Ashish Khanna | Chief Executive Officer and Executive Director, Tata Power Solar
How do you look at the Paris Climate Change summit outcome?
We were pleasantly surprised to see a more positive and concrete outcome in this particular summit versus Copenhagen. Perhaps the earlier expectations were a bit higher. May be a lot of groundwork has happened this time leading to a positive outcome and intent in this summit.
How do you see the summit outcome affect the power industry in general and solar sector in particular?
The summit, virtually, has put a lot of thrust on sustainable energy sources vis-+á-vis fossil fuels that have been a staple source of energy for a number of countries, and that is a major shift that is visible in the outcomes of this meet. The summit´s impact on the power industry is, yes. In fact people have realised that fossil fuels cannot grow in the manner it has been growing in the last 25 years as a source of energy and hence we may need to rely on sustainable and renewable energy sources like solar, which is and will play a critical role in providing that energy source. In a nutshell, there is a big shift from fossil fuel energy sources to renewable energy (RE) sources and this is very critical. There are a few things that have come out as takeaways: The intent is Intended Nationally Determined Contributions (INDCs). And also intent is to hold the temperature rise to 1.5 degree level.
I think the outcome reflects the ground reality and addresses the concerns of the voices of the island nations, including that of India, which will be grossly impacted by temperature surge on their existence itself to a large extent. The other critical factor, which India had voiced is, there are a large energy needs in a large part of the world and there is need for cost- effective energy solutions to meet these requirements.
There is a feeling that in the wake of the Paris Summit, power companies have to rush to drawing board to redraw their long term strategies. So what is the strategic shift all the power companies have to take and where the exact remedy is?
I do not want to give any clarity on the exact remedy as such. I will completely agree with you that till date we are a coal-based power producing country. Still there are gaps in basic demand and supply. I think this gap needs to be bridged first of all. And in this scenario, on a long term perspective, what will help solar companies is greater financing and capital building for RE sector, which will emerge vis-+á-vis coal based power generation. We have to develop a perspective on long term financing front for the power sector as a whole and we have to see what kind of support will flow in. There are exiting schemes whether it is IREDA support or from IIFC for solar companies. It is a clear indication and demarcation of the fact that these are indicating towards the RE energy vis-a-vis coal based power stations. In my personal view, everything is here to stay because in this country as there are 300 million people without any power source and another 400 million people who have an erratic grid connectivity. In that particular segment, solar is a new technology, it has compatibility and is competitive. As such it is going to give to coal-based power, especially the imported coal-based power generators, a tough time at the grid level tariffs. As you said these people have to rush to their drawing boards and revisit their models. For several years, solar has not been considered to be a competitive power source vis-+á-vis the coal based source. All those companies which are primarily relying on coal-based power will have to revisit their financial requirements and also the tariffs. Compared to them, solar power companies will get more leverage in getting bank financing, besides technology will enable them to provide distributed generation and it will be a much better power source considering the transmission and grid costs for transfer of power from generation to the ultimate consumer and other factors are taken into consideration.