NHPC the Green Energy producing company is on the eyes of stock analysts now. Analysts at BNP Paribas have started covering the company’s Carbon Credit Story which we had told during the time of its IPO.
Unlike Dirty Energy companies like – Reliance Power, Adani / IndiaBulls Power, NHPC projects are allowed to sell Carbon Emission Rights under the Clean Development Mechanism.
Currently, climate change legislation in India is absent, hence thermal power plants in India do not have to purchase rights to emit greenhouse gases. However, in the next 3 years, India will come under increasing international pressure and will have to bow down; this is when Reliance / Adani and IndiaBulls will be affected.
NHPC has currently received approvals for the sale of 0.35m CERs annually from its Chutak (44MW) and Nimoo Bazgo (45MW) projects. NHPC is including carbon credits in the DPRs. There would be upside to our earnings in case NHPC manages to get CDM approval for its projects under construction.
A hydro plant can sell its CER credits to developed countries that have to meet their greenhouse gas emission reduction targets under the terms of the Kyoto Protocol.
HOLD NHPC or ADD on Decline If third rate dirty companies like Reliance / Adani and IndiaBulls can quote high, their will be definite re-rating of NHPC and the stock should give good returns in long run.
NHPC, Suzlon and Indowind Energy
Yes, I agree that NHPC is going to have a very substantial additional income by way of selling carbon credits the developed countries who want to emit green house gases. NHPC should go up to Rs 100 in the next 6 months. However after the next climate talks scheduled in Mexico in Dec 10-20, 2010 a legally binding emission reduction is inevitable for all countries, and whenever the same happens the money currently invested in dirty enerty coal companies like Adani, JSW, RePower, NTPC will move into clean energy companies like NHPC, Suzlon, Indowind Energy and Moser Baer (photo voltaic).
After, or even before, the next climate talks in Mexico (Dec 2010) the share price of NHPC could move upto Rs 200 to 300 depending on how much credits are earned by NHPC.