Cost Reduction in Storage is Key for the Next Level of Solar Growth: Pradeep Chauhan

Pradeep Chauhan, Country Manager, Indian Subcontinent for Solarpack Corporacion Tecnologica, SA, the Spanish solar firm making waves finds himself in focus, after his firm made a record low bid of Rs 2.36 to win a 300 MW share at a SECI Auction this year. Solarpack, which has been bidding, and growing aggressively in multiple markets, has prided itself on its profitability focus despite operating in such a competitive market. We caught up with Pradeep to get a view on how the firm sees the market in India.

Q. Tell us about the background to your record Rs 2.36 bid in June for 300 MW. Should we expect more of the same, or was that a one off?

We believe the auctions conducted by SECI are highly successful in attracting huge interest from domestic and international IPP’s/Developers due to various factors like bankability of PPA, ISTS connectivity, SECI’s own payments track record and successful functioning of the projects awarded by them in last many years.

Process transparency is another factor. We have been developing projects in India since 2015, but going forward, we want to select larger scale projects under central schemes, which offer definite advantages in terms of lower risk compared to discom PPA’s, scale of the project, grid availability, preference of lender to finance such project.

Tariff’s discovered during auctions are generally the derivatives of factors like lending rates & financial liquidity, modules pricing, timeframe of the project which provides certain incentives or applicability of duties etc.

Each auction has its own ingredients, hence it is not feasible to predict any trends across different auction programs or agencies awarding the project, we believe that the project awarded to Solarpack is very much viable at Rs 2.36/ Kwh and development of this project is progressing in right direction and very well advanced, which shall be commissioned within the PPA timeframe.

Further, we are evaluating new opportunities to participate for similar capacities in coming months to expand our pipeline in India and we hope to present our best offer with most viable tariff as per the prevailing market & tender conditions.

Q. Do you see bid prices trending down even further, or will there be a halt or even an increase, as the government and industry looks to shift to higher quality too?

Solar electricity tariffs are very highly dependent of two major input, Modules prices and Lending rates, both of them are very volatile and dynamic in nature and hence the tariff also fluctuate with them.

However, even though there may be slight increase of discovered tariff from one bid to another bid, solar power remains the most affordable source of electricity to the end buyers. I do not foresee any cost increase due to BIS certifications or other certifications being implemented by India on the imports or domestic products as we always choose the best quality products and installation standards, as some have predicted. I do not believe that in large capacity projects any developer chooses low grade products, so certifications as a qualification to supply is welcome as long as the process of these certifications are transparent and do not lead to delay in shipments, as such kind of scenarios may lead to projects delays.

It has been noticed that BIS certification of imported solar components and modules are taking extraordinarily long time. Indian Solar Industry growth is hampered by lack of transparency in the approvals for very long and dilemma of intermittent policy changes such as Safeguard Duty & Basic Custom Duties, ALLM (Approved list of Models and Manufacturers) etc. (Editor Note: The deadline for ALMM list for solar passed on September 30, 2020)

Q. You recently shared news on possibly the biggest bifacial module solar plant being developed by Solarpack in India. Tell us more about this project.

With the evolution of PV technology from Poly Silicon based cells to Mono/Monoperc and Bifacial, it has become possible to increase the overall efficiency of Plant and reduce the surface footprint required for the same capacity otherwise. We are evaluating bifacial modules which suits better for soil conditions in certain parts of the country such as Rajasthan and Gujarat with higher albedo effect. (Note: Albedo effect refers to the measure of reflectivity of a surface) We believe that there is visible transition happening in the PV industry in last few years from 330Wp to higher rating 400Wp plus modules going upto 600Wp.

We would like to be very adaptive to different technologies in the PV space for development of high quality assets. Since gain from bifacial modules application is very site specific depending on the ground conditions, it become more important to measure site specific GHI & Albedo for better yield estimation and presenting to lenders as a bankable project with this type of products which might be new to their criteria.

Q. As a market focused on low costs, India has had the strange situation of growing without major suppliers, like solar trackers, for instance. If the market indeed shifts to better quality and higher CUF requirements, what are the big changes we can expect, besides the entry of solar tracker suppliers.

Indian market has been very price sensitive and competitive with desire of achieving lowest possible cost in all aspects and this is true across industry. Hence is becomes highly critical to work on cost effective solution affordable to masses, here in Solar Industry the opportunity is to provide cost effective and affordable electricity, we are just trying contribute in a small way in the overall ecosystem. In my opinion trackers systems have not achieved scale of domestic production and reduction of cost to match the other advancements eg. Modules capacity has grown almost 3 times and prices reduced to 40% in last five years, similarly for inverters. Trackers have simply not kept pace.

Q. How do you see India progressing on its 2022 goal of 100 GW for solar , and in the long term, 450 GW of renewables by 2030? What will need to be done to get there?

To achieve the highly ambitious 100GW goal upto 2022, it was very important to remove policy hurdles and bring uniform states wise policy for approvals, which has not been attempted. Also there have been few missed opportunities and gear changes in last 3 to 4 years such as GST implementation, currency demonetisation, safe guard duty and now COVID 19, later upcoming BIS/ALLM/BCD. However I am hopeful that notwithstanding some slippage on the deadline India will reach 100GW installed capacity, as evident from the auction trends and the pipeline of projects created in last 1 year.

On a longer horizon of 450GW Renewable by 2030, it will need consistency in policy and infrastructure such as Solar Parks, Transmission Network upgrades. Also key is the availability of high quality human resource trained specifically on Solar Technology and related infrastructure, availability of domestic solar cells/modules, other BoS (balance of systems) items production ramp up. This long term goal will need enormous capital from oversees investors. We see India as a very long term market that can grow consistently even with some intermittent disruptions. Thus, the key will be to invest early in development, cost reduction of storage technology and production as mass scale, as without storage renewable energy growth cannot be unleashed for next levels.

Q. Any views on the next big trigger for rooftop solar in India?

We as IPP are completely focused globally in utility grid scale market in India, on generic view the rooftop industry looks like having difficulties in many areas such as financing to residential customers, net metering policies inconsistencies and barriers applied by certain state discoms/regulators. Rooftop segment can achieve higher growth with implementation of virtual and group metering policies with simplified process of connection to grid.

Q. Vis a vis India’s solar ambitions, what does Solarpack plan to achieve by 2022, and beyond in India?

We as company are focused on healthy returns for our investors and development of a profitable projects pipeline for future growth in multiple geographies, I hope in the coming year Solarpack will be among the global leaders in Solar Energy.

Q. In the tender where Solarpack won 300MW with its 2.36 bid, we saw multiple European players do well too. How much does access to historically low interest rates play a part in that success?

As we have seen various international players participated in most of the tenders alongside domestic players, however specifically in the recent auctions international players have been successful due to lowest corporate tax applicability & dividend distribution tax changes on these projects for the new manufacturing incentives including Power Generation, in addition to the attractiveness and growth potential and stability Indian Power Sector provides. Looking at the future growth pipelines and national targets in Renewable Energy Sector, we can expect continued interest of global players.

Q. Has the delay in notifying additional basic customs duty helped you and similar firms who won recent bids in any way? Have the PPA’s been signed finally, as we understand they were delayed for various reasons.

LoA/Agreements that were awarded and signed before the new duties shall not be affected as the provisions of change in law allows to maintain the same conditions as on date of proposal submission, hence any change afterwards shall be considered as change in law to provide pass through in the tariff change. There have been some delays due to COVID 19 period overhang, PPA signing is in process as we understood from bidding agency and shall be signed shortly.