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Interaction | March 2018

Govt needs to provide certainty on regulatory front

Presently, industrial and commercial rooftop makes sense for big developers as average size of installation is larger and commercial power tariffs higher vis-a-vis residential rooftop, says <span style="font-weight: bold;">Manoj Kohli, Executive Chairman, SB Energy</span> in one of his very rare media interviews to POWER TODAY's Manish Pant.<br /> <br /> <span style="font-weight: bold;">Given the present downturn, are we likely to see more realistic bids as against the more aggressive bids placed recently by SoftBank's?</span><br /> Globally, we have seen the solar energy sector becoming more competitive, with ó2.34&nbsp; tariff discovered in Saudi Arabia and similar tariff being seen in Mexico, Chile and other parts of the world. We believe that improvements in technology have helped drive down costs. While the module costs saw an upward trend in 2017, due to a record 50-GW plus installations in China, we see it returning to normal this year and solar to continue being the most cost-effective source of electricity across the world.<br /> <br /> In India, competitive tariffs in recent bids have set certain expectations with state distributors. But to push the 'Make in India' agenda the government is planning regulatory changes, which will obviously put upward pressure on tariffs. The government needs to provide certainty on regulatory front for it to remain on track for 175-GW renewable energy by 2022.<br /> <br /> <span style="font-weight: bold;">Will there be a revision in SoftBank's $20-billion investment plans in India's renewable energy sector. If not, how do you propose to stagger the investment?</span><br /> SoftBank remains committed to its plans to invest 20 GW in the renewable energy sector. We will be commissioning 600 MW in Bhadla alone between this year and next, which is in addition to the 350 MW that is performing well in Andhra Pradesh. We plan to bid for more projects once there is clarity on regulatory uncertainties, such as safeguard duty, anti-dumping duty, customs duty (7.5 per cent) and Goods and Services Tax (GST) applicability. <br /> <br /> <span style="font-weight: bold;">How can power purchase agreements (PPA)s be tweaked to benefit the stakeholders?</span><br /> PPAs are contractual documents, more so for solar power projects where huge capex investment is made up-front. While the government has taken steps towards improving the bankability of PPAs in the renewable energy sector with the revised national guidelines issued in 2017, we see the next challenge will be in implementation of these guidelines. The Ministry of New and Renewable Energy (MNRE) needs to ensure that these guidelines are adopted by all states, and central renewable energy bids and sanctity of honouring PPAs is maintained. <br /> Further, there are still some gaps to bring it up to international standards. For instance, the deemed generation for curtailment should be provided along with the monthly billing rather than any offset next year for excess generation.<br /> <br /> <span style="font-weight: bold;">The current rooftop policy is said to serve the industrial rooftop segment alone. What would be some of the best ways to address such concerns?</span><br /> Industrial and commercial rooftop makes more sense for big developers as average size of installations is larger. Residential rooftop is more akin to retail play where the customer's acquisition cost is a much larger portion of overall cost. Also, since the industrial and commercial power tariffs are higher compared to residential tariffs, it makes a lot more sense for commercial and industrial customers to go for renewable energy. Hence, the industrial rooftop space is witnessing a lot more traction than residential. <br /> <br /> <span style="font-weight: bold;">How can the issue of lack of manufacturing facility for high-value equipment be addressed to kick start 'Make in India' in the renewable space?</span><br /> With the latest MNRE concept paper on 'Make in India' and Solar Energy Corporation of India's SECI's 20-GW expression of interest (EoI) for manufacturing of modules, we are hopeful government will provide a forward-looking policy for manufacturing of both modules and storage batteries. We have provided our feedback to the government on both these schemes and are waiting for it to come up with final tender documents. To kick-start manufacturing in India, the government should consider providing upfront incentives to manufacturers that are comparable to China, plus provide manufacturers an assured pipeline of orders till 2030.<br /> <br /> Renewable energy needs to follow the automotive model of manufacturing where all components are manufactured in India in hubs like Pune and Chennai and even exported. <br /> <br /> <span style="font-weight: bold;">Is the government's target of six-million electric and hybrid vehicles achievable? Can its schemes be made self-sustaining without subsidies?</span><br /> The plan to have six million electric and hybrid vehicles on the country's roads under&nbsp; schemes. <br /> <br /> The government has set the targets and framework to achieve the same. This now needs to be followed up by implementation. All major private players in the ecosystem have shown interest. Ola, a SoftBank invested company, did a successful pilot run of EVs for its taxi fleet in Nagpur. Major automotive players have their India electric vehicles (EV) launch roadmap in place. With the rapid growth of EVs globally, the costs would move down to make them competitive with conventional vehicles. So, a very rapid growth is certainly a possibility. <br /> <br /> The major constraint for EV adoption is building the infrastructure for charging to make the option more acceptable for the customer. This needs concerted effort from governments at both the central and state levels.<br /> <br /> With mass adoption of EVs as projected by the government, demand for power would also shoot up by 15 to 20 per cent. It is imperative that all additional demand for power is met by clean energy. Unless the whole chain is made of clean energy, it would defeat the purpose of having eco-friendly transportation.<br /> <br /> <span style="font-weight: bold;">You have said energy storage costs will drop boosting usage of electric vehicles (EVs). Has there been any movement on the storage front?</span><br /> Internationally, multiple companies have invested billions in giga-factories for battery storage. The expected advances in technology and economies of scale will help bring down the cost of energy storage globally. Further, it is crucial to bring the manufacturing of batteries to India to make EVs affordable. We see some traction as 'Make in India' covers manufacturing of batteries as well.<br /> <br /> The major shift would come as the cost of storage for large scale installations comes down to less than Rs 3 kWh, and it becomes competitive with its alternatives, as it happened in the case of solar. Many applications, like integration of solar or wind and EVs would become viable, and it would grow exponentially thereafter. The government support for 'Make in India' would help achieve this tipping point faster.<br />
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