SunSource Energy

Growing footprint in India and Southeast Asia

By Dolly Khattar and Sarthak Takyar

After having worked in the US solar energy industry for over a decade, two solar engineers, Adarsh Das and Kushagra Nandan, returned to India to start their own venture. They set up SunSource Energy to primarily focus on the solar power requirements of commercial and industrial (C&I) consumers. “The Jawaharlal Nehru National Solar Mission and the increasing use of solar power on a commercial scale encouraged us to fulfil our dream of coming back and starting a venture,” says Das. Headquartered in Noida, SunSource Energy develops, engineers, procures, constructs and operates solar power projects.

The company was established in 2010, and has since grown to become one of the key players in the Indian solar power segment. In a short span of time, SunSource Energy has grown from a two-man army into a 200-employee company.  It has expanded its operations to several countries including the US, Singapore, Thailand and the Philippines, and has a geographical presence in over 25 states in India. SunSource has a portfolio of 300 MW, of which 60-70 MW is set up outside India. Its clientele includes Yakult, Jubilant FoodWorks, Jamia Millia Islamia, Indian Oil Corporation and Thomson Press. The company also operates in the engineering, procurement and construction space. It plans to own a cumulative capacity of 200 MW by the end of this fiscal.

Recently, the company ventured into the open access solar space by winning a 70 MW project in Uttar Pradesh. It is expected to be one of the largest open access-based solar projects in the state and was allocated under the UPERC Captive and Renewable Energy Generating Projects Regulations, 2014.

To keep up with its expansion plans, in February 2018, the company raised money from Neev Fund, which is a joint venture between the State Bank of India and the UK’s Department for International Development. “As we are in the business of asset ownership, we need to continuously raise funds,” says Das.

Further, with consolidation growing in both the utility-scale and commercial-industrial-scale segments, SunSource is exploring  “opportunities for joint investments. We are also considering the acquisition of a few assets in the coming year”, adds Nandan.

The experience so far

SunSource has come a long way over the years, not just in terms of achieving scale but also in terms of applying its experience to improvise operations and venture into new segments.

Initially, the company set up projects in the 100 kW range (which was the limit specified under the 30 per cent subsidy scheme of the government). “In 2013, we installed a 100 kW project equipped with a 300 kWh battery storage system for a resort-cum-residential complex. The project has been operational for six years now and uses solar plus battery storage for 280 to 300 days in a year,” says Nandan. The learnings from this hybrid project helped the company in winning large solar plus battery storage projects. It recently won one of India’s largest solar projects with storage in Leh that will supply clean and stable power to the Military Engineer Services, a defence infrastructure development agency in India. It is executing two other solar storage-based projects in Jammu & Kashmir and Himachal Pradesh.

Given the distributed nature of its assets, one of the options available to the company is to outsource the operations and maintenance (O&M) of its projects but it prefers to undertake this in-house not only for its own projects but also for the ones that are co-developed. Both Das and Nandan have extensively worked towards advancing the company’s O&M division over the years. They have moved to a portal-based real-time monitoring model, in order to centralise the control of its disbursed assets.

“The advancements in software technologies and remote monitoring have made the O&M of the hardware much easier. We are also evaluating robotic cleaning for our rooftop solar projects. However, robotic cleaning makes economic sense for larger projects,” says Das.

The company follows a cluster-based approach and operates around eight clusters in India that operate at a significant scale. With these clusters, the company is able to reduce the O&M costs and achieve economies of scale.

With years of experience in the O&M business, the company has now started to figure out the right balance of clusters to save costs, the right local support and the data analytics team.

Both Das and Nandan believe that a number of regulatory developments and technology advancements have helped them improve O&M over the years. “Post goods and services tax, truck movement has become very smooth, making the logistics much easier, especially in the rooftop solar segment where a limited amounts of material has to be moved,” says Nandan. “Many more states are adopting a net metering today with industry stakeholders gradually understanding the concept. With time, implementation issues will also get resolved. Moreover, both time and money is saved with the provision of online application for net metering.”

Back in 2010, when the company started operations, the largest solar panel size available was 200 Wp. These days even the smallest solar panel size is in the range of 320 Wp-330 Wp. Now, modules of 400 Wp are also available and new technologies such as bifacial modules have entered the market. While talking about the technology trends, Das adds, “If you stick with Tier 1 vendors, the panels will remain the most stable part of the system. Inverters have gone through a major change as well. Earlier, 20 kW inverters were available and today 100 kW string inverters have entered the market,” he adds. The company sources solar modules from REC, Trina Solar, Canadian Solar, Adani and Vikram Solar.

Challenges and the way forward

While SunSource has developed a strong credibility to be affected by competition in the solar segment, the market has seen the entry of many players lacking in core capabilities and creating unhealthy price competition. SunSource deals with this issue by restricting its services to only creditworthy clients looking for long-term quality power supply.

However, in RESCO mode, there is always a challenge of credit review assessment. Moreover, Tier I C&I clientele will soon start getting exhausted. To tackle this challenge, SunSource Energy is working on a portal, which will collect GST data to analyse the creditworthiness of C&I consumers. “Post the implementation of GST, industry players have become cautious of default rates as these impact their credit rating. With the Indian economy becoming more formalised, one can look at the GST returns and check whether clients have been paying taxes on time or if they have been profitable,” says Nandan.

Another key challenge that the company has to tackle is the resistance from discoms, which are losing out on their high-end customers to players like SunSource.

Das believes that this trend is set to change as pure economics is driving the market now. He adds, “Private discoms in Delhi and Mumbai have learned from global trends. One, consumers want to become prosumers and de-risk themselves from the utility. Two, there is a growing awareness to fight pollution. And three, private discoms can be paid handsomely by meeting the needs of the clients.”

Frequent changes in regulations also pose a key risk for the company besides the challenges pertaining to delayed payments and counter-party risks. Take for example Uttar Pradesh, which recently introduced its net metering regulations but withdrew the same within a week. The regulations, which were drafted in 2018, encouraged many players including SunSource to draw up expansion plans in the state; however, all these stand stalled for now.

Open access regulations too are uncertain. Nandan, however, is hopeful that eventually the market is going to open up and SunSource needs to make sure that it is in the right states at the right time. “We are ready for open access now and have found a good location in Uttar Pradesh. We are looking for opportunities in other states as well. The key to success is to be nimble and have a long-term approach.”

To sum up, SunSource’s approach to transform into a distributed energy company that provides solar, storage and energy management services seems to be rightly placed in a segment that is beginning to witness a convergence of all these services.

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