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EQ in Exclusive Conversation With Mr Pradeep Chauhan, Country Manager-Indian Subcontinent At SOLARPACK

EQ in Exclusive Conversation With Mr Pradeep Chauhan, Country Manager-Indian Subcontinent At SOLARPACK


In a special talk with EQ, Mr Pradeep Chauhan, Country Manager-Indian Subcontinent – Solarpack, talks about the biggest challenges in achieving India’s RE targets, PLI scheme, ALMM, BCD, Energy Storage, privatization of discoms and more. Check the excerpts from the interview here.  

Byline: Mohita Gupta

Mr. Pradeep Chauhan, Country Manager-Indian Subcontinent – SOLARPACK

What are the biggest challenges in India’s goal of 175 GW by the year 2022 and 450 GW by 2030? How much can we achieve by 2022, 2025 and 2030?

The target of 175 GW encouraged India to become one of the largest markets in the solar and renewable energy value chain and achieve the scale, which attracts developers and international investments. With target revision from 20 GW to 100 GW for solar, and 175 GW for renewable power, the initial three to four years of the target went well, which was later hit by some natural and policy-related roadblocks such as GST, safeguard duty and pandemic.

The regulatory challenge will always be there, and if addressed well in time, it would be good to have a well-regulated environment. Right Now, we are falling short of the target, but we should be happy for aiming high despite the roadblocks.

Despite the global pandemic, the countries demand growth was all-time high last year, and the energy demand in the grid is increasing this year as well. It is a matter of how the Government Agenciesmakes things run smoother for the next four to six years with no interruptions. For 2030, I am hopeful about the 450GW target as we see a big push coming from Electric Vehicles segment across the globe. The electricity consumption will be multi-fold with the evolution of electric vehicles market.

When will Module Prices stabilise? What will probably be the pricing and technology roadmap?

On Solar modules, pricing is the outcome of the supply chain & raw material availability, which is dominantly driven by the Chinese market. Possibly, there will be a reduction but not as sharp as earlier (20% to 25% every year) because the demand and production are not growing at the same pace. Tariff barriers and other things also contribute to not helping the market in a manner that can stabilise it. It is difficult to say when the price can stabilize, as prices adjust because of supply chain availability, various tariffs/duties and policies. We need to watch and stay updated about what happens globally.

What will be the impact of BCD, ALMM, BIS? It is 25% on Cells and 40% on Modules. Will it protect Indian manufacturing as it is just a difference of a net 15%?

We shall support initiatives like safeguard duty, BCD, and BIS, if it helps improving the quality, availability and cost effectiveness in the country. Developers are supporting the government’s decision that helps to increase local production. BIS and ALMM are directed towards improving the quality of the product sold in the market. If the processes of BIS and ALMM are not implemented on time, it can create disruption in logistics and capacity additional targets will slip further leading to higher uncertainty and cost overrun of the projects in pipeline. With BCD, there is a lot of momentum to set up or increase domestic manufacturing, We’ve seen news and announcement of either new players entering the module manufacturing or existing domestic players planning to set up additional manufacturing capacity. However, we have observed that earlier Safeguard Duty on Solar Modules and cells hasn’t helped manufacturers in improving their cost competitiveness nor it has helped increasing the production capacity to compete with global suppliers. In order to benefit from BCD, the domestic manufacturers have to increase their capacity, quality and Bankability to cater to their domestic and international markets.

It looks difficult in the present scenario till the time R&D and product development becomes focus area by leading Indian manufacturers for PV products.

What will be the impact of the PLI Scheme for Solar PV Manufacturing in India?

If incentives are given to the manufacturers directly via PLI schemes, then it is beneficial for the manufacturing industry and the end consumers. The PLI scheme is a good idea,some manufactures have already applied for the scheme, and some new manufacturers are already coming to participate in the scheme The initiative of the PLI Scheme is helping to create the entire ecosystem, and it will be a long-term initiative. However, we need to be watchful about the longevity & sustainability of these incentives.

How the pending PSA will affect the Indian Solar Industry? We believe there are PSA worth 20GW pending, and still, SECI is issuing new tenders and getting a suitable response from developers.

Pending PPA and PSA are affecting the growth of the industry& accomplishing annual targets of Mission 2022 and holding us back from progressing faster . I believe certain policies led to such a backlog, It is for the ministry to review whether the agencies should conduct more auctionsor materialise the existing auctioned & awardedprojects because they are under development projects in advance stages and can come up much faster than those that will now get awarded.

India has the target of 40GW RoofTop Solar by 2022, and not even 15-20% of it is achieved. What is the main reason? How much can India Realistically achieve?

Rooftop is a smaller market that was progressing at good paceuntillthe year 2013. Then utility-scale market has moved much faster because of availability of large solar parks, availability of financing and definite offtakers in the market. The focus has shifted from rooftop to utility-scale market. All the schemes related to solar rooftops mostly have bottleneck from regulatory provisions to be implemented on the ground. Financing, lack of support from state bodies and in long time taken in implementation of policies are amongst the major challenges in the rooftop market because of which the progress is slow.

Which state is most favourable and which is worst for Solar or RE in terms of Policy, Grid Availability, PPA Honouring, Payment Timeliness, etc.?

We prefer business in any state which provides a suitable working environment for the investors and generating companies in the renewable space. Availability of infrastructure, stability in the state policy related to the implementation of RE capacity, the health of the distribution company’s in the state and radiation availability in a particular region are some parameters that decide or show the environment in the state. As an investor, we look for a couple of factors, including policy certainty, ease of doing business specific to our business, stability of the socio-political environment and more. Rajasthan, Madhya Pradesh, Gujarat, Maharashtra, Telangana, Karnataka etc. are preferred because most solar developments are happening in these states. We consider some states on a case to case basis where radiation is low, socio-political key indicators progress is slow, land reforms are not well implemented, etc.

In upcoming tenders, what will be the ratio of Plain Vanilla Solar/Wind, Hybrid Tenders, RTC, etc.?

For fewmore years, we will have Plain Vanilla solar & wind tenders coming up from state and central bodies. However, industry should anticipate more Energy Storage, Hybrid kind of auctions, We can assume the ratio of 50% of plain solar; 30% of wind and solar hybrid; 10% of floating solar, storage, RTC; and 10% from the demand from C&I market, rooftop market, PSU tenders, government establishment building, etc.
A year from now, we can assume an increase in demand for solar pluswind hybrid as it provides much better generation profilecompared to independent wind or solar. We can see 50% hybrid auctions in next few yearsyears, and storage can also pick up, whereas floating and other technologies may take little more time to become a significant part of the entire installations.

What will be the role of Energy Storage – Technology and price curves and Preparedness of Make in India and the role of PLI Scheme for Battery Manufacturing?

Storage has a huge potential, and its marksarevisible. While we talk of adding more renewable energy to the grid, and not setting up new conventional projects, balancing the grid would require some sort of storage. The pricing depends on scale,If two three large markets eg. US, China and India can provide scale, the cost can come down quite fast from the commercial &operational efficiency increase point of view. Battery storage needs continious supply of raw materials, whether the raw materials would be available to match the requirements for both electric vehicles and Utility-Scale Storage needs to be seen.

Please tell us about the present and future scope of Wind – Solar Hybrid, Dispatchable power on demand and RTC?

This is a new segment which has opened up with few auctions concluded in last few years, the experiment is good and happeningin other markets as well. Such projects will need high-tech systems, super-intelligent forecasting and scheduling, along with suitable arrangements and contracts with trading companies or offtakers who will buy the excess power and supply the shortfall. It is interesting to have this scheme and possibly in future Distribution Companieswould demand only RTC power as Distribution Companies and consumers find renewable energy attractive. They have to tie up with the upcoming capacities, which give them a better generationcurve, which they have to supply to the consumer. We have to see how these projects are implemented and how many more such auctions come from different states and distribution companies.

Which state is most favourable and which is worst for Solar / RE in terms of Policy, Grid Availability, PPA Honouring, Payment Timeliness, etc.? (Repeat Question)

“What are the plans of Solarpack for the Indian Market?”

Solarpack has operational capacities in Telangana and Karnataka, and in Rajasthan under development currently. We are looking forward to multiplying our activities to build more projects. We see India as a long term market that will stay and demand will be available for solar and wind. In the next four to five years, we would like to add about 1.5 GW to our existing portfolio. We will keep adapting the schemes and projects as per the technological changes.

What challenges will the Grid face in up-scaling RE Capacities and what are the solutions to it.?

Consumption mostly depends on consumer behaviour, climatic conditions, working days, generation availabilityand variations in the grid. Renewable Energy projects are must-run projects to harness the best available natural resourceat the moment. The grid has to be managed by managing supply and demand. Managing the grid is difficult; however, we have the entire national grid connected now. Once, you have all forms of generation capacities connected to the same grid from different states, load patterns injecting on one grid, it’s quite complex, but it helps in balancing the grid when it is large.

Grid must be upgraded with futuristic additions in Evacuation infrastructure by using technologies such as Artificial Intelligence, which provides advance information’s of outage due to maintenance, climate change, control load profile and demand variations, also takes care of real time fluctuations.

Can India achieve its dream of one sun, one world, one grid?

The One Sun One World One Grid (OSOWOG) under initiative of International Solar Alliance & MNRE is a great ideain the times of globalisation for providing cost effective renewable energy to billions of population, but there are multiple challenges, such as technological, geographical, political, socio-political, economic challenges and many more. Many factors are not in control of few participants countries. variuousregions have different frequencies, time zones &consumption patternsaredifferent, road connectivity to multiple continents or tropical countries aren’t available so far. Implementing such a scheme is difficult. In case any of the countries are non-cooperative, then it can create a roadblocks, similar to cross countries regional gas pipelines. Every continent has regions that are socio-political hotspots,regions can interconnect between them, and if it helps, we can look forward to such schemes. In addition, exchange rates keep fluctuating.

Tariffs in India are high on a global comparison. Recently in Saudi, it touched 1 USD Cents per kWh, and in India, it is around 3 USD Cents. What are the top reasons for this difference?

India is a price-sensitive market. Specifications and technology used in India differ from what they use in the USA& other markets. The cost of labour is different in the USA & advance countiiesmarket from India, whereas debt financing is much cheaper in MENA region. The manpower cost is much higher in the USA market. CAPEX and OPEX are also different from ours, hence it would n’t be realistic to compare the costs/tariff’s, best case should be to compare with fossil fuel based energy sources and cost of reversing the damage by fossil fuel based generation plants

We have seen MNA’S, asset sell and acquisition model for exiting as an equity investor, but we haven’t seen a lot of IPO’S in India or abroad so, why not the green energy companies can go through the IPO route and lead successfully in India or other markets?

Capital availability is not a major challenge in India,Raising capital has not been a major challenge for developers and investors here because of global institution & strategic investors have confidence in Indian Renewable Energy market due to its size and potential for long term woth consistent growth opportunities, IPO needs the appetite of retail investors and customers to find that industry attractive enough to pick up those stocks. Domestic investors are not much interested in such companies. The growth in power sector in general is slow, and it has suffered losses/NPA’s for many decades. These are capital intensive assets, to generate 50 crore revenue, we need to deploy at least seven to eight times capital, wherein the other industries the ratio is around threeor four. Therefore, we have seen fewer of IPOs than equity sales or mergers and other structural investments Possibly, making an IPO successful in India for renewable energy companies is not that great. Experience of some listed companies doesn’t attract companies to go for this route rather than going for stake sale to fund managers.

What are the requirements or expectations of the renewable energy sector to achieve dispatchable power on demand through a combination of solar + wind + energy storage? How can we achieve this technologically? What will be the price implications?

The developers and generating companies are the adaptors of technology that is available from manufacturers & technology suppliers. We cannot demand a specific product from the manufacturer from the side of the developer and generator.

For the energy industry, it is difficult to demand products from the manufacturing sector.

We adopt new technologies with improvement in efficiency, reliability and cost. Currently, advancements are happening in the manufacturing side that helps to put up renewable energy generation plant with much more reliability& lower capital cost per MW, which can integrate, monitor and control the output with storage. We have to monitor and watch the new technology that can integrate different sorts of generations and can be dispatched to the grid. As new developments happen, the developers and generator community is quite fast in adoption.

What will be the impact of these ultra-low bids of 2rs and 1.9rs in recent to 2 tenders on the entire solar market?

Such tariff has given hard target to achieve. Distribution companies expect similar prices. Every auction with a tariff close to that expectation is an attempt to provide the affordable cost of renewable power and make reasonable expected returns for the investors so that the project and investment are viable and sustainable. If the project doesn’t generate sufficient revenue, then managing that asset is not possible. It is not healthy to be vocal about going to the lowest tariff power. It depends upon the cost input, module cost, interest rate and other factors. So far, the tariffs discovered in India are the best tariffs compared to any of the geographies, and they are much lower than the average coal based power purchasing cost of the distribution companies, i believe the current prices are quite competitive.

What is the wish list from the Government of India to make the RE Sector really grow to its max potential?

In the last couple of years, various schemes like KUSUM and PLI launched by Government are quite good. The idea of implementing that scheme was to enhance the income of farmers by providing more opportunities to become part of the green revolution. PLI Scheme is for helping the manufacturers to establish large-scale capacities to achieve scale and develop an ecosystem where they can set up cell manufacturing capacity, solar module assembly lines and other components related to manufacturing capacity, and get some incentives. The schemes give a longer horizon of what government intends to achieve by 2022, 2025 or 2030. There have been other incentives where solar power generation was included in the new manufacturing capacity program. If these schemes are implemented much faster and smoother, these can make the renewable energy fastest growing industry for India.

Do you think privatization of DISCOM is a positive step taking by the government?

Earlier around 2003, when the distribution companyin Delhi wasprivatised, the results showed hugeimprovement in the availability of power, quality of power in terms of interruptions and service provided by the Distribution company. In the comparison of Delhi to any other Indian distribution company based on these parameters, the progress in the last two decades due to privatisation is clear. It is the right time for India to change& reform the distribution sector. Some critical things are curbing corruption, more private investment, professionalism, new technology, 24*7 power for every state and city without complaints and improvement in services. If the sector is privatised, more private and professional companies can come and bring technology to the old stagnating system, and reliable power can be delivered, then it is good for the overall growth of the country.

How do you see the transformation of India’s Energy Sector?

The transformation is a necessity, and it is already happening in the renewable energy and power transmission space. Investors see a lot of value in investing in these assets in the power sector. Now, India has sufficient generation capacity to supply power to everyone. More technologies like AI, blockchain and many new ideas can be used in the sector to make it much more efficient, transparent and faster service delivery to consumers. For instance, companies familiar with IT systems can collect over 50 per cent of their revenues online from customer billings.


Anand Gupta Editor - EQ Int'l Media Network