In Conversation with Mr. Prafulla Khinvasara, CEO- Renewable Power Projects, GIRIRAJ ENTERPRISES-MALPANI GROUP
Let’s start with the recent developments at your organisation in last one year.
Malpani Group is a diversified Business House with interest in FMCG, Renewable Power Projects, Real Estates, Amusement & Water Parks, Hospitality & Education.
The Group is one of the pioneers in the Renewable Power Industry in India and started investments since 2000-2001. We have operating asset of 581 MW combined both Wind & Solar Sector spread across 8 States including Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Karnataka, Telangana, Tamil Nadu & Kerala.
We are an integrated conglomerate contributing immensely to the entire renewable power sector in India.
In last one year we have installed and commissioned almost 75 MW of Wind Projects in Gujarat and Kerala States. Apart from this we have installed almost 12 MW of Roof Top Solar Projects mostly for our own requirements (including 1 MW of Car Parking at our WET-N-JOY Water Park, Lonavala). We have also installed almost 1 MW of Roof Top Project at Mumbai Airport.
We are also looking forward to acquire operating assets of about 100 MW Solar Projects; which can add to our portfolio of profitable projects from which we can drive efficient revenues in long term.
As a developer, what key challenges do you face today?
As all know, the Prices of Power Sale have dropped drastically due to Auction Bid Price mechanism. However, there are several potential risks (such as currency hedging, higher interest, inflations, delay in lad acquisition and establishing power evacuation) which the developer has to face during Project Execution. The Government should provide some instruments by which such risks can be mitigated; otherwise the possibility can’t be ruled out that soon or later such projects can become NPA.
One of the most important challenge that the developers are facing is that the DISCOMS are not honouring the PPA terms and not paying in time. The interest clause defined in the Power Purchase Agreements need to be strictly followed; for which Government’s support is very important. Several DISCOMS who are the ultimate buyers of power, are in a poor financial condition. Hence, payment delays and rising receivables can upset both financial plans as well as cash flow management.
The Industry is also facing a typical challenge of Power Evacuation. While the Policy has accorded ‘Must Run Status’ for the Solar Projects, it has been seen that the backing down instructions are being given by several DISCOMS to the Generators during peak generation months.
The lack of Long Term Policy for Open Access is also a great challenge. The Open Access Charges and Losses such as Transmission, Wheeling Losses & Charges, Cross Subsidy etc should be derived for long term; and typically needs to be fixed for at least 10 years from the Date of Commissioning of such Project.
Which states do you believe lead see maximum solar energy investments this year?
I can see maximum Solar Investments in the State of Telangana, Andhra Pradesh, Madhya Pradesh and Gujarat in next couple of years.
As the assets become older, will aggressive bidding today become a pain point for the industry a few years down the line?
Yes, I think so. The Solar Industry is till date not fully matured. The developers really don’t have data regarding the life of the Solar Panels (which are being mainly imported from China) or the Inverters. It will be interesting to see how these major components perform in long run. Even we have observed several quality issues after 3-4 years in Solar Panels (of very reputed Make) installed at our few Solar Project Sites. Moreover, it will also be difficult to envisage the cost of the Operation and Maintenance in long term (typically after 10 or more years).
What are the milestones you wish to achieve in next few coming years?
As a long term investor in Renewable Sector, we wish to add 50 to 100 MW Projects every year; while targeting to have our own assets of 1000 MW by 2020.
We are also exploring possibilities of entering into EPC Business of Solar Rooftop Segment and the Operation and Maintenance Business of Grid Scale Solar Projects.
Anything else you would like to add.
The Auction Bid Price Mechanism has really affected the investments being made by typical Indian Business Houses who have traditionally contributed a lot to this sector in last several years. From Industry point of view, this is really a matter of concern.
After the recently concluded Paris talks, several countries agreed to limit their emissions. Even, in the National Action Plan on Climate Change our Country made specific target for Renewable Energy Projects through which Renewable Purchase Obligations (RPOs) can be fulfilled. But there is need of strong enforcement to fulfill the RPOs of obligated entities. The lack of enforcement has already resulted in lesser capacity additions of Solar Projects & low trading of Renewable Energy Certificates at Power Exchanges.
The Government should seriously think on establishing some long term policies (at least till 2022) with Feed-in-Tariff Mechanism while restoring both Accelerated Depreciation and GBI Benefits. This shall help in providing better investment climate in Renewables in India.
The long awaited Policy for Wind-Solar Hybrid also needs to be expedited.