The recent policy developments in the Indian solar power space have opened up a plethora of opportunities and challenges for developers and manufacturers alike. At the recently organised Renewable Energy India Expo, Ashish Khanna, managing director and chief executive officer, Tata Power Solar, spoke to Renewable Watch about the company’s strategy to cope with the changing market dynamics, its key focus areas and the future plans. Excerpts…
What are Tata Power Solar’s key offerings in the solar segment?
Tata Power as a group is an integrated player in the energy segment with a typical “mind-to-meter” concept. In the renewable energy sector, we operate in both the solar and wind segments. The company has the distinction of being India’s oldest solar manufacturer, which was incorporated in 1989 as Tata BP Solar. Tata Power Solar was formed in 2012 after British Petroleum exited from its renewable business.
Tata Power Solar has an annual manufacturing capacity of 300 MW of solar cells and 400 MW of modules. We have engineering, procurement and construction (EPC) capabilities for large utility-scale projects as well as rooftop projects. Apart from this, we are present in the agricultural solar pump segment. Owing to capacity constraints, most of our solar modules are exported and not sold domestically. Meanwhile, Tata Power Renewables functions as a wind as well as a solar developer.
What is the size of the company’s current project portfolio?
The project development arm of Tata Power Solar has a total portfolio of 2.4 GW at present. In the utility-scale segment, we have an available pipeline of 1 GW of solar projects at any given time. As per Bridge to India’s estimates, we are among the largest rooftop players in the Indian solar market. We have carried out EPC works for the 12 MW project at the Radha Soami Satsang Beas Educational and Environmental Society, Punjab, the largest rooftop solar plant in India. We have also constructed the largest carport in the world at Kochi airport with a total installed capacity of 2.67 MW. Recently, we have commissioned an 865 kW plant at the Brabourne Stadium in Mumbai, the world’s largest rooftop solar plant installed at a cricket stadium.
What are your views on the current solar tariff levels?
Solar tariffs are determined by business models, which are based on certain assumptions relating to the capital cost, interest rate of debt finance and predictability of returns. In the past, the trend of falling module prices with declining tariffs has helped provide a certain predictability on project returns.
In 2017-18, a total of 98 GW of Chinese modules were installed across the globe, including 52 GW in China. However, this year the policies in China have changed somewhat, which will lead to surplus module capacities worldwide. This surplus will help developers, who have considered aggressive assumptions while determining tariffs, find better margins.
What is the likely impact of the newly imposed safeguard duty on Tata Power Solar as well as the overall solar segment?
The positive aspect of the government’s safeguard duty policy is that its implication is being considered as change of law, which makes it eligible for a pass-through option. However, this pass-through option has its own process and will come with its own set of issues. In the present conditions, financiers are not keen about lending an additional 25 per cent cost, which will go towards safeguard duties, unless there is a settlement from discoms. That said, it is more of a working capital issue and is not likely to result in losses for anyone.
The primary aim of this policy is to support the Indian solar manufacturing industry. We should not get fixated on the low tariffs as during the course of the 15 months that these projects will take to get commissioned, even the Chinese module prices and exchange rates will have changed.
What are some of the challenges in the development of rooftop solar?
Grid tariffs in India are inverted as compared to European countries. The residential tariffs are the lowest while commercial and industrial (C&I) tariffs are high. On the other hand, rooftop solar tariffs are much lower than grid-based power tariffs for C&I consumers, and make strong economic sense for them. However, at the same time, we need a scheme that makes rooftop solar profitable for discoms as well.
The key challenges are in the residential segment. Tata Power Solar is trying to make people aware of the possibilities that exist in this segment. Despite the break even point being hardly five years, more support is needed to convince residential customers.
What is Tata Power Solar’s rooftop campaign about?
Tata Power Solar is trying to create awareness about rooftop solar in the residential space by showcasing the savings achieved from such systems. The awareness campaign began in Delhi, moved to Mumbai and will now be covering other major cities like Ajmer and Pune. We are using radio for mass publicity and carrying out roadshows to make residential consumers aware about the various benefits of rooftop solar systems.
Tata Power Solar offers a bouquet of services for its residential consumers, including project financing. Most financiers consider rooftop solar financing as a part or extension of home loans. As there is a dearth of viable financing schemes for residential consumers, we have collaborated with Tata Capital to provide funding support for the entire rooftop solar solution.
Considering the highly competitive nature of the fragmented rooftop solar market, we leverage our experience of over 150 years to assure our customers of quality monitoring service. We have a network operations centre in Bengaluru to remotely monitor and keep up the quality of every project round the clock. Moreover, our mobile applications enable customers to monitor their project performance.
What is the company’s take on digitalisation in solar O&M?
Despite the availability of advanced technology, project execution in the solar segment in India is carried out in a primitive way. Once the 100 GW target is met, the country will have a $2 billion-$3 billion business opportunity in the operations and maintenance (O&M) segment.
At Tata Power Solar, we have employed drones to survey the rooftops. Apart from recording basic parameters like solar potential or rooftop contour, these also generate the required bill of materials. We undertake advanced remote monitoring activities for rooftop as well as ground-mounted solar assets. Tata Power Solar is keenly looking at the business opportunity in enhancing operational projects and the entire asset portfolios to get optimum benefits.
Tata Power Solar is in the process of developing a forecasting technique and a forecasting centre with a partner company. Renewable energy is infirm by nature, so very precise forecasting techniques are required for solar as well as wind. Given our large experience in the power sector, we have various such energy systems in place for thermal and renewable power assets. For preventive maintenance and forecasting, artificial intelligence and digitalisation is important. Technology evolution has reached a point where SCADA will be replaced with automated remote monitoring at the inverter and string level.
Is Tata Power Solar looking at any other emerging technologies?
We are exploring energy storage systems on a small scale as the cost is still high. We believe that greater economic feasibility can be achieved through the integration of solar-wind hybrid plants with gas-based systems or pumped storage. Since Tata Power has its own hydropower plants, it is economically viable for us to use pumped storage. We are also looking forward to participating in the upcoming solar-wind hybrid auctions.
What is the company’s future growth strategy?
We are working towards Tata Power’s goal of achieving triple or quadruple growth in the renewable energy segment over the next three years, as was announced by the managing director a few weeks ago. As a group, we have in-house manufacturing, EPC and project development capabilities with high lending capacity, putting us at an advantage in the highly competitive industry. We at Tata Power Solar feel that despite some minor roadblocks that are the obvious outcomes of any industry of such a size and scale, renewable energy is here to stay. Meanwhile, we should refrain from glorifying these issues and think at the macro level instead in order to realise the optimum benefit from these sources for the country. We believe that thermal and renewable energy sources should coexist and not compete while our resources should be invested in the right technologies.