L&T Interview: Government Should Focus More on Decentralized Solar
The Indian solar sector has witnessed exponential growth in the past few years, thanks to supportive policies and the increasing experience of implementing agencies. The country has set an impressive target of achieving 100 GW of installed solar capacity by 2022. To meet this goal, projects are getting bigger and there is an increasing pressure to contain costs while delivering quality. However, the government also needs to focus more on decentralized power generation projects, as they offer the fastest way to get electricity directly to the point of consumption.
Mercom’s Q3 2017 Solar Quarterly Market Update shows that rooftop installations gained momentum in 2017. Rooftop installations in the first nine months of 2017 came to 735 MW, a significant increase compared to just 275 MW installed all of last year. Mercom is forecasting rooftop installations of ~945 MW in 2017.
Given this scenario, it seems that there would be great business opportunities for experienced solar‑focused engineering, procurement, and construction (EPC) companies, says Milan Kumar, joint general manager and head of special initiatives for the solar business of L&T. In an interview with Mercom’s news team, Kumar recently shed some light on how EPC contractors view the Indian solar sector. Here are excerpts from that interview:
What do you think about the Indian solar sector from the point of view of an EPC player?
Solar energy sector has emerged as a competitive, dependable and sustainable option of energy for India as well as the world. The government sees great promise in the solar sector. While utility-scale ground mounted projects have been mainstay, the rooftop and off-grid distributed energy solar sectors are catching up. As an EPC we see tremendous scope of value addition in all these segments. Project sizes are becoming bigger, time lines for projects are becoming shorter and complexity of land shape, size, terrain are increasing. For the government plan of 100 GW of Solar by 2021; I see L&T Solar EPC to be playing a significant role considering our proven strength of project management, technology leadership and construction management while maintaining quality and safety.
What do you think about the ongoing anti-dumping investigation?
The prices of modules have firmed up, though they have not risen the speculated slide is missing. Many are pointing to the anti-dumping investigation as the cause of this, but one of the reasons is growing demand in China itself and other markets. The imposition or non-imposition of a duty is in the hands of the government.
The purpose of expanding solar capacity is to provide energy at the lowest possible cost and to be responsible to environment. So, it is required that this purpose be not over-looked while conducting the investigation, and I have a feeling the Government and industry will take a mature view and treat everything reasonably.
What do you think about the solar policies in the various Indian states? Is there a huge gap in the ease accorded by policies in various states?
Certain states are very positive and actively shaping their renewable energy plans. Rajasthan has emerged as the number one state in terms of ground-mounted projects. Policies like the ones formulated for the Bhadla project are very conducive, there is clarity on most aspects needed for investing in these projects.
Madhya Pradesh has recently come out with a favorable solar policy. Over there, the state government is helping in the arrangement of security mechanisms that Project developers look for.
For rooftop solar, many states like Gujarat, Jharkhand, and Bihar are emerging. Each state is trying its bit, but I don’t see any one state having a big edge over the others as far as policies are concerned.
What do you find lacking?
Wastelands are widely available in states like Gujarat, Rajasthan, Karnataka, and Telangana. They should definitely be utilized for large, ground-mounted projects. However, there are challenges like connectivity and power evacuation including green corridor where a lot more needs to happen.
Secondly, over 300 million people still do not have access to uninterrupted and quality power. Then, the issue turns to providing power the fastest way to a household. The fastest way is decentralized power generation at the point of consumption, which can be executed in a matter of days. Hence, the government should consider giving more attention to decentralized solar.
Other area is that of Solar Pumps where need is to apply these innovatively to address more than just the water needs of rural population. Government has big plans for this sector. To achieve the target, I strongly believe that large tenders are required to be floated, where organized, large companies could participate and deliver on their deployment and upkeep for faster and assured delivery of benefits to people.
What are your thoughts on energy storage? What is L&T doing about it?
Energy storage is required for the sustenance of any renewable source. As the penetration of Renewable energy grows in the energy mix, storage is required to play a crucial role. L&T already has its involvement in this field. We have a couple of projects and pilots. One noteworthy on-going project is for providing power to more than 240 off-grid villages in Bihar during non-shine hours through energy stored in batteries; power generated through Solar through the day.
The company has plans to work in different technology and applications of energy storage. One would purely be for backup purposes and the other is for large, industrial applications in utility projects like frequency correction and peak-shavings, Time of Day energy etc.
You are one of the EPC firms deploying solar tracker technology in India. What effect do trackers have on generation?
L&T deployed trackers for the first time in 2011 at a 10 MW project in Gujarat. That project still has the distinction of having the highest generation per MW among other plants of same time in Gujarat. As an EPC, we have experience of putting up tracker projects in excess of 400 MW.
Earlier, trackers were expensive and there were various concerns about them, but now things are getting better with the wider availability of trackers and technological improvements.
This has a lot of benefits for developers in terms of managing the undulation of the ground, using the land more effectively, reducing water needed for cleaning etc. Land has always been a big problem and it is required that we use it responsibly. So, if we can optimize land utilization with the help of trackers and at the same time increase generation, it creates lot of value.
Is there a difference between the cost of EPC for the government and private projects?
Yes, there is a slight difference. The reason is tender technical specifications besides commercial terms & conditions. As such, requirements are relatively well defined in government tenders and at times these are more stringent that requires higher cost considerations. Also, government tenders are mostly full scope EPC tenders unlike scope split that private customers generally prefer.
What are your thoughts on the Goods and Services Tax (GST)?
GST is now appearing to be less worrisome than what was feared. Whatever concerns were there, they are getting sorted out and clarified gradually. The Ministry has taken a fair stance in favor of Industry, and has been working closely with Finance ministry to get further clarity and ease. So, things are falling in place. Its impact on cost of Solar projects and tariff is however yet to fully sink in.
Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.