 676
DRI demand ~4%; Cement growth
- 11%
2016 2017 2018 2019 2020 2025 2032
Import Firm imports Captive mines + Other Schedule I mines CIL and others
Increased supply is driven by production growth from CIL and captive mines
Discharge
Capex (Rs. LCOE
S.No Project Rating (MW) duration Country
Cr/MWh) (Rs./kWh)
(min)
1 Anchorage Area Battery Energy Storage System 25 34 USA 14.3 12
Total: 578
150
Coal PLF peaks to 74% Note
100 as solar goes out and • Other must run: hydro,
demand peaks nuclear, wind, other RE
50 • Gas based generation has
been adjusted for load factor
0 (23%) based on gas
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 availability
RE Solar MW RE Non Solar MW Hydro MW • Figures shown are adjusted
Nucl MW Gas MW Coal MW for PAF/ CUF
Demand (April) MW
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Key emerging themes - Summary
NTPC has the choice to react to these situations or proactively pursue the
developments
1. It is certain that incremental generation will be more skewed towards RE. Market needs to be continually
assessed to realign portfolio targets.
2. The less efficient and expensive plants will come under stress. Future base load plants to be located at
pit head only. For existing plants, linkage rationalisation and variable cost optimisation is imperative.
3. Cycling will become a reality, for which NTPC needs to prepare. Revised operations & maintenance
strategies will be imperative.
4. Storage is likely to be a game changer. NTPC to proactively invest to understand and gain leadership in
this space.
5. Market design will change with evolving technologies, competition, regulations and other changes.
NTPC needs to create integrated offerings and leverage market information, apart from policy advocacy.
6. NTPC needs to develop Integrated Command and Control Centre including analytical and forecasting
capabilities to leverage internal and external information for real-time decision making.
7. Internally NTPC will require a change in org structure, operating model and organisation culture to
anticipate and lead this dynamic market.
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5. Internal Assessment
Business environment
Internal realities- Summary
1. Some of the upcoming plants of NTPC may face dispatch risk due to higher variable
cost, owing to the longer distance from the coal sources.
2. NTPC plants have 25-30% higher capex compared to leading private sector developers,
which adversely impacts the competitiveness. This may lead to PPA denial risk.
3. NTPC has an opportunity to reduce the coal costs through its captive blocks (compared
to CIL notified prices); need to expedite operations to achieve these benefits.
4. For some of its future mines, NTPC may reconsider its model of end-to-end outsourcing
and may look at splitting contract or undertaking departmental operations.
5. With increased coal based capacity and generation, ash management is likely to
emerge as a key challenge. Current ash management strategy may require a re-look.
6. In light of the changing external environment NTPC may have to realign the
organization structure, culture and performance metrics.
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6. SWOT Analysis
Business SWOT
Based on interactions with internal and external stakeholders
Strengths Weakness
Opportunities Threats
Quantum & Pace of Capacity Addition
Services – Consulting, O&M, Proj. Mgt., Engg. Expiry of Tri-Partite Agreement
Coal Mining (Reducing dispatch risk) Priority Coal Allocation
Distribution & Retail Business Mgt. Threat of Substitutes (RE)
RE Business Competition from IPPs
Ancillary Services Market Dispatch & PPA Surrender Risk
Tightening of regulatory norms
Inorganic Growth
Low PLF (Unit Sizes, Specs, Capacity Target)
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Organizational and People Related SWOT
Based on interactions with internal and external stakeholders
Strengths Weakness
Pride Agility
Skilled Manpower Stagnation at Critical Levels
Passionate Workforce Training & Development
Honesty and Credibility
Knowledge Management – Sharing of Good
Low Attrition Practices
System and Process Orientation Risk Aversion
Opportunities Threats
People Capability Depletion (retirements)
Growth Prospects in new Business Areas
Hiring at Requisite Scale and Grades
Learning New Skills
Low Morale (Remote Locations, Low/ falling
Variety of Roles and Domains PLFs)
Multiple options based on the market share in coal and solar generation evaluated
Share in coal Share in solar
Option Strategy
generation capacity generation capacity
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Generation portfolio
Total installed capacity remains largely unchanged though the fuel mix has
been revised
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Beyond Generation
Other opportunities which were evaluated
1 Ancillary Services
2 Roof top
3 Storage
4 Trading
5 Services
6 Distribution
7 Transmission
8 E-Mobility
9 Cement
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Opportunity evaluation
Evaluation matrix
High
Ancillary
Services
Key imperatives
• Business environment
Cement
management
Transmission • Corporate agility
Distribution • Strong cost controls
• Culture of innovation
Low
NTPC in 2032
2016 2032*
Generation capacity 47 130
Power Generation
Ancillary services and Storage
Power Generation
Key businesses E-Mobility
Trading
Trading
Services
Revenues, in Rs ‘000
~70 ~300
crore
*If Tanda decommissions – revenues in FY 2027 will be INR 205,000 crores and INR 305,000 crores in FY 2032; EBITDA will reduce to INR 74,000 cores in FY 2027;
and PAT will reduce to INR 25000 crores in FY 27
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