To achieve grid parity and enhance solar production, the imports should not be regulated, says Ketan Mehta, CEO, Rays Power Infra
India has an impending need to build renewable energy infrastructure to nurture its economic growth? What are your views on this?
In the coming years, India will seemingly face insurmountable challenges to its economy, environment and energy security. To overcome these challenges India needs to shift to non-polluting sources of energy. India has tremendous energy needs and it is becoming increasingly difficult to meet those needs through traditional means of power generation like fossil fuel. Thus, renewable resources - is the way to go.
There is no denying the fact that the economic growth of India is dependent on the availability of electrical energy. This electricity is needed to run the industrial units, and also to light the homes of India’s 400 million rural populations, who are not getting any electricity whatsoever. Thus, for Indian economy to grow, inclusivity is needed. Unless the rural area is brought into the economic growth cycle, Indian economy cannot grow to its full potential. There are some limitations currently present, such as, coal energy is in use today but it’s very expensive, there are restrictions imposed on utilisation of hydel energy, grids for mega power plants are often not available. Considering these challenges, the immediate solution is that of renewable solar energy.
However, to make this a reality, well-crafted infrastructure is required which we should have developed by now. But better late than never.
The present government has laid down ambitious plans to build India’s renewable energy infrastructure. Do you think the plans are achievable and what are the policy changes which are required to turn these plans into reality?
“We have a target for renewable energy generation of 175 Gigawatt by 2022. We have got off to a good start with nearly 12 GW likely to be installed by 2016, more than three times the current capacity,” Prime Minister NarendraModi said during the inauguration of the Indian Pavillion at COP21, Paris.
The plans to generate energy in GigaWatts are achievable by involvement from all sections of the society and the Modi government’s Make In India layout surely suits the Indian solar energy sector very cohesively. Moreover, the renewable energy infrastructure is now a must for the overall economic growth of India as mentioned previously. The country is ready to embrace solar energy and all investors, both big and small should be given the opportunity to pump money into this moribund sector and contribute in the growth of solar power in India. In fact, out of 5000 MW of solar plants so far installed in India, 3000 MW are installed by small investors only.
The Government should now strongly enforce laws and regulations and leave out no room for corruption in this noble field. It should also encourage the Make In India concept be put to use for all equipment and machinery being employed at solar power plants.
What are the major sectors, where you feel that immense possibilities exist and why?
As far as solar energy is concerned, roof top solar plants pose immense potential in India. Also, off grid solar plants with battery backup is a good opportunity, particularly for remote rural regions where grid supply of power usually does not reach. Additionally, for small industries, grid tied solar plants are essential, especially in the areas plagued by frequent power cuts. This will also help in saving a lot of diesel. Countries like Germany and Italy has already done it.
What are the major challenges for the renewable energy infrastructure growth in India?
Firstly, the Government of India has to compete with China in the manufacturing and procurement of solar modules indigenously. Thus, big investors’ needs to invest money for the manufacturing of equipment required to create solar energy, and the small investor should be helped to install the solar power plants.
The Government should also refrain from giving any subsidies, instead it should make arrangements to purchase the product-Solar Generated Electricity-from each households. Additionally, it should provide funds to purchase solar generated electrical energy from all the investors.
The center should also improve the grid ecosystem so that energy reaches one and all, including the rural areas. Furthermore, it is important to penalize the pollution creating power generators and industries by levying compulsory fine on them and utilizing the money collected to add boost to the growth of the solar sector.
Is the government encouraging research & development, innovations in terms of new products & technologies in the sector? How more can be achieved?
We need the Government to introduce more policy reforms so that the solar revolution in India can become a reality. We feel that the Modi-led center can do a lot more in uplifting the solar sector. Firstly, it is essential to free the solar industry from complex processes, documentation and approvals needed from the administrative departments, introduce solar energy related courses in the engineering colleges and also launch academic and training institutions for renewable energy engineering courses.
What is the role Rays Power Infra would be playing in the India Infrastructure growth story?
We have our limitations, but still we are a major player in the solar power market. With two solar parks and more than 200 MW solar plant construction, we are one of the largest solar EPC firm in India. Our company has employed more than three hundred engineers, technicians and other labour to construct, operate and maintain the solar power projects that we had built. We have our in house training center where we train fresh engineering graduates in the solar engineering field.
The government is planning to keep rooftop solar target at 30,000 MW, of the cumulative solar power capacity target of 100,000 Mw planned to be achieved in five years, do you think this is achievable? What are the major hurdles in the growth of rooftop solar sector in the country?
This is ambitious. Such a target is difficult to be achieved in the present scenario. The Government has to step in and arrange one key thing-Purchase of the electricity generated by roof top power plants. If this is done, everyone will opt for solar power plant at their roof top. Also, another issue is that there is a lack of involvement and interest of common public in the solar segment, and the common man is not coming forward because of the cost involved in installing roof top solar power plants. People need to realize that the cost in initial. In the long term, the overall expenses are less.
What would you say about the alleged unregulated imports of solar equipment to India? How big a threat is this for the domestic solar industry?
As India has adopted the methodologies and functioning of free market in 1993 and as India is depending on a solar power for satisfying its energy needs, therefore, regulating the solar market in anyway will only slow down the speed of expansion and energy independence for India. The imported solar modules are much cheaper as compared to Indian solar modules and offer almost the same technology. To achieve grid parity and enhance solar production, the imports should not be regulated. Also, if Indian module manufacturer can match the price and economies of scale of imported supplier, then there won’t be any need for regulated imports. Such regulations would only hamper the Indian solar industry
The solar prices have seen a considerable drop in the Power Purchase Agreements. What would be the pros and cons of this on the overall renewable energy scenario in the country?
At present, the reasonable solar tariff with considerable returns is close to
` 5.10 per unit and above. The solar tariffs of ` 5 per unit and below would find it very difficult to get financial closure for these projects as the banks are very skeptical of funding power projects with low rate of returns. Even if they get foreign funding, the same will be subject to hedging and other costs which would increase their cost of funds. To maintain the margins and to justify the viability of the projects, there may or may not be some cost cutting in the execution of these projects which might have a direct impact on the long term sustainability of these solar power plants. Therefore, it is too soon to comment on such tariffs. We should wait and watch the execution and thereafter the operational working of these projects so as to provide a justification of these projects and their tariffs.
What are the green technology solutions offered by Rays Power Infra for roof top solar power plants?
We have come up with a very innovative solar solution wherein we want to commoditize solar energy which would enable it to reach the common man. We have introduced solar products which can be installed on residential, commercial and industrial rooftops without any hassle or major changes and can be directly plugged into the existing meters of the rooftop owner. The rooftop owner on the one hand is contributing in energy conservation whereas on the other hand is saving a lot in electricity bills by using solar power instead of electricity from discom. We will soon be launching our products on online portals by which any interested consumer can order this product online and will have an option of installing it themselves or they can contact us for installing the same. This concept will be a game changer in solar industry as it will connect the common man with the solar industry. At present, solar is considered as a rocket science by many in India but with this concept we will put solar in hands of common man.
Major projects of Rays Power Infra are in southern India, what are your plans for other parts of India?
This is not true as we have our plants, constructed/under construction all across India. Currently we are working on important projects in Arunachal Pradesh. We have our presence in Orissa, Uttaranchal, Punjab, UP, Rajasthan. We are sure to do project in Jammu and Kashmir too, in the near future.
What does order book look like for 2016-17? What are the major orders in the bag?
We will be doing close to 400 MW – 500 MW in this financial year with various international funds and utilities. Our main focus is on the EPC and IPP business.
Rays Power Infra has partnered with Hilliard Energy to jointly develop solar power, how is this partnership going to benefit Rays Power Infra in project execution and fund raising?
We signed a 150-MW project development term sheet with power producer Hilliard Energy, a company incorporated and registered under the laws of Mauritius. We will jointly develop 150 MW of solar power project with a total investment of USD 130 million. This partnership merges the fund-raising skills of Hilliard Energy with the execution capabilities of our company. We would like to achieve a target of 150 MW in the next 12 months.
What are the investment models offered by Rays Power Infra?
Rays Power Infra provides innovative business models with attractive returns to investors, HNIs, Entrepreneurs and large corporate houses with tax saving benefits and tax holidays. We also provide solutions to roof top owners in various cities and surrounding districts.
Rooftop Establishments:
a) Opex Model
Under this model, our investors invest and install the solar power plant on your location or a common location and would supply power to you at a price less than your current electricity prices.
b) Capex Model
Under this model, the end consumer can own the asset and claim Tax Saving benefit. This would also benefit the consumer as it offsets the huge electricity bill been paid by the consumer. The consumer gets hassle free electricity from the solar power plant for a tenure of 25 years and beyond resulting in high saving on electricity costs.
Large scale sommercial solar power plants:
a) In RPIPL solar parks
Third Party Power Sale: Under this model, we provide the prospective investors the Land, Evacuation Facilities, Government permissions and Power Purchase Agreements for installation of the solar power plants.
Government Tender: Under this model, we provide the entire infrastructure for the installation of the solar power plant in any state of India for the investors who have won Power Purchase Agreements with the Government.
b) Outside Rpipl Solar Parks
Third Party Power Sale: This model pertains to the investors who have their own land in any state of India wherein they are willing to install the solar power plant. We arrange a Pre-Feasibility study of the land and provide complete infrastructure including evacuation, engineering, procurement, construction and the arrangement of Third Party Power Purchase Agreements for the solar power plant.
Government Tender: Under this model, we do the EPC (Engineering, Procurement and Construction) along with the installation of Evacuation system and availing Government permissions for investors who have won the Power Purchase Agreement with the Government in any state of India.
Independent Power Producer:
Rays Power Infra has aggressive plans to be a Solar IPP with 120 MW+ capacity in next 3 years with an investment of nearly ` 8000 million under BOOT Model/Joint Bidding with other IPPs. We already have a running Project of 1 MW since December 2012 at Jaisalmer, Rajasthan. At a project cost of ` 140 Million and Govt. PPA of `15.32 per kWh. Its performance has given confidence to the management to expand in future. We have also invested in a roof top solar project of 250 KW on a university, which is paying at a rate of ` 6 per unit escalating every year. The group has also claimed MNRE subsidy of 30% through Rays Power Infra on this project.
What are the financing solutions available with Rays Power Infra for setting up solar projects?
Rays Power Infra has a separate financing wing which caters to the needs of arrangement of project based funds for solar power projects. At present, this department is catering to the internal funding of Rays Power Infra but we also act as an advisor to our clients for raising funds. The client can either raise the funds on their own or if they approach us, we can arrange the funds for them at a nominal consultancy charge.
