Market Leaders – What It Takes To Survive In The Competitive Solar Market

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Mr. Pinaki Bhattacharyya, CEO, AMP Energy India

The solar industry has developed rapidly to enter the mainstream over the past decade reaching approx. 34 GW in Sep 2019. This success has attracted both serious as well as opportunistic investors. Due to the fragmented nature of the industry it is fairly hard to differentiate the two. For institutional players such as AMP Energy India, our biggest challenge has been that the nonutility market continues to be cost focused. While achieving a low tariff is important for consumers, it is also important to ensure that the developer delivers high-quality reliable energy systems so that the consumer is assured of reliable and high-quality supply of energy throughout the life of the system.

At AMP Energy India, we are extremely focussed on providing integrated renewable energy solutions to our customers. We customise our energy solutions to the client needs and brings this focus starting from the design stage through to project implementation and operations. Apart from being a one stop shop for customers, it is also important to follow a robust risk mitigation framework, aggregate volumes to drive economies of scale in costs, Creating high quality assets, right sizing the debt leverage and financial engineering to drive the returns, It is also essential to maintain high standards of corporate governance and following globally accepted ESG standards as we partner with reputed corporates.

Col Sudhanshu Kamboj (Retd.), President Business Development, Hinduja Renewables Energy Pvt. Ltd.

The Indian Solar sector is going through a challenging phase where the tariff under competitive bidding is finding new lows and discovering tariff levels which are among the lowest globally. In such a situation when the markets are consolidating the market leaders are emerging due to their inherent leadership traits.

Innovative approach to drive business growth and discover new business models is the key in surviving the competition. The Solar assets must be grown to larger portfolio in order to reap the benefits of economies of scale. Such a growth can come by growing through both organic and inorganic routes.

Lower financing costs will provide the correct leverages in order to match the competitive reverse bidding tariffs without compromising on the quality of solar assets built to last its full life cycle and further reducing the Levelized Cost of Electricity (LCOE).

The vision of a market leader should be long term as solar power is slated to grow exponentially in future bringing many disruptive changes in the power industry and paving way towards the economic development of the country. India is taking power sector as central to its security and economic requirements with the government setting aggressive and ambitious targets. In such a situation, companies with long-term vision to grow in this sector will have the advantage.

There is a pressure on solar plant profitability due to reducing tariffs impacting investors’ return. The fine balance between growth and profitability have to be maintained in order to keep the business competitive. This balance while selecting the projects is very important for a sustainable growth of business.

With the growth in computing power, technology is providing innovative paths to bring efficiencies in solar power generation, distribution and its management. Such advancement on the technological front needs to be adopted early to have the first mover advantage albeit with some risks. Building collaborative approach to address such technology advancements and working with partners who are experts in such fields will provide the necessary impetus to become a global leader in solar energy.

Ms. Monika Rathi, Head – Business Development India & SEA, Mahindra Susten

Solar sector has emerged as one of the fastest growing sectors among renewables, exceeding installed capacity of 31.5 GW, including both ground-mounted and rooftop installations. Utility scale projects have been at the forefront of this development, because the solar tariff prices have fallen over the years. This falling tariff has put tremendous pressure among all segments of the solar PV value chain to continuously innovate ways to be sustainable yet profitable. Financiers, Developers and Utility businesses are all looking for a viable financial model to maximize a solar project’s return. There is growing focus on determining and fine-tuning the long-term costs and economics of managing these plants over its lifetime. This has presented both opportunity and threat to the market leaders within the industry, who are striving to balance costs and performance.

As Albert Einstein once famously said, “We cannot solve our problems with the same thinking we used when we created them.” This is precisely what is needed today to stay ahead in such a super price sensitive and competitive market. The three pillars, E, P and C all need optimization to be able to survive and thrive in this market.

  • Value Engineering: Engineering is the foundation of a solar plant project, as 3-6 months of design efforts on a project yields 25 years of performance. Tariff trend has ensured that there is no place for gold plated specifications, and hence value engineering becomes critical. Usage of Aluminum winding transformer has enabled similar reliability, albeit with lower costs. Module cleaning Robot has improved plant performance over lifetime, though at higher Capex. Dual metal structure designs, with new materials have been explored and tested to reduce costs. Detailed geo analysis, including usage  of geospatial software for effective site analysis, thereby zoning the site to achieve optimization in foundation design. Usage of higher cluster size, higher Wp module, wind tunnel analysis for structure design are other areas through which lower costs have been achieved without compromising on the project performance.
  • Procurement efficiency: The solar value chain is completely fragmented with most items procured from vendors. Vertical integration of the same for an EPC is not the solution to beat the market pricing. Instead value chain control, through long term partnership model is helping reap similar benefits . The preferred vendor model not only enables lower costs, but also better quality based on an ongoing trust and relationship between the parties. Efficiency in timely order closure to manage deliveries at site also enables shorter project durations, thereby limiting the project overheads.
  • Execution quality: The long-term performance of a PV project is largely dependent on the quality of construction materials, processes and design conditions under which a PV project has been built. Price may be one of the governing factors for Developers decision on selection of EPC player, however the lower Capex with sub optimal plant construction would mean an outflow every year in terms of lower generation and hence loss in revenue, and/or multiple quality defects leading to warranty claims and increased cost of O&M. Thus, it has become a Developers imperative to go beyond the price and evaluate an EPC players capability holistically. We as an EPC player are delivering on our promise to be a long-term, reliable partner, by meeting this requirement of the developers, through our tighter quality controls at site. We are moving from a culture of quality inspectors to a culture where quality is owned by each individual working at site. Quality is rewarded at site and the benefits of ensuring quality are realized in short term through faster synchronization of PV projects & in long term through higher performance leading to better revenue realization.

The industry is reshuffling and when the dust settles, we will still be here because of the quality practices, the transparency that we maintain and the engineering strength that we bring to the table. 

Ms. Nithya Balakrishnan, Head – Marketing & Communication, Fourth Partner Energy

1.37 billion people. Current share of global primary energy demand at 6%, estimated to grow to 11% by 2040 – this makes India’s demand for energy the fastest growing amongst all the major economies. Needless to say – renewable sources will play the primary role in helping our country meet this exponentially increasing demand for electricity.

India’s target is 100 GW Solar power by 2022, the market is ripe for utility scale players, distributed Solar developers and EPC contractors to contribute to this significantly. Recent sectoral research indicates over 300 solar firms are operational in the country.

At 4PEL, we believe the distributed solar segment will see consolidation in months to come. What will separate the wheat from the chaff, then?

  • Regulatory prowess – deep rooted understanding of dynamic State regulations
  • Offering the lowest total Cost of ownership while ensuring Quality is not compromised
  • Ability to customise solar solutions
  • Value added services like storage, power trading
  • Offering innovative financial models to the client
  • Dedicated service, O&M teams functioning round-the-clock to ensure maximised generation
  • Execution expertise and stringent adherence to timelines
  • Technological innovation to ensure Remote monitoring of plant’s generation
Mr. Amit Gupta, Business Head- Energy Infrastructure Solutions, Delta

The Competitive Solar Market

Being the market leader in rooftop segment, competition is healthy and it motivates us improve our technologies and keeps us driving towards achieving our goal. Also we intend to stay focused more on our R&D in bringing new innovations to cater to the market needs for holistic approach. In India Delta has captured major airports, key metro and railway stations, government offices, public sectors and many more, with over 1500+GW of string and central grid-tied solar inverters.

Today’s solar market is subjugated by utility sector and mainly inclining towards large scale solar projects by positioning huge quantity of solar inverters. However commercial segment is expected to show its growth rate during the near future. The solar market is growing significantly and the government is also initiating to create awareness by involving private sector groups and promoting government schemes, policies, smart cities for residential and commercial sectors.

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