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In an exciting interview with SolarQuarter India magazine, Mr. Manoj Gupta, VP-Solar and Waste to Energy Business, Fortum India spoke about the company’s progress in the current year, and its strategies for business growth. He also gave his views on the solar tariffs, financing of solar projects, and the future outlook of the sector.
How is the business progressing for Fortum in 2022?
The year has been progressing well for our solar business. We recently won the right from Gujarat Urja Vikas Nigam Limited (GUVNL) to build a solar project with a total capacity of 200 MW in the state, of Gujarat, India. The solar project will be entitled to a fixed tariff for 25 years under the GUVNL PPA (power purchase agreement) of 2.29 INR/kWh and is expected to be commissioned by 2024. Another project that we won this year includes the right to build two solar power parks from the Solar Energy Corporation of India (SECI) with a total capacity of 600 MW in Karnataka, India. That, too, is expected to be commissioned by 2024. With these recent projects in our kitty, we believe that the progress is multifold and looking forward to doing more.
What is your view on the current solar tariffs? Do you see them falling more?
The solar tariffs in India are currently very competitive, with more and more players bidding for various projects in the country. Currently, India’s solar tariffs are among the lowest in the world however it solely depends upon the site location, irradiation, and commissioning timeline. Going forward, uncertainty in the market is growing due to the disruption created by the war. We need to have a close watch on global development happening and its impact of it on demand-supply. The closedown of many cities in China due to the new covid variant may also disrupt the market.
How has financing for solar projects evolved over the years in India? Has the situation eased?
The solar sector’s early expansion stage was financed by concessional loans from multilateral agencies like the World Bank and the Asian Development Bank, but with renewable energy finding stability, commercial financing options have expanded. While currently a major chunk of solar energy projects are financed through the syndicated commercial loan market. The sector has become attractive to investors, with increased support from the government and improved economics of the renewable energy sector.
What are some of your strategies for business growth in 2022?
We have now secured 800 MW solar projects to be executed during 2024. The next focus will be to have a proper execution planning of these projects. Securing land, Power evacuation infra, and supply chain will be at the top of our agenda list. Once we control it then will again start building up the future pipeline.
How do you see the solar sector progressing in the next 5 years?
India’s inclination towards renewable energy is increasing gradually year by year. The solar segment is likely to have the largest market share during the forecast period, owing to the declining tariff of Solar projects due to advancements in technology and improved efficiency of solar modules. The versatility of Solar systems for various applications, like electricity generation, water heating, etc is another plus point for the growth of solar in India. India has a plan to build 500 GW of renewable by 2030 and the majority of it will be driven by the Solar sector. Solar is planned to be 35% of the overall Energy mix by 2030. To achieve this goal, there will be lots of focus on new solar tenders in different modes like plain Vanilla, wind-solar Hybrid, with storage, etc in the next 5 years. I expect more than 100-150 GW of solar tenders in different forms coming up in the next 5 years to achieve the 2030 goal. I see lots of development happening on the Power evacuation infrastructure front and changes in policy and regulation for smooth execution of solar projects.