Rajat Seksaria, Vice President & Business Head, Punj Lloyd Infrastructure, talks about the company´s plans and competitive advantages in solar.
Tell us a little about Punj Lloyd.
Punj Lloyd Infrastructure Limited (PLIL) is a wholly owned subsidiary of Punj Lloyd which was incorporated as a project development company focussing on public private partnership (PPP) projects in transportation, energy and urban infrastructure. Since 2010, the company has grown significantly and presently has assets (commissioned and under development) of about $400 million. I am proud that each of our projects was commissioned ahead of time; a rare feat in the infrastructure industry. In fact, as recognition of our delivery capability, its road project Khagaria Purnea road project in Bihar received an early completion bonus from NHAI. The present focus of PLIL is in developing solar power projects.
Increased concern on climate and environmental changes, rapid technological developments in available solar technology and proactive government and regulatory environment provide a good backdrop for focusing on this segment. As an infrastructure development company and with a clear focus on quality and delivery, we want to be partners in the solar power revolution in India.
Our first solar development project was an outcome of the Jawaharlal Nehru National Solar Mission launched in 2010 - the 5MW solar power plant in Rajasthan with a PPA of 25 years with NTPC Vidyut Nigam Limited. The project was financed by US Exim Bank and has been successfully running since January 2012. Today, PLIL has a portfolio of six solar projects (commissioned and under development) of about 83 Mw in size and about $90 mln in asset value in three different states. Each of those entities with whom we have an agreement are highly rated, making for a high quality portfolio for us.
Are you looking at opportunities in rooftop and solar parks? What projects are you bidding for?
Solar power development in India has evolved into four clear segments; rooftop projects which are typically sub mw size; second - sub 5 Mw, typically undertaken by rich farmers, small enterprises and/or high net worth individuals; third - 10 to 40 Mw which are usually on offer by various state governments; and fourth - large 50 Mw + single site projects usually within a solar park and under the aegis of central government agencies like NVVN and SECI.
Our focus would be in the third category of projects, sized between 10 to 40 Mw, as we believe we have developed strong project delivery capabilities in this segment which requires working collaboratively with various stakeholders like small contractors, local farmer/land owners, local communities, state government, state utilities, etc.
We have executed many rooftop projects. In January 2015, a 200 kWp SPV Grid interactive multi-rooftop, single point integration power plant, designed and commissioned by Punj Lloyd, was inaugurated by Chandigarh Renewable Energy Science and Technology Promotional Society (CREST) at the Indian Reserve Battalion (IRB) Complex in Chandigarh, taking Punj Lloyd´s cumulative installed solar energy capacity in rooftops to over 1.2 MWp in Chandigarh.
Punj Lloyd had earlier completed a 495 kWp and a 435 kWp SPV grid interactive multi-rooftop single point integration power plants in the government colleges of girls and boys, respectively.
Chandigarh was identified as the model solar city by the Ministry of New and Renewable Energy (MNRE) in its Solar City Programme. CREST is the nodal agency for executing solar projects in Chandigarh.
Besides contributing to the Ministry´s mission of creating solar cities, these rooftop projects will be instrumental in reaching the government´s target of 100GW by 2022.
Are you bringing in equity into the company? How do you plan to go about it?
We are in the process of creating a separate platform for our solar development business where we will be transferring our existing projects in a phased manner. We are in discussion with a few PE and strategic investors for investment in this solar platform to grow the asset portfolio to about 1000 MW in the next three to four years.
What are the factors that you believe set you apart from others?
There is intense competition between players for developing solar power projects. The size of the opportunity offers space for several players in this market. We will have developers with different skill sets thriving in various segments of the market. For example, someone with strong financial muscle and ability to bring in cheap finance would have advantage in the solar parks segment. PLIL, which has strong expertise in collaboratively working with local stakeholders in delivering projects, is well placed to succeed in the distributed mid-size segment of 10 to 40 MW projects. We have a very hands-on approach in project development where we are focused heavily on plant design, new project delivery methods and process improvements.
For instance, we have graduated technologically from fixed tilt of modules to seasonal tilt and now single axis trackers. Similarly, we were among the first players to implement projects on ramming method instead of the traditional pilling method. This helped us in significant reduction of project delivery time while preserving the nature of the land.
In India, land is the most critical part of developing projects. Unlike other players, we have a very strong land aggregation team which works very closely with the project teams to ensure seamless delivery of projects. Punj Lloyd was one of the pioneers in adopting an innovative concept of taking semi-fertile land on lease from local farmers with annually escalating rentals, providing a stable and growing source of income for the local farmers without losing the ownership of their land. While on one side, this guaranteed an escalation of 5 per cent every year to the farmers, this put the less fertile land available in the state for the best alternative utilisation, resulting in a win-win situation for the local farmers, developers and the state Government to achieve their respective goals.
Similarly, we keep improvising on various aspects of project delivery to create maximum value.
What are the development/project opportunities that you see in India today?
There is a strong pipeline of upcoming opportunities in the solar power space. There is a good mix of projects on offer under the aegis of central and state government agencies. While the headlines have been grabbed by large single location solar- park based projects, we find several medium sized projects by various state governments, of interest. Typically, state government solar programmes require projects to develop in various districts which results in optimised use of existing T&D infrastructure and preserves the original distributed nature of solar power development.
Nowadays, companies are winning bids based on very low prices. How do you see this trend playing out?
With the ambitious targets set by the government, a plethora of companies are venturing into solar in expectation of good margins. As I said earlier, this is a technology cum quality game and if you have not done your homework, the amount of actual energy generated from your solar power plant may not be as profitable as it should, owing to various internal and external factors. Hence I am certain that this initial euphoria of awarding/winning projects on abysmally low prices will not last if quality and good output are to be maintained. I am certain that only a few chosen players will be able to sustain in the long run while providing quality, timely delivery and cost efficiency.
Obviously, there is a vast new market for solar technology and devices that will be created in the coming years in India. However, will we continue to depend on cheap imports from China?
Indian market is very quick to adapt. Every day we see a new breed of start-ups or entrepreneurs emerging who will provide tough competition to our Chinese counterparts while retaining quality and efficiency of the product. Presently, solar modules are imported and assembled in India. The need of the hour is for manufacture of solar cells and assembly of the modules in India to reduce capital cost. The government´s impetus on SEZ (solar energy zones) will also help.