Tulsi Tanti, Chairman, Suzlon Group says the company aims to be an end-to-end solution provider for solar projects, adding that they already were successful being an end to end provider for wind projects, and so would bring that expertise into solar too. Currently, there is not a single company in India that provides end-to-end solution for solar projects The bidding process for the solar projects in India is getting more and more competitive because outside players are entering the fray at lower tariffs, said Tanti in an interview to CNBC-TV18’s Menaka Doshi at Davos. The orderbook for the wind projects currently stands at 1200 megawatt (MW), with another 1000 MW in the pipeline, said Tanti. With regards to solar, they are doing a 200 MW project and will sell the project next year, he said.
The company as of now is not looking at an acquisition or joint venture to develop solar projects, said Tanti.
Below is the verbatim transcript of the interview..
Q: While we speak of wind energy which is what you focus on, I also want to bring into the mix solar energy. We have seen some very aggressive bidding take place on the solar energy side. Tariffs like Rs 4.30 what do you make of that kind of competitive pressure. How is Suzlon going to deal with that as well?
A: Suzlon is currently more focused in the area of wind, but now we have started to focus on solar also and the first solar projects we are doing is in the Telangana of 210 megawatt. Same bidding process we have got the tariff and other things. No doubt the bidding process is becoming more and more aggressive because some of the companies are coming from outside India. They are bringing low cost of funding and their expectation of the Internal rate of return (IRR) from the market is low and current commodity price is also low. So, it is a good opportunity for our country to build such capital intensive assets with low tariff and it is good at the moment.
Q: But are those tariffs realistic according to you?
A: Currently whatever it is, Rs 4.35 is there it is really too aggressive tariff but gradually it may become the reality but moreover the Rs 5 level is most viable projects to go in a bigger investment in a bigger scale and other thing because we are targeting country is a 100 gigawatt installation by 2022 in solar and 60 gigawatt is in wind. If you want to achieve that at least we have to give reasonable pricing in the market place. So, we can attract more large investments. Otherwise small investments may come and we get better pricing but it will not give big volume and the downside risk also maybe some product and quality risk on that.
Q: How are you at 5 going to compete with the 4.3 guys?
A: It is not a problem because wind is cheaper than solar. So, that is not a constrain. The solar plant load factor is 18-20 percent in the grid whereas wind is producing 35 percent. So, energy production per mega watt basis is almost double in the wind and capex investment is more or less same. So, it is not a problem to compete in solar. We have to understand, India needs both the energies. 1000 giga watt installation is required for the next 10 years and we do not have our conventional resources much more. So, we have to build more and more wind and solar which is a very complementary energy system. So, it is a good solution for us. I think government is taking a very strong aggressive focus on renewable which is good for our country.
Q: What is the orderbook looking like both for wind and for your nascent entry into solar?
A: We almost 1200 mega watt orderbook currently and nearly 1000 mega watt orders are in the pipeline for wind. In solar first project we are doing which is 200 mega watt. As per the system first we have to build our books and then we will sell. So, we will sell this project in the next year.
Q: In solar are you looking at any kind of partnerships, joint ventures. I want to use the word acquisition but I know the last few years have been difficult so I am not going to use that word unless you do have an inorganic strategy and you would like to talk to us about it.
A: In solar there is no single company in India who is providing end to end solutions for solar. We are a successful company in wind in last 20 years. So, we are bringing that complementary strength of the wind in solar. So, we will remain as a total solution provider but we are not going for any joint venture or acquisition. We are developing in our own way and that will continue.