Interview with Vipul Tuli

“Addressing challenges will require a new kind of thinking”

Sembcorp Energy India Limited (SEIL) is one of the leading independent power producers (IPPs) in India with a generation capacity of 4.37 GW, comprising thermal, wind and solar assets. Of the total generation capacity, thermal assets account for 2,640 MW while renewable assets account for the balance 1,700 MW. In an interview with Renewable Watch, Vipul Tuli, managing director, Sembcorp Energy India Limited, spoke about the current state of the Indian renewable energy sector, the key highlights of 2019, and the key policy and regulatory issues that need to be addressed. Excerpts….

What are your views on the current state of India’s renewable energy sector? What are the key challenges and what is the way forward?

Pursuing its long-term target of 450 GW, the Indian renewable energy sector continues to remain one of the world’s largest, fastest growing and most competitive markets on a price parity basis.

Among IPPs, Sembcorp led the way in the country’s clean energy roadmap, by bringing 607 MW of wind power capacity on stream as against the 800 MW won in the SECI auctions to date, while the rest is at advanced stages of completion. So far, this is the highest capacity commissioned by any IPP under the SECI wind auctions.

The renewable energy sector has witnessed rapid growth in the past decade contributing to 8-9 per cent of India’s energy mix. However, as it moves towards contributing 15-20 per cent of the country’s energy demand in the next 10 years, the renewables industry will have to tackle a fundamentally different set of challenges.

The signs of some of these challenges are already visible and addressing them will require a new kind of thinking among policymakers as well as the industry. It will also require enabling regulations and practices that will support this new direction.

  • As renewables begin to contribute over 10 per cent to the national energy mix, the true cost of renewables and their intermittency will be increasingly difficult to socialise across the industry value chain, which includes using thermal plants as standby, providing free access to transmission and even the kind of wheeling and banking that will be required.
  • Further, ensuring the sanctity of contracts will be important for long-term local and global investors given the implied sovereign risks that undermine global investor confidence.
  • We need an effective process to agree on how the benefits of new energy investments will be shared with the host states. Technologies are changing and so is the nature of their benefits. For instance, coal mining royalties are giving way to solar radiation, wind and transmission access. But these agreements need to be made clear before the projects are contracted, not post facto.
  • Ensuring that the industry has access to capital from domestic and global investors will be vital to maintain the necessary liquidity in this bright new sector.
  • Policymakers and the industry will have to work together to keep the Make in India story in the wind segment alive, and at the same time try to replicate it in solar.

How has Sembcorp India’s journey been in the renewable energy business during 2019?

As a leading IPP in the country delivering clean, affordable and sustainable energy, our efforts towards building an integrated entity with a balanced energy portfolio led to encouraging accomplishments in 2019.

Building on our distinct achievements of three consecutive wins in the first three rounds of SECI wind auctions and of being the first to complete a SECI wind power project ahead of schedule, we set another industry leading example this year by increasing our generation from SECI wind power projects to 607 MW.

As a utility company with global operations, we have maintained a strong focus on extracting maximum productivity from our assets through best practices in technical operations, commercial rigour and innovations in digital and analytic platforms.

Riding the market shift towards renewables and encouraged by the policy push in the clean energy space, our operational capacity of SECI projects showcases our steadily growing renewable portfolio, which is a result of our focus on:

  • A structured approach to capacity expansion and timely project delivery by capitalising on group synergies and strengths
  • Agility in terms of new bids and investments while remaining disciplined and diversifying risks
  • Sustainable profitability and returns

Another notable accomplishment was the successful financial closure of balance SECI projects in an otherwise challenging market condition. In 2018-19, we raised listed bonds worth Rs 10 billion at an attractive interest, for a tenure of five years. We achieved these milestones during the year through a combination of operational excellence, financial prudence and technological superiority and we continue to focus on them.

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