In conversation with INFRASTRUCTURE TODAY, Hitesh Doshi, Chairman and Managing Director, Waaree Group, expresses optimism regarding the prospects of the renewable energy sector, particularly solar energy.
Have government initiatives escalated the growth of the RE sector?
Yes, revising the target of renewable energy to 175 GW by 2022 has elicited a lot of interest in the global market. Initiatives like RE Invest 2015 has been a tremendous success, considering the commitments made by corporates and banks to achieve the RE targets. International solar companies are now tying up with Indian players to enter the Indian market. Lot of projects are seeing the light of day, and we have seen projects more than 1 GW already commissioned this year. Softbank and Foxconn are considering investing $20 billion in India. Sun Edison reportedly has investment plans of $15 billion by 2022. Rosneft is interested in investing for 10 GW of solar projects.
The RE Invest summit earlier this year saw huge amounts being pledged towards the development of solar in India. How many of these do you think will be realised?
If I recall correctly, for solar projects the commitment was of 160 GW, whereas the JNNSM target is of 100 GW by 2022. So, I think we will be able to achieve the target even if two-thirds of the commitments get realised.
What is a realistic target of projects for 2022, as opposed to the government´s RE target of 176 GW?
I would restrict myself to solar projects here. I think most of the utility scale projects which are about 60 GW will be fundable. The financing options for rooftop market is still evolving in India. Net metering as a concept has not caught on with the masses yet, so we will have to wait and watch how it grows.
To what extent has the ´Make in India´ campaign impacted the growth of the sector?
´Make in India´ is one the most successful campaigns undertaken by our government in the recent times. This campaign about making India a production hub for the world has elicited a lot of interest and to that end, the government has made it easy to do business here. It has got a lot of visibility to brand India. Major foreign players have shown interest in setting up manufacturing units in India. Also, the domestic manufacturers have increased the capacity in line with the theme.
What financial options are available for funding of RE projects in India?
The main line of finance available is debt finance from banks. Then, there are also institutions like World Bank and KfW who are interested in funding RE projects in India. RE projects are included on the priority list for lending as per the new RBI directives.
Although banks pledged support to RE projects during the RE Invest summit, how many of the current crop of projects are actually ´bankable´?
If the recent bidding is considered, then all the projects are bankable. The bidders have ensured a decent margin on the PPA´s which have been signed. I am sure all these projects will be financed by the banks.
What is the growth the renewable energy sector registered in the last two years?
Last two years have been good for the renewable energy sector- specifically for the solar sector, where we have seen some positive developments. There have been on ground execution of projects and also announcements of new projects across the country. MNRE has revised its target to 175 GW by 2022. The total solar installation in the last financial year was a little shy of 1000 MW. This year we have already crossed 1000 MW and we have two more quarters to go. As you may have noticed, various bodies at central and state levels have announced tenders for more than 6 GW. This is indeed a great step in ensuring the growth of RE.
Which policies in particular have made a significant contribution? How well do you think they continue to be implemented?
We cannot single out a particular policy which has made a significant contribution. All policies, be it bid-based tariff route, bid-based viability gap funding and domestic content requirement have given good results, considering most of the projects allocated have completed in time and the remaining projects also appear to be on track. These policies have also retained the interest of the developers, which is apparent by the response for recent bids in Telangana, MP, Tamil Nadu, etc.
The government has ambitious plans of installing 1,00,000 MW of solar energy by 2022. Do you think this target is achievable?
The foremost challenge is finding contiguous parcel of land for huge projects. There is ambiguity in land ownership records in India. Second on the list will be transmission and power evacuation infrastructure; the coverage of transmission infrastructure is limited which is a hurdle in last mile connectivity. The third challenge is the bankability of the off takers. India has one of the highest AT&C losses in the world which affects the financial health of the off takers. Financially solvent off takers are a crucial element to the success of the Indian solar story. The fourth challenge is the net metering policy which is still evolving across the country. Rooftop projects will account for 40 per cent of the total solar installation target, so absence of a clear net metering policy is a hurdle as of now.
How do you see the future of renewable energy in India?
I can talk about the solar sector. In the next four years, India will be among the top three countries in terms of annual installations globally, and we will also be able to keep up with the government´s target.