In conversation with Mr. Parag Sharma, COO, ReNew Power
Let’s start with the recent developments at Renew Power in last one year.
ReNew Power commissioned 1 GW of Solar and Wind assets in FY’17. It took us close to 5 years to add the initial 1 GW and we were able to double our existing capacity by adding another 1 GW in just one year thereafter. Last year was particularly special because ReNew Power transitioned into an EPC organization as all our solar projects we were installed and commissioned on the back of an internal EPC organization. Moreover, we were able to deliver these top quality projects well before the committed timelines. Infact an important point of note is that under the projects awarded under the Karnataka State Policy, ReNew Power was the only IPP that was able to deliver projects in the last fiscal. ReNew Power looks to continue this impressive growth in the coming years and is committed to delivering best-in-class projects on time.
As a developer, what key challenges do you face today?
India has so far done exceedingly well in its solar program and is now recognized as one of the favourite destinations for foreign investment. This is particularly true in the renewable energy sector. However, maintaining this momentum needs going forward can prove to be challenging as we do not foresee a lot of bids happening in the near future.
Beyond the recently concluded bid for the Bhadla solar power project, we see no clarity as to when the next solar power bid will take place. Despite developers like ReNew Power being well funded and ready to deploy capital, the opportunities appear to be drying up. For this to change, the pipeline needs to be maintained along with a strong RPO enforcement mechanism to ensure that the obligated entities purchase the required units of green power.
It is also critical for the MNRE to set up the process for more independent bids and not focus purely on solar park bids. Significant capacity addition in the short term can be built if the responsibility of land and evacuation is left to bidder and large scale non-solar park bid is called. Another area of concern is the health of discoms. The UDAY scheme has undoubtedly helped in this regard but it is important that processes are put in place for the strong monitoring and compliance of targets set under it. If the discoms don’t improve their financial health, the entire sector is at risk.
An area of definite concern and one that requires urgent intervention is the integration of renewable on the grid. If steps are not taken, in the very near future, we could be faced with the problem of not being able to manage the renewable capacity on stream despite getting more than sufficient energy harnessed from the sun and the wind. Policy flip flops and delays in signing of PPAs once the bid process is concluded are also two areas where change will be welcome.
Which states do you believe we will see maximum solar energy investments this year?
We will see a significant overspill of capacities where tenders that were conducted over the last two fiscals will get commissioned in FY17-18. Some of the states where this could happen are Karnataka, Telangana, Andhra Pradesh and Rajasthan. These states also incidentally have very conducive policies in terms of ease of doing business and where investors are happy to invest their funds. However, some of the states where significant gap exists between current capacity and the total RPO targets are Odisha, West Bengal, Uttar Pradesh and Chhattisgarh. Uttar Pradesh is a state that ReNew Power is looking at with renewed interest as the new dispensation has an ambitious target to revamp the power sector. With the state having recently signed the ‘power for all’ document, we can expect to see some traction there.
As the assets become older, will aggressive bidding today become a pain point for the industry a few years down the line?
Typically, in solar tenders in India, at the time of bidding the tariff looks very aggressive. But with time because due to the decrease in the prices of modules and inverters along with the option of attractive financing, the bid tariff starts to look reasonable. However, in the last 2-3 bids, with tariff dropping to 2.44 Rs/u, it seems lot of that a lot of the upside on financing and module pricing have already been factored in resulting in hardly any cushion left for any surprises in the 25-year useful life of the project.
What are the milestones you wish to achieve by the end of this fiscal?
We want to continue with our growth path and keep adding capacity in a responsible and sustainable manner. ReNew Power has consistently been able to maintain our position among the top three renewable IPPs and we will strive to consolidate our position as the leading wind and solar IPP in the country. In the long term, we would also like to be recognized as an employer of choice and provide opportunities to our employees to excel. As a trusted partner for our vendors ReNew Power will look to strengthen these very important relationships and commit to execute all our businesses with highest standards of quality in line with our motto of “Transforming Energy and Transforming Lives”
Anything else you would like to add for our readers.
As India’s leading IPP, we believe that the solar sector is going to be the mainstay of India’s energy requirements in the future. India has made binding commitments under the INDCs at the COP 21 and we are well on target to achieve them. What we need from Government is policy stability and assurance that the renewable energy industry should be protected from any issues related to grid availability. Last but not least, I would like to add that ReNew Power is totally committed to supporting the government in its agenda of providing green, reliable and good quality power to the people at the bottom of the pyramid.