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Glimpse of Fortum’s presence in India’s RE sector?
Fortum is a leading clean energy company that provides its customers with electricity, heating and cooling; as well as smart solutions to improve resource efficiency. Our role is to accelerate the shift towards sustainability by reshaping the energy system, improving resource efficiency and providing smart solutions.
In India, we started our activities in 2012 with an acquisition of an operating 5 MW solar plant in Rajasthan, and with this, Fortum has created a portfolio of 685 MW (435 operating and 250 under development) solar assets in India. We have formed a Joint Venture with Numaligarh Refinery Limited along with Chempolis for setting up a bamboo-based Bio- Refinery Plant. Apart from solar energy, we are also in the business of EV charging stations, with the vertical being named ‘Fortum Charge & Drive’. As a Charge Point Operator, it has a network of more than 3000 smart chargers in the Nordic countries, out of which more than 30% are DC quick chargers. Coming to a key concern, many countries along with India already have a strict limit on the emission of nitrogen oxides; thus, NOx reduction technologies are being widely deployed. Keeping this in mind, Fortum would like to bring its own advanced time and cost saving Primary NOx reduction technology to India, which will help India in reaching its sustainability goals.
Where do you see the Solar Energy industry in India poised for the next 10 years?
In the long run, I believe that there is immense scope of solar power in India and it will inevitably take center stage in the power sector in 10 years’ time. So far, India has contributed considerably to the energy mix when it comes to solar. Prime Minister Narendra Modi’s energy agenda has set an ambitious target for renewables. The aim is to increase renewable capacity on the grid to 175GW by the end of 2022 and 450 GW by 2030. Around 100GW of that capacity is expected to come from solar photovoltaics (PV) by 2020 and 300 GW by 2030. The COVID -19 outbreak has slowed the execution of ongoing projects however the long-term growth of the industry looks intact. Currently, the industry is facing challenges of logistics and liquidity, which will affect the renewable energy targets for this year.
Owing to the plunging cost associated with solar and wind technologies as well as the anticipation of a more carbon-constrained future, the Indian renewable energy space is increasingly growing. The resource potential of India has also been recognised as substantially higher than earlier. Initiatives such as provision of solar parks, off-grid solar rooftop solutions and solar development in rural areas under KUSUM scheme can also help support rapid market development in India. India’s renewable energy growth is primarily propelled by a few driving factors such as considerations to meet energy demands, sustainability, energy security and lower costs.
What do you think about India’s Solar Policies from a holistic perspective and what according to you are the current bottlenecks which may impede growth for this sector?
The Government of India has ambitious plans of generating 100 GW of solar energy capacity by 2022, but the momentum has been severely eroded in the last few months. Issues such as uncertainty around import duties and future tax rates on existing power purchase agreements have dampened investor sentiment. With the imposition of safeguard duty on solar cells, I believe it makes the situation all the more difficult. The safeguard duty will only be justified, and the country can achieve this target, if the domestic industry is able to match cheap imports within two years. We hope that soon the domestic industry will scale up and bring down the cost differential. The disruption caused by the COVID-19 crisis has posed further challenges to the industry.
The recently announced draft Electricity Act (Amendment) Bill 2020 by the Ministry of Power to address structural issues and bring in fundamental reforms in the sector is a step in the right direction. Cost reflective tariff, simplification of tariff structure and reduction of cross subsidies is another positive move for the sector. The amendment proposes a contract enforcement authority for adjudicating in matters pertaining to contracts, except tariff related matters while the existing. In the proposed amendment, a payment security instrument is made mandatory for scheduling of power. While there is a clear attempt to address the fundamental issues, more clarity is needed in various aspects viz., jurisdictional clarity between regulatory commissions and contract enforcement authority, penalty payments for non fulfilment of RPO obligation, strict implementation of open access, distinction between distribution franchisee and distribution sub licensee, along with mandating payment security. We are confident that with stakeholder consultation, the draft bill will evolve, incorporating the necessary changes, especially as it is going to shape the future of electricity markets of the coming decade.
What are your growth plans for the Indian market, and do you feel India would be your most favoured destination for RE investments?
In terms of our growth plans for the Indian market, our ambition and vision is clear. Along with our financial partners, we presently plan to execute around 250-300 MW of solar power capacity per year. We were initially bidding projects only in Solar park but our current ongoing 250 MW solar project in Rajasthan will be on Private land Consistency and clarity of regulation from the Government will play a vital role in paving the path for our growth in India. We are happy to be part of the Solar growth journey of the country and committed for future growth here. India is now part of Fortum’s home country of business and will continue to grow in Solar as well as in other businesses of Fortum in India. As declared earlier, we would invest between Euro 200 million and Euro 400 million in India in the solar power sector along with financial partners.
What according to you is the biggest strength of your company in the solar industry and how do you plan to leverage this strength in the Indian solar sector?
Fortum is a leading clean energy company that employs some 8,300 professionals in the Nordic and Baltic countries, Russia, Poland and India, and 57% of our electricity generation is CO2 free. The focus on reducing CO2 emissions has been in Fortum’s DNA for decades. Our carbon exposure is already one of the lowest within the European power generation industry.
Fortum, being a utility company, always looks at every project from the long-term perspective. Quality is the key parameter always in focus while we design and construct the plant. During O & M also, we would like to use the natural resources in a very effective manner. This is one of the reasons that for all our solar plants, we are using waterless, Robotic technology so that the consumption of water for cleaning the panel is minimized and brought to almost Zero. Fortum’s 250 MW solar plant in Pavagada is one of the largest in India, having waterless technology. Going forward also, we planned to use the advanced module and inverter technology so that the plant can be built up with the minimum land area requirement. Fortum is happy to take the new challenges to showcase them in our upcoming plants.