Interview with Manoj K. Upadhyay

“Solar storage will be the next big market opportunity”

Manoj Kumar Upadhyay, founder and chairman, ACME Group

ACME is one of the leading solar power generators in the country with a cumulative project portfolio of over 5.5 GWp and an operational capacity of over 2.1 GWp. In an interview with Renewable Watch, Manoj Kumar Upadhyay, founder and chairman, ACME Group, spoke about the viability of current solar tariffs and the most promising technologies in the renewable energy space going forward. Excerpts….

What are the three biggest challenges and risks before the solar power segment in India?

With an ambitious goal of 175 GW of renewable capacity by 2022, the government is promoting all renewable segments. Among all renewable energy sources, solar is leading because of its versatility, efficiency and scalability. However, its scalability is determined by the continued reduction in tariffs, which must be closer to Rs 2.50 per kWh for it to displace the variable cost of thermal power. Tariff is dependent on the price of solar panels, the Global Horizontal Irradiation (GHI), interest rate, and taxes and duties. Solar panel costs are coming down and this trend is likely to continue. GHI is natural to a locality and is a given condition for that place. High interest rates with unfavourable lending conditions by public sector financial institutions and frequent changes in tax and duty structures are the key challenges faced by the solar segment. In our view, a solar power tariff of Rs 2.44 per unit is viable. But safeguard duties will increase this tariff. Higher tariffs make solar unattractive and is expected to negatively impact demand. Another impediment is the way load is managed. Currently, the load is managed by the state load despatch centres. It is high time we move from regional load management to the national level and follow merit order despatch. Transmission capacity constraints of inter-state transmission systems located in high-GHI areas is yet another issue. The tendering agency has to act as a facilitator rather than a penalty-imposing body. Frequent policy changes, banks’ reluctance to provide finance, and lack of clarity on land are other concerns.

What steps can be taken to resolve the issues?

Transmission capacity, particularly in high-GHI solar zones, needs to be expeditiously set up. Developers have indicated their willingness to contribute to transmission infrastructure construction on a per-MW basis. They have a currency risk or hedge the same while quoting the tariff. The need for utmost clarity on tenders cannot be over-emphasised.

What have been the most noteworthy developments in the renewable energy space in 2018?

The release of tenders with a large capacity has been the biggest development. But the most promising development has been the rapid fall in solar panel prices globally, with a marked improvement in efficiency. This has brought down solar tariffs.

What new opportunities do you foresee in the renewable energy space in India?

After lead acid, lithium batteries are the new storage technology, which is slated to grow rapidly in the coming years. Currently, these are being deployed for applications such as home lighting, microgrids/minigrids and some electric vehicles (two/three wheelers only). However, mass uptake is yet to be achieved. There are three main components in lithium batteries: lithium cells, BMS and balance of plant. Lithium cells are not manufactured in India as the current volumes do not justify the investment. Many companies have developed their BMS and are making battery packs with imported cells. Bharat Heavy Electricals Limited is reportedly planning to set up a lithium cell manufacturing line using ISRO’s technology. It is a good initiative.

Solar energy storage systems (ESS) are going to be the next big market opportunity. Current ESS costs are high. It can, therefore, be economically used only for improving the quality of power, such as for frequency regulation and peak load shifting, and not for supplying power during non-solar hours. That said, Bloomberg New Energy Finance has forecasted a rapid decline in lithium battery costs. By 2025, it is expected to decrease to $73 per kWh from $250 today. In parallel, solar tariffs are likely to drop to below Rs 2 per kWh. At $73 per kWh as battery cost and Rs 2 per kWh as solar tariff, the resultant tariff could become attractive. Low tariffs will create a big market for ESS. We see this happening within the next six years. After being used in electric vehicles, the lithium batteries can be used for storage applications and power supply. The cost of such power would reduce further as the battery costs would have been recovered.



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