With the rapid transformation of the renewable energy landscape from vanilla utility-scale solar projects to round-the-clock (RTC) power supply and a growing C&I market, even the established developers are forced to be nimble in adapting to the ever-changing scenario.

Hero Future Energies (HFE) is one such developer attempting to transition to a renewable energy company with all the offerings in its bouquet. Srivatsan Iyer, Global CEO of HFE, spoke to Mercom about the company’s plan for battery energy storage and green hydrogen production. Iyer also spoke about the recent policy changes and their impact on the industry while offering solutions to some of the problems hindering renewable growth in the country.

What is HFE’s focus right now? Has your business plan and priorities shifted?

 HFE has an operational capacity of ~1.6 GW across India and the EU, with 70% solar photovoltaic and 30% wind projects.

The recent addition of KKR as a strategic partner and the company’s strong pipeline of 4 GW of shovel-ready projects in multiple countries sets the stage for an ambitious growth trajectory. HFE aims to expand its portfolio to over 5 GW of operational capacity within five years.

HFE’s growth strategy involves offering end-to-end energy solutions in the C&I space, becoming its customers’ integrated energy solutions partner, and providing advanced round-the-clock (RTC) and firm power solutions with integrated battery-enabled storage solutions.

Additionally, the company is looking to establish itself as a go-to partner for green hydrogen energy and mobility solutions.

HFE plans to develop more advanced hybrid, RTC, and peak power projects in India.

Our vision is to become a leading RE transition partner with a diversified portfolio of projects and innovative solutions to help our customers achieve their sustainability goals.

HFE is traditionally a utility-scale developer. So, what prompted the company to foray into the commercial and industrial (C&I) market?

HFE recognizes the significance of the C&I sector in India’s decarbonization efforts. While C&I projects currently account for around 10-15% of HFE’s portfolio, the company collaborates with some of the largest C&I players in India and other countries to help them achieve their net zero emissions goals.

The C&I segment’s growth depends on developing clear national guidelines regarding captive/group captive projects, which HFE believes is critical to sustaining the growth the sector has seen over the past few years.

What differentiates HFE in the C&I market from the established developers?

We pride ourselves on offering complete solutions under one roof, including onsite and offsite options, solar and wind solutions, and Capex or Opex models.

Our extensive participation in the C&I and utility segments enables us to leverage our vendor ecosystem to provide the best value to our customers.

Our robust project development process helps us manage multiple cycles of land, connectivity, customer acquisition, construction, commissioning, and O&M. This ensures that we deliver projects within budget, on time, and to our clients’ satisfaction.

Additionally, we are engaged in the GH2/GNH3 space with all the necessary tie-ups to access the latest technology and execution expertise. This positions us well to provide our clients with a complete range of solutions, including green hydrogen and mobility solutions.

Tell us about your plans in the green hydrogen space. Is this a natural progression for a developer? What are your goals for green hydrogen, given that India doesn’t have indigenous electrolyzer technology?

As part of our vision to become the industry’s leading energy transition partner, HFE has made significant strides in our ambition to be a leading provider of green hydrogen and its derivatives. We have partnered with global leaders across the entire hydrogen value chain to achieve this.

One of our key partnerships is with Ohmium International, a U.S.-headquartered, Bengaluru-based electrolyzer manufacturer specializing in designing, developing, and integrating state-of-the-art PEM hydrogen electrolyzers.

Founded by electrochemical industry veterans, Ohmium brings extensive experience from the fuel cell and power electronics industries, making them an ideal partner for our green hydrogen initiatives.

Together, we plan to install 1 GW of green hydrogen production sites in India, the UK, and Europe, providing scalable, flexible, and cost-effective solutions for our C&I clients. Additionally, we are actively working towards deploying green hydrogen solutions at the utility-scale, helping to drive the decarbonization efforts of the energy sector.

Can you elaborate on your battery energy storage market plans?

HFE is setting its sights on becoming a key player in the energy storage market, recognizing the critical role storage plays in addressing the variable cost due to increased renewable energy penetration in the grid. With the recent win of the first KSEBL tender, HFE is about to commence work on a 10 MW utility-scale battery energy storage system (BESS) project, which will serve as a model for future projects in the storage domain.

As India strives to achieve 500 GW of renewable energy capacity by 2030, HFE understands that storage will be integral to achieving this goal. By enabling DISCOMs to manage their peak demand, reduce demand-side management (DSM), and augment the share of renewables in the energy mix, HFE is poised to be a critical player in India’s energy transition.

What is your view on the ALMM postponement for a year? Does the suspension make life easier for developers? Would the domestic manufacturers be ready once ALMM returns next year?

The relaxation of ALMM is a welcome move that could provide a fresh lease of life to several stalled or postponed solar power projects. Implementing BCD and ALMM amidst a global supply chain crisis has impacted almost all ~50GW projects under execution today, leading to cost escalations and schedule delays.

While the ALMM suspension for one year is helpful, a longer deferral would have had a greater impact, considering the realistic commissioning time for larger-sized RE projects. It would also be beneficial if the ALMM exception applied to modules imported before the expiry date rather than requiring commissioning before it expires.

While a competitive domestic supply chain is critical for sustained long-term growth, the present domestic manufacturing capacity of solar modules falls far short of what is required to feed the pipeline of projects.

Therefore, if not urgently addressed, the short-term disruptions could have cascading effects on achieving the annual capacity addition of >30 GW required to meet the goal of 280 GW of solar capacity by 2030.

As a result, the government of India must find a reasonable path forward, including deferment of ALMM, to meet the ambitious RE targets and sustain the momentum India has gained in the last few years of RE deployment until domestic manufacturing capacity under the manufacturing-linked tender and PLI schemes becomes operational, and the output is comparable in price and quality to internationally available modules.

What are the current constraints for future growth? What reforms would you want from the government in the renewable sector to ensure uninterrupted growth?

One of the major challenges is the implementation of the 40% Basic Customs Duty on modules and 25% on cells, which has caused an increase in module prices to historic highs. While there has been some relief through the recent deferment, more sustainable avenues to closing this supply gap must be implemented.

Another area for improvement is the financial health of DISCOMs, leading to payment delays to RE developers, which in turn leads to reduced investor interest in such projects.

Transmission and distribution infrastructure expansion has been slow, and policy variations at the state level have led to confusion among prospective investors. Cross-subsidy and wheeling charges imposed on C&I consumers are hampering the growth of Open Access Power across states.

To ensure uninterrupted growth in the renewable energy sector, the government needs to simplify the process for open access projects, reduce additional transmission charges and cross-subsidy on C&I consumers, and promote private sector involvement in transmission infrastructure.

The sector needs a long-term structural support mechanism to maintain the financial viability of state discoms to enable timely payments. States should also have long-term policy stability, and the central government should evolve mechanisms to streamline state policies and regulations.