KEC International provides support on bid price identification and pre bid support on pricing strategy
The transmission infrastructure would be challenged with the increased renewable energy contribution to the Indian grid. NEERAJ NANDA – President, Transmission & Distribution and Solar Business (South Asia), KEC International
What are the reasons for KEC International to foray into solar space?
At the onset, I would like to tell you that EPC in Distribution and EPC in Solar are natural allies in terms of the nature of projects, skill sets required, etc. The two businesses have adequate synergies in various facets of EPC with some specific distinctions like value engineering, performance outputs, timelines, etc. We are already a world leader in the EPC Transmission space and have substantial presence in the Distribution arena as well, thus venturing into Solar Business was a natural progression for us on account of similarities between these two
businesses. I am very sure that the synergy of our T&D business will enable us to scale up our solar operations significantly.
The government has set an ambitious target of deploying 20,000 MW of grid connected solar power by 2022. Do you think that this target is achievable? What are the major challenges for the growth of renewable energy in India?
Considering the current pace at which the allocations are being made and tenders are being floated, we feel that 20 GW is an achievable target, however only time will tell its actual outcome. At this, let me also tell you that the realization of capacity addition post the allocation is a major challenge as many developers are exiting the market. Nevertheless, with increased FDI inflows and enhanced thrust by the Indian Government, the sector seems to be progressing at a good pace. Speaking of challenges, the transmission infrastructure and sustainability of the Indian Grid with rapidly increasing contribution from renewable power is one more element to be taken into consideration which is likely to
challenge the capacity addition plan going forward. To give you my perspective, infusion of upto 5-7 percent of solar power to the grid,
which is a comparatively low forecast than the conventional power is easily manageable, ie. will not have that much of an impact on the
sustainability of the grid. However, when we are talking of percentage contribution of renewables to the tune of around 15-20 percent, this is definitely a concern, as this would have a stress on the grid. This has to be effectively navigated and it is therefore imperative that we take a closer look at how grid stability challenges need to be managed in the country. Strengthening of the infrastructure would be key to realize
which is envisioned. Another challenge we face is that of high dependency on imports with exposure to foreign currency fluctuation and lack of local manufacturing. This also in the long run is likely to have an impact on the growth of this sector. Also, in light of GST likely to be implemented and the fact that solar power enjoys concession on taxes and duties by virtue of MNRE guidelines, the impact of GST is still unidentified.
What is the capacity addition you have achieved in the grid connected solar power segment?
We ventured into the solar business just recently and initially were a bit cautious as we were observing and understanding the nuances of this
business. Having said that, let me tell you that over the past one year by successfully augmenting our credentials and focus we ramped up our solar business by almost 10x in FY16 relative to FY15. As of now we have connected more than 60MW of solar power to the grid (till March 2016). Going forward, we are all geared to take up larger projects and increase our share to the capacity addition.
KEC International has recently secured an order for setting up of grid interactive solar photovoltaic power plant in Andhra Pradesh. Can you
please provide us the details and status of this project?
Presently, we have approximately 45 MW under execution in Andhra Pradesh and Uttar Pradesh in addition to the projects commissioned in Andhra Pradesh. We have a visibility of additional 40 MW expected to start up soon.
What are the services provided by KEC International in Bid Management? What are the pros and cons of sharp drop in solar prices in
the Power Purchase Agreements?
KEC International provides support on bid price identification and pre bid support on pricing strategy. Since we have an already established and proven track record in the EPC Transmission space and as I have mentioned that the two businesses are natural allies, we are
able to provide more value driven solutions to the developers beginning with the initial phase of the project. Our successful record in T&D has opened many a doors for us, in terms of financial bandwidth, sustainability, timely completion of projects, etc. The drop in solar prices naturally puts a huge pressure on the EPC contractors. With this the market has become even more competitive and there is a need to have
your own USP like create innovative solutions and value engineering to meet the current demands. It has also paved the way for smaller players / developers to gain in-roads and start looking at doing EPC on their own. The lower price movement combined with easy availability of low cost funding propels the need for cost optimization across all elements of EPC including product development, value engineering, innovative execution methodologies, etc, in order to attain cost leadership. This in turn mandates continuous product and process development across the entire value chain which will ultimately translate into better delivery of the end product.
What are the impediments in the growth of Roof-Top solar PV projects in India?
Uniformity in tariff policy and regulatory mechanism for power generated by way of rooftops across States is one of the key impediments. Also, there is no clarity on the way in which the voluminous smart city would be incorporated into the existing policy framework. Another aspect to
this is that in India we still have back up power by way of DG sets for various institutions, offices, shopping complex, etc, how would such power get replaced with rooftop in terms of their feasibility is another question which probably would have an impact on the success of rooftop projects.
Please tell us about KEC International’s global footprint and the key ongoing solar projects in this fiscal?
Currently we are focusing in domestic market given our presence in the Indian market. Further we are also looking at the MENA and South Asian market to set our foot in the international arena this year. All our current ongoing projects are in South India which is the current epicenter of the industry. With more than 5GW capacity of allocation done in this region, we are focusing to get more share of the pie in the states of Andhra Pradesh, Telangana and Karnataka. We have initiated the solar powered street light at our existing project sites.
What are your plans for the near future?
The EPC space in solar business is growing along with the growing attractiveness of the solar market. The National Solar Mission of 100 GW by
year 2022 appears to be quite feasible on account of the aggressive development agenda initiated by the Government of India assuming the challenges stands addressed. Besides, there is renewed interest showcased by several states in adopting solar power to meet their power demand needs. Another good part is that there has been the rise of turnkey EPC procurement by the PSUs. We expect the current year market for Solar EPC to be quite promising due to continued and growing interest of power buyers towards Solar power procurement. KEC having successfully executed solar EPC projects, our strategy going forward is to emerge as a reliable EPC partner to the developers working on their generic as well as specific needs. We are well poised to unleash implemental improvements which will make us more efficient and reliable.