A STUDY ON CAPITAL BUDGETING IN RENEWABLE ENERGY PROJECTS WITH REFERENCE TO NTPC

Abstract

Capital budgeting is crucial for determining the strategic direction and evaluating the financial viability of significant energy projects. Green energy necessitates significant initial expenditures, prolonged return times, and dynamic regulatory frameworks, rendering this process increasingly vital. This research examines the decision-making processes of NTPC Limited, India's premier power generation corporation, concerning investments in wind, solar, and hybrid energy projects. NTPC employs standardized approaches such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period to evaluate project profitability and guide decision-making. The organization considers factors beyond financial statistics when allocating resources. It further examines sustainability objectives, risk management measures, and governmental incentives. The results indicate that NTPC's organized and cohesive capital planning is crucial for facilitating India's shift to greener, more sustainable energy sources while concurrently improving the company's financial performance.