Below are the excerpts of our recent interview with Mr. Simarpreet Singh,Head Startegy,Hartek Power
What are the current and potential challenges fronting on solar EPC sector in India these days?
The most crucial aspect of any solar EPC project is its timely completion. Executing solar EPC projects in time without com-promising on quality is the real challenge which not every EPC company is able to meet. Any delay in project delivery can entail a heavy penalty. Then you have to also see to it that there are no breakdowns or last-minute glitches that may delay a project. For this, you need specialized manpower suited to the requirements of the rapidly growing solar industry. Solar EPC demands an altogether different set of skills, which can be imparted through expert training. The industry needs professionals who are thorough down to the last detail. Considering how competitive the solar EPC industry has become over the years, retaining this manpower is also a formidable challenge.
Operation and maintenance is another area where the Indian solar EPC industry has a lot of catching up to do. After all, solar plants have to operate optimally for the next 25 years, for which the focus should be on operation and maintenance like never before. The non-availability of uncultivable land for solar projects is also a major concern. Getting timely approvals and clearances can be an impediment,too, but of late the industry has evolved with state governments adopting investor-friendly policies. We need smart grid systems to make the solar industry self-sustainable.
Bringing down the overall cost of a solar EPC project to achieve grid parity and make the solar industry self-contained also poses a stiff challenge. It requires optimised design techniques and constant improvements in module technology so as to enhance efficiency. Proper evacuation of solar power is one of the biggest concerns. Since solar energy is intermittent in nature, integration of power to the grid is extremely important. Clearly, grid infrastructure is the missing link in India’s solar chain. Our transmission system is not growing in sync with the increase in solar power generation. This widening gap can put immense pres-sure on the existing transmission lines and lead to system collapse. Our transmission lines have not been upgraded to receive the kind of solar power being injected into the grid. We can ill-afford breakdowns given the high stakes in the solar sector.
With fall bids in the competitive bid-ding, are EPCs facing significant cost-pressures?
Yes, EPC projects are facing cost pressures in the event of rapidly falling tariffs in competitive bidding. When there is a cost pres-sure, the entire value chain gets hit. It is a challenge not just for the EPC firms but also the vendors. But looking at the positive side, the competition that we are witnessing will do a lot of good to the solar industry by making it financially viable. However, what is worrisome is that some developers are quoting ridiculously low rates in their attempt to grab more orders. Biting more than they can chew, these companies often struggle to sustain themselves financially.
A below 4-rupee tariff can upset the equilibrium of the solar industry at this juncture, but we at Hartek Power know the pitfalls and associate with only those developers who are realistic in their approach and can deliver what they promise. We keep a close watch on the module technology the developers have adopted because this can make all the difference to the overall cost. Modules account for 60-70% of the total cost of a solar project.
Cost is a major factor in determining the levelized cost of electricity (LCOE), the internal rate of return (IRR) for investors as well as the overall commercial viabil-ity of projects. EPC costs generally involve land survey, levelling, engineering, design, installation and commissioning of proj-ects. Reduced EPC costs can not only help achieve better IRR but can also bring down the overall costs so as to achieve grid par-ity.
Could you tell us what have been the new trends of the year for the solar sector?
With India’s total installed solar capacity touching the 8-GW mark, the country is poised to emerge as the world’s fourth largest solar market soon. A rapid reduction in costs and unprecedented demand for solar installations have spurred growth in the Indian solar sector like never before over the past one year. In India’s booming solar market, a total of 25-GW projects are under various stages of development. Given the exponential growth in the solar sector, the 100-GW target for 2022 looks achievable provided the government adopts the same proactive approach in promoting rooftop solar, which has immense potential.
The solar industry has received a big push in the past two years with solar tariffs registering a 33% decline in the past two years. In pursuit of the 100-GW target, the focus has shifted to large solar projects and mega solar parks. However, if the transmission infrastructure is not developed in sync with generation, state governments will struggle to meet their respective targets.
The Green Energy Corridors envisaged by the Power Grid Corporation of India for the evacuation of renewable energy can make a big difference. It is heartening to note that the National Thermal Power Corporation has also decided to take up some big solar projects, thus emerging as a pacesetter in the Indian solar industry. In due course, concentrated solar power (CSP) technologies with a centralised solar system will also shape new trendsonce the cost factor is taken care of.
Anything you want to share with the industry?
The two factors that define the success of any solar EPC project or company are uncompromising quality standards and timely execution, backed by world-class project management techniques. To make a mark in the business like Hartek Power, solar EPC companies should emphasise on excellence in engineering, cost-effective design, energy-efficient operations, smart grid power solutions and high safety standards. A customer-centric approach can make a world of difference. Solar EPC players should also be familiar with the standards and procedures laid down by various state electricity boards.
Recognising the critical role of substations in timely delivery of solar projects, developers should take the EPC part more seriously. They cannot afford to delay a project even for a day. When it comes to world-class project management techniques, the challenge lies in proactively managing the entire supply chain and ensuring that there are no missing links. As sustainability holds the key to the growth of the Indian power sector, we should go all out to tap the power of the sun and turn India into a global solar superpower.