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“100 GW solar energy may be achieved in 2019 itself”

Sustainability Outlook spoke to Vineet Mittal, Vice Chairman, Welspun Energy Pvt. Limited on the future of renewable energy and challenges being faced by the sector in India today. 

Do you think that Government’s mission of 100 GW of installed capacity for Solar energy and 60 GW for Wind energy by 2022 is achievable?

I see it as a very realistic goal. If you look at what has happened in the last 6 months, it seems very achievable. Various state governments have already tendered out 6000 MW+ of capacity. Karnataka has already awarded 500 MW, Bihar has awarded 200 MW, Andhra Pradesh has rewarded 1500 MW, Telengana and Tamil Nadu have each awarded 2000 MW. If you add all this up, it’s more than 6 GW of tenders awarded in just 6 months. Additionally, the central government is coming up with 3000 MW, which was declared last week, and now they have plans for another 7000 MW. Madhya Pradesh is also looking at a 750 MW plant. 
 
Now, suddenly there is so much interest and so many opportunities emerging in the solar sector that the goal seems less ambitious to me now. Six months back, I would have said that 100 GW looks very ambitious, but from what the state governments and central government have managed so far, it looks like this goal may be achieved by 2019! However, I am a bit cautious about wind, because there are limited sites with high potential. 

What are the major challenges being faced by developers in the renewable energy sector?

The key challenges in the renewable energy sector have been around transmission lines, land acquisition and consistent pipeline of government projects.  Also, there is dearth of skilled people in this industry.  We have a massive shortage of people who design the plants, the electrical components, the civil engineering aspects, installers, plumbers, fitters, welders etc. Today, we employ 500 permanent employees and 1500 contractors and that number is likely to go up to 10,000 in the near term, because we have a huge number of projects under construction (almost 1000+ MW).  
 
However, the government has now started addressing some of these challenges. Issue of consistent pipeline of projects has now been fixed with these high renewable energy targets being set. The transmission corridors are being fixed and land is being acquired before the projects start. The Power Minister’s program on skill development program through NISE, NITs, IITs is a great step to address labour shortage. Three of the major problems are already being addressed. The only issue that still remains is around payment security to ensure that the developers get paid on time for the electricity that is supplied to the grid. 

What are the financing related policy changes that can aid the renewable energy sector?

There is a huge issue around the availability of financing. Renewable energy forms part of the power sector. Because of challenges related to coal supply, electricity tariffs, forex etc., a lot of the banks have had a tough time lending to the power sector. Issues related to environmental clearances and land acquisition has also delayed many projects. Many banks have reached the ceiling set by the RBI for lending to the power sector. As a result, they cannot lend to the clean energy sector now. To revitalize investments in this sector, the government has to set sub-sectoral limits for the renewable energy sector. This would provide the necessary boost to this industry. 
 
The government should resolve the issues around the infrastructure trust. It is a great instrument, but it has some issues that need to be addressed.
 
Also, some financial incentives such as income tax benefits for bond issuers should be explored. The regulators should allow for new modes of financing for green energy projects- like green bonds. Green bonds can be made tax free, so that developers have greater access to capital. 
 
One of the other means could also be removal of Minimum Alternate Tax (MAT) on the solar companies, so that they have more cash flow to invest into future growth, and priority sector lending status for the renewable energy sector. 

Despite the challenges in financing of the renewable energy sector, how have Welspun’s projects been over-subscribed?

Actually, all our projects are over-subscribed. The reason is simple: we typically raise money for most of the projects when the project is already half-way complete. Most of our projects are completed ahead of schedule. Now we’ve had 10 different projects completed before time and without any cost overruns, so most banks want to partner with players like us. We have been fortunate enough to build the confidence of the banks because of our performance track record. 

How is Welspun Energy different from other renewable energy players in the country?

We are probably the most experienced clean energy team in the country. We have proprietary project management tools which helps us predict the places where there could be issues or delays. Because of our process driven ISO methodology, we are able to predict those risks and mitigate the risks in a timely fashion to deliver all the projects without time or cost overruns.
 
We partner with the communities where we work. In every place we have gone, we have helped the society and community to such an extent that they consider us as a part of their community and not as an outsider. They become very supportive of our involvement in the locality and that avoids disruption.
 
We also focus a lot on innovation. We have around 8 patents at the moment.
 
We have been challenging ourselves by reengineering each practice to come up with the most effective way of setting up solar power projects. One of these is the modified module mounting structure which is a great example of ingenuity by streamlining the structure as compared to the usual industry design. In the modified module mounting structure due to simple streamlining of the structure, the project erection time gets reduced drastically leading to lower costs. Given its simplified design, the need for training or technological expertise required also reduces, leading to faster commissioning of solar projects. Welspun Energy today has become synonymous with its 151 MW (DC) Neemuch and 55 MW (DC) Phalodi projects having set benchmarks for being commissioned much ahead of scheduled deadline. The Golden Peacock award bestowed on us for this innovation recognizes this key quality of the organization and motivates us towards greater ingenuity and innovation in our functioning.  
 
 

 

Author: Sustainability Outlook
Calais Document Category: solar
Industry Term: energy