In Conversation with, Mr. Pradeep Chauhan, Country Manager- Indian Subcontinent, Solarpack
2018 has been volatile. Can you give us your insight on the highs & lows of the company? What are your plans for 2019?
2018 has been a marvelous year for Solarpack globally, Solarpack Corporacion Technologica, SA has been listed in Spanish Stock Exchange in 2018, in India, company was successful in winning 95MWac of Solar PV Projects for 25years PPA to be set up in 5 talukas of Karnataka State through competitive auction process.
However, volatility in the Indian Solar Sector is still an element to consider for future investments, due to various factors like imposition of Safeguard Duty on import of solar cells & modules, unforeseen deprecation of currency, cancellation of auctions in light of low tariff expectations by off takers few examples in SECI, Gujarat, UP and Maharashtra. These persistent risks in the market is keeping us in observing situation and has made us even more selective when it comes to decide on which further auctions we should participate.
However, we believe that these uncertainties will not have impact in long term market growth, Solarpack remains committed to Indian market and firmly believes that India will stay as one of the top markets in terms of scale for at least in next 5 to 7years for Solar Energy Development. Solarpack plans to acquire & develop a significant amount of MW in Utility & Open access market for high credit worthiness C&I customers in 2019 and enhancing current portfolio from two-fold in next two to three years.
After solar sector achieving the status of lowest tariff energy source in India, industry looks to move towards newer technologies like Energy Storage System (ESS), Floating Solar, Wind Solar Hybrid for more stable power in the overall energy mix, we intend to work in new technology areas in recent future as well.
In my opinion, last year growth for the industry was hampered mostly because investigation by DTGR & imposition of Safeguard Duty and cancellation of auctions, but Indian Government is focused on achieving 100GW target, shall be able to achieve substantially in the utility segment.
In order to achieve 100GW target, State Regulatory Policies on Renewable Energy must be aligned with the National Mission, reducing complexity in obtaining approval & clearances for utility segment, relax open access approval for C&I segment shall also be a big boost.
What kind of challenges have you faced as an EPC player, when it comes to acquiring projects in India.
Solarpack has started, its business activities in Indian market in 2015 through investments after winning 80MWac projects in State of Telangana though competitive bidding process. The EPC segment is very competitive due to the number of players and pricing pressures.
We intended to establish a pipeline of projects under development in the country and provide for them the best in class EPC, O&M and Asset Management services.
Some of the challenges an overseas EPC player faces is the scarcity of high-quality resources, risk of cost overrun due to local factors beyond the control of EPC contractor as in any other market, over crowded market and competition with many smaller players and lenders insistence of looking at track record in Indian Market and overlooking global experience.
Furthermore, India is a very price sensitive market predominantly driven by lowest price approach, which may sometimes lower the bar of quality standards. Solarpack’s cost efficient and quality approach to its with own developed and built assets is the best proof in case we decided to acquire EPC business for specific customers and offer other services to quality focused customers.
In my view, the present EPC players are much focused on the traditional designs & construction philosophy, which is more manual and labor intensive, industry shall look forward to use innovative designs of solar plants for better monitoring & control through use of automation, for construction use of advance machines & equipment allows faster construction must be use to avoid delays & ensure faster completions of projects with higher safety standards and improve quality of constructions.
As the size of project has increased and to be constructed within PPA timelines of 12 or 13 month is very important that new methods shall be used which will have cost advantage and timelines in sight.
Are you content with the progress of the Indian solar industry and the new policies being introduced by both state and central government? What more would you like to expect from the government policies?
Looking at the progress so far in Solar Industry since the inception of JNNSM in 2010 with a target of 20GW by 2022, which further was revised to 100GW by 2022 in June 2015, I see that country has achieved a outstanding growth till end of 2018 and has become one of the largest & fastest growing market globally specially after 2015-16.
We have seen year on year growth over 8GW average in last three years, which has seen interest from global investors and suppliers, itself is a testimony of the stability & potential. I am quite optimistic about the future growth of Indian Solar Industry based on the fact that Solar Photovoltaic Energy has achieved level playing field compared to all other form of electricity generation eg. Coal, Gas, Nuclear Wind, Biomass, Geo-thermal, Solar Thermal. Many factors favors Solar Photovoltaic Energy over others such as scalability, quick implementation time, environmental, economics of scale and productions, logistics.
On the policy front, Center & State Governments are trying to formulate policies as per the need of various segments like rooftop solar, Opex & Capex model, Wind Solar Hybrid, Solar with Storage, Regulations for Forecasting & Scheduling for Wind & Solar energy generation plants, Wheeling & Banking. Almost all the states have come out with their Solar Policies in recent years, however, there have been flaws & areas of improvements, specifically differences in state Solar policies. I have observed that even though most of the states have in place their solar policies, yet the implementation varies from state to state. More focused shall be given by MNRE on the monitoring & implementation of the JNNSM and state solar mission in tandem.
I expect from Center & State policy makers to align the basic provisions in their scheme and state energy regulations must give their concurrance to such provision to avoid any conflicting situation, which is evident in the current situation. Bottomline my assessment is Government must put in place a uniform structure across center and states.
One of the improvement area is to effectively establish single window clearance mechanism for approval & clearances of the projects awarded, investors generally face difficulties for obtaining the permits from various state bodies.
What do you have to say about the recent Indian Budget. Was it able to address all pending concerns from its last budget for this industry?
The interim budget has allocated Rs 3,004.90 crore for development of solar power projects next financial year (2019-20) including both grid-interactive and off-grid and decentralized categories. This is a mere 1 per cent increase over the likely expenditure of Rs 2,969 crore for solar projects this fiscal.
In our opinion, budget hasn’t been encouraging enough to support various areas like research & development, capacity building, policy reforms, domestic manufacturing of solar
panels & cells need assistance for country to develop in-house capacity and makes industry a sustainable and lucrative enough for Make in India program.
Though the scale of implementation would still be increasing which is more driven from the opportunities and cost reduction from global perspective and need of cost-effective electricity in country like India which has huge unmet/suppressed demand in the grid.
Also, budget should have allocation for adoption of newer technology support like floating solar, solar with storage and wind solar hybrid.
Do you think more companies will now enter the market as the economics improve? Will further investments by large strategic investors and global power firms etc. will bring about change in the industry?
Global Investors have shown huge interest in Indian renewable sector due to scale and size of the auctions, various investment funds & groups have taken up large size project and portfolios from the secondary market in last couple of years. Though this shows the capacity available in the Indian renewable sector to absorb such huge investments, it is important to reduce risk perception for international investors with capital strength to extend their tenures in the country. Strong competition is also a barrier of entry for international developers who are keen to enter into market.
In the interest of the Industry, it is important to attract developers with investment plans for medium to long term view of the market, for which it is important to avoid uncertainties.
Solarpack has succeeded since 2015 with moderate scale investments and looks forward for a longer horizon to be a fair play developer in Indian Solar Industry.
Solarpack has grabbed 2 contracts in India, one of which is 133 MWp in Karnataka. How has the progress been?
We have been successful in Telangana & Karnataka in winning Solar projects since 2016 by winning 6 project in Telangana state for 80MWac/104MWdc capacity, which has become operational now.
Further, Solarpack with its Indian Subsidiary for investment “Ekialde Solar Pvt. Ltd” listed in New Delhi has participated in Karnataka state for approx. 95MWac capacity projects at different locations in early 2018, after the successful award of five (5) projects totaling to 95MWac a/133MWdc, we have been progressing in development of these projects and very close to starting construction activities.
Both Telangana & Karnataka are among the top states and progressive for renewable energy capacity addition, we have been exploring other opportunities in Solar rich states and would like to expand our operations in next two years in most of the favorable policy states having good solar energy potential.
So far we have not been active in Solar park based or Interstate transmission system (ISTS) based auctions, however we plan to be an active player in auctions with high credit rating off takers auctions.
Further we also are very keen to be part of the development in Floating Solar & Energy Storage System auctions, in additional to offering energy sale to Commercial & Industrial off takers through open access mechanism.