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RE sector seems to be losing steam, says Saibaba Vutukuri, CEO, Vikram Solar

RE sector seems to be losing steam, says Saibaba Vutukuri, CEO, Vikram Solar

Banks are wary of lending to developers as they suspect the viability of projects that have agreed to sell power at rock-bottom tariffs

 

Post trade restriction with China, what are the challenges facing the solar sector in India?
China is the largest producer of solar raw material in the world and supplies 85 percent of this raw material to the solar industry globally. Southeast Asian module manufacturers mostly rely on Chinese suppliers for solar cells, glass, backsheets, frames, junction boxes, etc. Chinese companies overall dominated the Indian solar components’ market due to their competitive pricing, where they supplied 80 percent of solar cells and modules. Due to the lockdown, there was a long hold on these items in China, so the module assembly capacity of these module manufacturers was affected. This dependence on China and the lockdown further had an impact on Solar projects.

The Solar Power tariffs have plunged to a new low of Rs. 2/kWh. How do you view this development?
India’s solar power tariffs hit a new record low of Rs 2 per unit in November 2020 during a bid conducted by state run SECI. Foreign players have been taking the lead in placing aggressive bids at the auctions in India due to low financing rates as compared to the Indian markets. Debt financing for green energy projects are drying up as large Indian banks and financial institutions are declining to fund projects that have committed to sell power at less than ₹3 per unit. Banks are wary of lending to developers as they suspect the viability of projects that have agreed to sell power at rock-bottom tariffs. According to industry estimates, the prices could further go down 4-5% per year from here going forward. 

Will India hit the target to produce 175 gigawatts of renewable energy by 2022? Your views
The Government of India has set a target of installing 175 GW of renewable energy capacity by the year 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power. However, India's renewable energy (RE) sector seems to be losing steam and may find it tough to meet its 175 gigawatts (GW) target by 2022, even as its total capacity reached almost 86 GW by December 2019. This is also due to the slowdown in capacity addition and auctions due to emerging risks and unaddressed structural issues. Although, if for us to catch up we are required to install 37.8 GW of solar rooftop, 32.1 GW of solar utility and 23.3 GW of wind power capacity in a short span of just two and half years. With new initiatives like ‘Atmanirbhar Bharat’, PLI scheme etc, we are still hopeful of a phenomenal growth.

Covid-19 induced lockdown has battered almost all the industries, solar industry being one of them.  How has your organization performed in this pandemic period?
India was technically inching towards slow achievement but the imposition of a nationwide lockdown by the Government of India to control the Covid-19 outbreak, has had a negative impact on the whole economy. There has been an estimated 30 per cent fall in Indian electricity demand during the period from mid-April to May, due to the lockdown of industrial and commercial establishments. Consequently, this has also adversely impacted the revenues and cash collections of the power distribution companies (DISCOMs).

Some of the other adverse effects faced by all renewable energy, including solar, businesses are - non-availability of resources at the sites, depreciating rupee value (particularly for companies that import components), and banks not operating in many regions, to name a few, also manpower issues due to the unavailability of labors at the manufacturing sites. The under-construction projects are facing delays in execution because of disruption in the supply chain in India and labour availability, following the lockdown. The Covid-19 crisis also impacted the global manufacturing space. Among the various sectors that are bearing the brunt, India’s solar power industry, in particular, is looking at months of delays due to disruption in the supply chain. Currently, the Chinese companies dominate the Indian solar components’ market due to their competitive pricing, where they supply 80 percent of solar cells and modules. Due to the lockdown, there was a long hold on these items in China, so the module assembly capacity of these module manufacturers has also been affected.

However, during this lockdown, GoI has focused its attention to the domestic manufacturing industry and took steps to boost the industry by taking steps to help in capacity expansion and make India the manufacturing hub and supply to the whole world.

During the crisis we focused on ensuring safety of our employees, suppliers and clients at all times. We formed a rapid response team, stayed connected without team members, supported each other, maintained a flow of accurate information and implemented safe work procedures to start work while ensuring safety. 

Understanding the necessity for green energy growth, we took another step towards manufacturing capacity expansion.Our decision to set up another manufacturing unit in the southern part of India to increase capacity is focused on growth. We signed MoU with the Tamil Nadu government with a focus on setting up a 1 GW solar manufacturing facility (to be scaled to 3 GW in future) in the state. 

How are you optimizing and leveraging the latest technology - Digitization, IoT, Robotic process automation (RPA), Automation, Artificial Intelligence, data analytics - to get maximum from solar plants?
At Vikram Solar, we have always been focused towards innovation. In last couple of years we introduced- Mono crystalline module SOMERA, smart module SOLIVO, High-efficiency Multi Bus Bar half-cell modules, and first bifacial PV modules along with half-cell module series to the market. We have fast-forwarded our digitization plan due to the COVID-19 spread to simplify the work process in midst of crisis. We believe we have always made good on our commitment of quality, performance, and customer centricity. With new requirements surfacing, we are ready to comply as per demand and lead the solar revolution to future.

To keep renewable energy plants up and running requires top-notch operation & maintenance (O&M) services. What are the O&M services you offer?
We have an international experienced Operations & Maintenance division, which takes preventive and corrective maintenance services for solar power plants across the globe. Our team operates and maintains solar power plants, offers monthly reporting on generation and activities, provides project commissioning expertise along with developing mechanism to retrieve and manage generation data. Our O&M team has an experience of over 630 MW of projects globally.
Vikram Solar's O&M services also reach out to third party PV system owners, operators and original equipment manufacturers (OEMs). Its service portfolio includes professional financial and physical asset management solutions, revenue assurance, ongoing maintenance and repairs, and complete operational solutions for PV assets across India. The company consolidates risk mitigation and operational challenges associated with project financing and production into a single accountable entity to leverage economies of scale and deliver comprehensive asset management services at greater efficiency and lower cost.

For any industry to grow and sustain requires favorable government policies and regulations. What is your take on the current regulatory framework and tweaks needed to propel the sector?
New policies like- Atmanirbhar Bharat campaign, Vocal for Local, PLI scheme can help Indian solar industry grow.To turn this dream of building a sustainable energy future with the help of solar, India needs policy support to manufacture, exemption from taxes and duties, skill development, flexible financial solutions, exemption from duties and taxes, speedy removal of bureaucratic hurdles.
Additionally, the industry requires support in
Input Costs

  • 5% Interest Subvention on term loan and working capital
  • Supply of power with high reliability at Average Power Procurement Cost (APPC) rates, currently it is around INR 3.50/kWh

Financial Incentives

  • Upfront Central Financial Assistance of 25-30%
  • Increase export incentive from 2% to 8% under RoDTEP

Fair Trade Regime

  • Tariff barrier like BCD/SGD/ADD for at least 4-5 years while ensuring that SEZs are treated at par with DTA in terms of levying of duties of customs.

Support to Existing Manufacturing Facilities

  • Technology Upgradation Fund for existing investments in cell and modules.
  • Reserve 25% of domestic procurement for high-efficiency/new technologies with 10% higher tariffs.
  • Allow stage-wise backward and forward integration in Manufacturing Linked Tender
  • Capital subsidy of 50% for setting up R&D and Quality testing infrastructure within the manufacturing unit

What are your growth plans for your organization for the next three years?
We have planned to set up an addition 4 to 5 Gigawatts capacity (module and cell both). New year we are also planning to add 1.2 Gigawatts cell and module capacity in Tamil Nadu. With a target of doubling the business in the next 3 years, we have partnered with 40 distributors and over 600 extended partners in 40 cities across the country and aims to expand it to about 50 by end of 2020.

 




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