In Conversation with Mr. Raghunath Mahapatra, Head solar Grid Business, Hero Future Energies
Let’s start with the recent developments at Hero Future Energies in last one year.
The year 2017-18 has been highly significant for our growth. We have had consistent growth in all our operating segments viz. solar (ground mounted and rooftop) and wind. We have ~ 1.2 GW operating capacity with approximately 50% of that commissioned in last one year. Additionally, we have added capacity inorganically. We commissioned the solar-wind hybrid plant, which is a first in India.
We won a large capacity solar of 300MW and 75MW wind capacity through bidding route which we shall be commissioning in the current year. We have established our global presence by opening our manned offices in Singapore and London to focus on market in Asia, Middle East, Africa and Europe. We expect to continue our growth in the coming years.
Project performance is becoming an increasingly important factor for project developers. How do you cope up with the falling bids and produce the power at low rates?
The operating performance of the constructed plants has always been an important factor for us at Hero Future Energies and it will remain that way. Compliances with multiple covenants, explicit or implied, are important for a plant. We select, design, build our plants so that they perform at the best possible manner consistently.
Falling bid tariff is a function of multiple factors viz. structural i.e. location, input cost etc., capital efficiency and dynamics of policy and market. As a leading developer in Indian solar space we use our experience, expertise and track record to decide our investment strategy on a project specific basis. It is a continuous exercise and we exercise prudency and efficient risk management for this purpose.
Which factors do you believe will guide solar energy investments this year?
Given that the tariffs are falling and the off-takers are expecting the tariff to remain low, the investments will be attracted by projects that have a combination of factors viz. locations with good radiation, stable and encouraging policy regime, better ‘ease of doing business’ environment, better payment security mechanism, reduced duration spent in land acquisition and other permits and clearances among other aspects.
The challenges that the industry is facing in terms of land acquisition, conversion of land for non-agricultural use, right of way issues need to be addressed. Some of the structural ameliorations are being attempted through creating solar parks to reduce the risk.
As an example, the success of Rewa project was due to the combination of off-taker credibility, availability of land and also the innovative payment security mechanism put in place. Stable policy regime is one of pre-requisites of sustained investment. Last year witnessed uncertainties in taxes and duties regimes, as witnessed from the investigations for anti dumping duty, safeguard duty, classification of modules, impact of GST. The risk perception of investors and developers was heightened due to these events and the investments will be better guided by avoiding them. The comfort and confidence of lenders and investors will be a dominant factor considering that a large part of the investment in solar sector is debt.
We are cognizant and appreciative of the fact that the intention of government and policy makers are progressive and there is a consistent effort to create the right environment for development of the sector.
What are the milestones you wish to achieve in next few coming years?
We have a target of reach an asset base of 3.5 GW by the end of FY 2022. This capacity will be a combination of the following.
● Solar (ground mounted and rooftop) and wind, the mix of which will be determined by different factors impacting the sector including policy framework, financial viability etc.
● We have the distinction of having the first Solar-Wind hybrid plant India which was inaugurated in April 2018. This is a significant milestone not only for Hero Future Energies, but for the renewable energy sector in India as it helps in better generation forecasting and hence the scheduling leading to better grid management.
● We intend to achieve integration of storage into our hybrid model to achieve a robust and scalable renewable energy regime.
● Geographically we aim to be present in multiple countries, other than India, in Asia, Middle East, Africa and Europe. Our targets mentioned above include, outside India, 400MW by FY 2019 and 1GW by FY 2021. We have established our presence in London and Singapore at nodal centers to achieve this.