In conversation with Mr. Rajesh Bhat,Managing Director,Juwi India Renewable Energies Pvt. Ltd.
Let’s start with the recent developments at your organisation in last one year.
As we know, solar industry has had ups and downs and we did extremely well in first three to four years of our operation since 2011. In the two years there has been downtrend because we are seeing very low return from the Indian market. Although we had LOIs worth of 250 MW by various investors, the same could not be executed as we the customers could not get financial closures or get their PPA approved by regulatory authorities. Also there are lots of compromises that have been done. So we shifted our attention to projects in other parts of Asia Pacific in countries like Philippines, Thailand and Malaysia and built with our Asian colleagues 200 MWp worth of projects in last years. Since then we have again come back to understand what are the market requirements in India and how we have to gear up to the needs of the market without compromising on the quality. So we have understood the market requirements and have done quite a few innovations in our Design which we have already proposed to the customers by virtue of which we have currently a pipeline of approximately 300MWp worth of projects to be executed this year. In addition to this our business model now focuses on providing one stop solution of development, access to funds and Executing the project which enable us to increase our pipeline. The other addition is that our group in Australia has now executed a 10 MWp tracker project with 6 MWh of Li-on battery with electronics for Energy management connected to Copper mines DG set enabling us to gain lot of experience in Large Grid connect projects. So We believe we should be able to do reasonably well this year and for the coming years
As an EPC player, what key challenges do you face today?
As an EPC player we have challenges from the perspective of uncertainty which comes from developers. Earlier, the entire project used to be awarded to us, now of course all developers have started to supply modules themselves ,which means that our project cost comes down to almost 60%. In addition to that the project cost has itself come down by almost 1/4th since the time we have started the business in India. So the value we need to achieve in terms of revenue has almost increased by 7 to 8 times to achieve the same volume or revenue that we had achieved in 2011 or 2012. Of course when we start working on a project, we have some of the challenges like the land acquisition and in some states procurement of land itself is cumbersome. These are the challenges that we see consistently. And most of the IPP’s and the developers want to put the problem onto the EPC’s court. There is a constant battle between the EPC’s and the IPP’s as to whose responsibility is what. Added to that, another is sizes of projects, earlier in 2011 we were doing the projects of size of 5 or 10 or 20MWs. Currently the sizes of projects that we are executing is 50MWs-100MW with time line shrinking. That means we are expected to deliver these projects in 3-4 months time and if we have challenges like land being not available or one piece of land not being acquired then the project deliverable suffers a lot. Lot of times its thought that it is a simple problem but it plays a major role in terms of what we want to deliver as an EPC company. For example, sometimes because of land acquisition process or wrong inputs we need to redesign the entire layout 8 to 10 times just to ensure that we meet the project requirements and this is not something which is budgeted.
Which states do you believe lead see maximum solar energy investments this year?
States such as Karnataka has come out very aggressively and wants to do about 6GWs and also I think UP will be another player that has got the real need of renewable energy or any other form of RE. And there are other states like Rajasthan, Andhra Pradesh, Telangana Tamil Nadu, Gujarat, M.P that will do pretty well in time to come.
What is the impact of aggressive bidding on EPC players? Does cost v/s quality come into the picture?
Yes, If you just look at the country, we have about 5-6 players who are known as the tier 1 EPC players including us. We are under constant pressure; the reason is the investors or the IPPS comes to us with belief that we can deliver quality on the project. But at the same time because of the situation of the reverse bidding the investor or IPP who is in competition with any other normal non conscious investor or an IPP, the cost becomes the paramount factor for them and it isnaive on everybody’s part to expect delivery of projects with quality at the same cost. Our request to the fraternity is not to compromise on the quality of the projects. For example, if 100 is the cost of the project and somebody’s bidding at 90, unless he has got preferential cost of up to 10% it’s no way that he can deliver the project in the same Quality project. So that’s why you see that in the country we have 5-6 tier one EPC companies and then probably we have fifty or hundreds of others who are compromising on quality just to meet the cost of agenda that is required. You can definitely reduce the cost if you are ready to compromise on quality; there is no doubt in that. And it is so true for all infrastructure projects, just not for solar. For example, if you look at the bill of materials of various components that you as an IPP or Investor bought or will buy and if you have compromised on the bills of material definitely you’ll get a reduced cost. But will that plantlast for 25 years is anybody’s guess. So I think cost has got some relation to quality and the safest way that any investor can put his egg in the basket is just by ensuring that he goes to the right and conscious EPC Company like us where we are governed by methodical process of choosing right Quality components for the project.
What are the milestones you wish to achieve by the end of this fiscal?
We would like to do is at least about 4-5 projects varying from 10MWs to 200 MWs, completing about 400MWs to 500MWs projects this year.
Anything else you would like to add for our readers.
Yes, I would like to say that of course we are seeing this reverse bidding putting a lot of pressure on the EPC players to a larger extent. Since most of the bidders have taken away modules from EPC player’s scope, hence would urge Investors or IPP’s to not compromise on the BOS of the project including modules. We also have a long way to go for achieving Make in India with right cost, price and Quality and Standards