The future of the world is green energy and renewable energy, said Rajeev Karthikeyan, Founder and Managing Director– Leap Green Energy, in an exclusive interview with SME Times.
Excerpts of the interview…
Please tell our readers about Leap Green Energy and its entrepreneurial journey.
Rajeev Karthikeyan: Leap Green Energy, established in 2010 is a fast growing, Independent Power Producer (IPP) dedicated to generating energy using renewable Resources. Leap green energy’s assets are spread across six states in India and its customers are well diversified between various Indian State Utilities and the private sector. Leap green energy uses advanced AI enabled platforms to monitor assets Real time and is a Pioneer in the wind forecasting initiatives in the country. Leap green assists State Utilities and Industry associations to fully utilize and harness renewable energy with high prediction accuracy. Leap green is also the market leader in the private sector and has a well-diversified customer base of over 200 corporates spread across completely different sectors ranging from Hospitality, IT parks to textile factories. Currently we own an operational capacity of 751MW and 400MW under construction which makes 1.2GW of wind assets and is determined to expand to beyond 5GW by the year 2023. Leap green is heavily investing into setting up wind mass in all the major wind passes in India and thus is building to create a pipeline excess of 6 GW going forward.
What are the products/services do you offer?
Rajeev Karthikeyan: Our portfolio of interests includes Wind, Wind/Solar Hybrid, Repowering, Energy Storage and Offshore wind at various stages of development.
Please tell us about the current situation and prospects of the wind turbine energy sector in India?
Rajeev Karthikeyan: India has been rapidly adding power generation capacities to fuel the growing needs of the masses and the industries. Today, India is the third largest producer and fourth largest consumer of electricity in the world. As per Ministry of New and Renewable Power (MNRE), total Grid-Interactive Renewable Power Capacity in India as on March 31, 2017 is 58,581 MW, majorly comprising of 32,280 MW of wind power capacity. CRISIL estimates that the wind power capacity additions of ~17 GW over the next five years (2018-22) with an investment of Rs. 1,360 billion as compared to 15 GW over the last five years (2013-17). Capacity additions in FY 2018 will be driven by rising participation of central government (SECI) and other relatively stronger off takers like PTC, which significantly reduces risk as compared to direct exposure to state discoms. Moreover, wind power capacity additions will be driven by decline in tariffs and higher procurement from non-windy states. The key driving factors for wind energy sector in India are given below:
1. Improved technology: Capacity additions in wind energy would be supported by the fact that newer wind turbines have higher rated capacity and higher hub height (over 140 m), which can be set up even at low wind sites, which are otherwise considered economically unattractive. Technological advancements have allowed players to set up wind mills in states / sites with lower wind density. Newer technology turbines increase annual PLF by up to 3 percentage points. Based on our estimates for every 100 bps change in PLFs, equity IRRs improves by 130-150 bps.
2. Large scale allocations under the central level competitive bidding: Post the 1 GW of competitive bidding by SECI in February 2017, SECI has released RFP for another round of 1 GW of wind allocations in May 2017 and has further plans to bid out ~4 GW of capacity each year. The central sector PPAs have lower counter party risks as compared to the discoms that delays payments to the developers and have poor financial ratings.
3. Upward revision in RPO targets and stricter RPO compliance by states: The discoms are expected to upward revise their Non-Solar RPO targets and provide the long term trajectory based on the Ministry of Power guidelines, which proposed states to ramp up their targets to 10.25% by FY 2019.
4. Lower wind tariffs to improve off-take of power: With the onset of reverse auctions, the competitiveness of wind power versus other fuel sources has increased. The bid prices for the recent reverse auction are ~24% lower than the weighted average tariffs of coal-based plants, discovered under Case I bidding in the recent past. For instance, under the design, build, finance, own, and operate (DBFOO) model in fiscal 2016, state discoms signed an agreement for 570 MW capacity with Thermal Powertech Corporation India Ltd, for buying power at Rs. 4.15 per unit, which is ~17% costlier than the recent wind tariffs.
5. Increased investments in augmenting the transmission infrastructure: States such as Tamil Nadu, Rajasthan, Karnataka and Andhra Pradesh are strengthening their evacuation infrastructure, to support capacity additions over the long term.
We would also like to hear your expert comments on other sectors like Solar, Biomass and Hydro Power.
Rajeev Karthikeyan: The future of the world is Green Energy, Sustainable Development and Renewable Energy. We foresee, in a country like India with the second highest number of Population, the need of energy is only likely to increase with time. Every sector of energy is required and important to sustain the need of the hour. August 2018 witnessed some important policy announcements in the renewable energy sector by the MNRE. The sudden imposition of 25 percent safeguard duty on solar imports and then the deference of the levy temporarily has been the talk of the industry. These frequent changes in the sectors are an endeavor to help ensure energy security, independence and improvement in quality of life for the environment and the people.
Please tell our readers about the future plan of Leap Green Energy.
Rajeev Karthikeyan: Currently we own an operational capacity of 751MW and 400MW under construction which makes 1.2GW of wind assets and is determined to expand to beyond 5GW by the year 2023. Also, we are present in 4 states – Tamil Nadu, Maharashtra, Rajasthan & Madhya Pradesh and we plan to expand by opportunistic acquisitions and setting up green field projects. In addition to this, We have been working with major global equipment suppliers like vestas, Gamesha, enercon, and Suzlon since 2004 and continue to work with the leaders who provide us with both turnkey projects and supply equipment for our own epc. By 2022, we would have wind mass in all major wind passes in India across all the 6 wind rich states and have strategic tie ups with all the major independent developers, giving us an active pipeline of 6 GW going forward.