Larsen & Toubro: Strongly positioned to be a technology front runner and EPC player in the renewables space

Strongly positioned to be a technology front runner and EPC player in the renewables space

Larsen & Toubro (L&T) is a $21 billion Indian technology, engineering, construction and manufacturing conglomerate, operating in over 30 countries worldwide. Among the top 15 global contractors, L&T Construction, the construction arm of L&T, is a construction organisation, offering engineering, procurement and construction (EPC) solutions with single-source responsibility to execute large industrial and infrastructure projects, from concept to commissioning.

L&T Construction’s renewables business is a leading player in the solar segment, with proven EPC capabilities to indigenously design and execute solar photovoltaic (PV) systems, balance of systems and power evacuation systems. It operates in the grid-connected PV, hybrid power, battery energy storage and large microgrid segments.

The company’s track record includes some of the largest solar plants in the country, and over a decade of experience in the solar segment. L&T’s solar EPC portfolio in India, comprising projects both under execution and commissioned, totals over 3.2 GWp. L&T’s renewables business offers economically viable technical solutions for independent and flexible solar power projects with high bankability. Geographically, the business is being operated from three offices, covering the major markets of India, the Middle East, Africa, the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation.

Current operations

L&T’s renewables business includes project offerings in the utility-scale solar, hybrid power, battery energy storage and large microgrid segments, alongside battery energy storage container solutions, L&T Mobisol, L&T Tracker, and operations and maintenance services. Apart from established processes and procedures for proactive and reactive (breakdown) maintenance, it offers round-the-clock site surveillance support for very large solar farms. Smooth functioning is ensured using a remote monitoring system at L&T’s headquarters in Chennai, real-time plant technician support, and a well-networked communication channel.

L&T’s containerised solution for battery energy storage systems (BESS) is an all-in-one design that includes power electronics, control systems and advanced battery technologies. With its flexible and scalable design, this storage solution ranges from kW to MW scale. It is specifically designed for a plug-and-play model to reduce installation time. L&T’s newly constructed BESS integration facility is located at Kanchipuram, near Chennai. Various tests are also carried out on integrated containers by replicating site conditions, to ensure smooth operation at sites.

Among L&T’s many achievements since 2010 is the construction of one of Asia’s largest solar thermal plants, a 125 MWe plant in Rajasthan, as well as one of India’s largest rooftop projects, a 7.52 MWp plant in Punjab. Showcasing its speed, L&T completed a 6 MWp solar project in Gujarat’s Charanka Solar Park in just 80 days. The company has also executed one of India’s largest floating solar projects, as well as the country’s first large-scale solar PV-cum-battery energy storage project.

Currently, L&T is executing two large-scale projects for NTPC Limited: a 345 MWp ground-mounted solar PV project in Tamil Nadu and a 28 MWp floating solar PV project in Uttar Pradesh. In addition, L&T is executing three solar power projects with a cumulative capacity of about 100 MWp for Gujarat State Electricity Corporation Limited. On the international front, the company is executing a BESS project in Thailand. While the company’s project pipeline in India consists of about 1-1.5 GW of capacity, it has also made some significant breakthroughs in the Middle East, with over 1 GW of projects.

Digital initiatives

Launched in March 2019, the company’s technology platform, L&T NxT, leverages the group’s deep industry domain expertise, information technology capabilities and learnings from the digital transformation of its diverse businesses to deliver disruptive digital outcomes for its global customers. Some of the digital initiatives that it has taken in solar EPC projects are geospatial topology surveys, worker availability, machine and material tracking, project progress monitoring, and vision analytics-enabled quality control. These initiatives aim to optimise the productivity of resources, and avoid project delays and cost overruns. The company has taken several digital initiatives under L&T Nxt to maximise yield and reduce unplanned downtime in order to reduce operating costs and risks in solar plant O&M, such as online condition monitoring and predictive maintenance of critical plant assets, optimised spares stocking, optimised worker availability and yield maximisation, and remote monitoring of renewable assets.

Plans and targets

The company is going green and global by expanding its international footprint in the renewables business across the Middle East, Africa and ASEAN regions, with its key areas of operation being large-scale solar EPC projects, battery energy storage projects and floatovoltaics.

With its engineering know-how, technologies such as bifacial modules on trackers, and massive mechanised and digitalised construction resources, L&T is well placed to give customers an edge, with total solutions for large, 1-2 GW scale EPC tenders that will lower tariffs for power consumers. Further, the company is constantly innovating through bifacial and horizontal single-axis tracker test beds, containerised BESS pilots, mobile solar power container (mobisol) pilots, and multiple in-campus microgrids and rooftop test beds for various module technologies and mounting structure designs. L&T has deep-dived into the renewable hydrogen energy segment as well, aiming to become a major EPC solution provider for green hydrogen projects for the domestic and international markets.

Key challenges and outlook

Two of the key challenges faced by solar players in India are rising module prices due to a shortage of solar glass, and logistical issues. Challenges also lie in sourcing solar modules. With the introduction of Basic customs duty on modules, overall project costs will further increase, irrespective of sourcing locally or internationally. With the safe-guard duty on modules set to expire on July 29, 2021, there is still no clarity on applicable duties from July 30, 2021 to March 31, 2022. Overall, fluctuating module prices and the volatility of currency exchange rates are causes of concern for EPC players as they impact project costs. With solar power tariffs going below Rs 2 per unit, EPC margins have been affected, while the fluctuating prices of imported modules create further issues. Obstacles in tariff adoption and delays in the signing of PPAs are resulting in the annulment of many awarded tenders. These impact the business of EPC players as well.

However, with the entry of several foreign developers and investors in the market, a greater emphasis is being laid on construction quality and bankable EPC partners. Developers are looking at the least cost of energy of a plant in order to achieve lower tariffs, rather than just the project cost. Further, the demand for capable and competitive third-party EPC players in the market is increasing. In this scenario, L&T is strongly positioned to be a technology front runner and a premier EPC player in the renewables space.