Waaree To Start Module Production In US From Sept: Hitesh Doshi

From an initial module manufacturing capacity of 30 MW in Surat in 2007, Waaree Energies has come a long way indeed. And helming the company through that journey from 30 MW to 12 GW now, and counting, is its founder and CMD, Dr. Hitesh Doshi. Dr. Doshi has not only seen the solar sector take birth, drop roots and grow in India, he has been an integral part of the journey all the way. A strong advocate of make in India, Doshi made his bet on solar manufacturing when few others would, and has had to wait patiently for that conviction to pay off. Today, not just the parent firm Waree Energies, but Waree Renewable Technologies, the groups listed EPC arm, are flying high. The IPO of Waaree Energies itself remains the most awaited one from the sector.  SaurEnergy’s Group Editor Prasanna Singh, caught up with the busy Dr Doshi for a video chat.

 

Q. Dr. Doshi, how do you see the global solar market right now in terms of changing price dynamics?

For the last few months prices are moving downwards. A number of Chinese companies are incurring huge losses. We have seen the financial results of more than six Chinese companies in the last two weeks which are reporting cash loss at the gross levels. This was not on the expected lines. When we were speaking last time, we were saying that at least the companies will incur the loss. They will stop at the price where they can recover their cash loss. Unfortunately for them and fortunately for the customers, there are still a lot of tough battles to fight and the competition is going on. They are fighting with each other.

So it is really difficult to tell you to what extent the prices can further plunge. Because, when the companies decide to continue making losses, we don’t know how much losses they want to make and where they want to put a halt. But I will stay with my statement that these prices are definitely much lower than I had thought. And this is a time for anyone who wants to go for solar.

Q. What is Waaree’s roadmap now towards solar module manufacturing and backward integration?

At the time of manufacturing solar modules in India, the value addition is more than 60 percent (from cell to module). So, whatever is the price of these solar modules today and the price of solar cells, the delta is more than 60%. That gives us an edge over any other assembly or manufacturing in India. And of course, when there is a large value addition, there’s a large opportunity for ancillaries like solar glass, aluminium, battery tech. This is also followed by large avenues for the service providers, including the transport and other sectors. 

To your question, we are all set to start solar cell manufacturing of capacities upto 5.4 GW in the next quarter. Earlier, we had also won the government’s Production Linked Incentive (PLI) scheme for a capacity of 6 GW in addition to this. In the coming days we will start the work in a maximum of six to eight weeks with the land availability. That project will also be ready in the next 18 months. We have no plans to stop at solar cells. We are going for manufacturing of ingots and wafers back-to-back as well. Leaving just polysilicon manufacturing outside our own plans. 

Q. How do you see the preparedness of the country towards the target of 300 GW of solar capacities by 2030?

As far as manufacturing is concerned, the government has given a clear roadmap. You had only published the news that India’s solar module manufacturing capacity has surpassed 50 GW. We can see more than 10 GW of applications under process. So, maybe in the next month or later, once this inspection gets over of all the factories, we’ll see the 60 GW figure being crossed. 

On the installation side, we saw India adding 15GW-16 GW of new solar capacities last year. With this one thing that became evident was that the India solar module manufacturing capacity is much more than what is required. In the next 18 months, we are likely to see a good scaling up of domestic solar cell capacity beyond domestic demand. In the next 2 years, ingots and wafers will also be there in the Indian market. 

The manufacturing is much more than required. The challenges today in executions and land and the government is working on that. We are seeing a lot of new projects coming for the grid. Once these challenges are addressed, I think we will have much higher capacities on the ground. 

 Q.Is the availability of DCR solar modules a challenge for the Indian solar module makers now?

The DCR (Domestic Content Requirement) demand mismatch is a temporary phenomena because of this demand supply gap. But, as there are a lot of solar module manufacturing companies, they are starting their DCR cell production soon. So I believe this gap will also be addressed with the larger pipeline of the production.

 Q. Waaree has recently bagged several large module orders of over 200 MW per order. Has it affected your supplies and delivery timings? 

We have very good stock inventories. We have recently opened an additional factory in Greater Noida for offering the next-day delivery to the customers. Usually the large developers post their orders in advance which may vary from one year to six months. They also get a time period of around 18-24 months to execute these plans. So there are two markets-one is for these large orders which allow us enough time and other one is the retail market that demands faster deliveries. Waaree is well prepared to service both these now. 

Q. Would it be fair to say that exports to the US have been a huge reason for the financial stability of the large Indian module manufacturers?

Indian module manufacturers who are offering the quality, who have proven their performance, who have all the required certifications, documentation, that’s the first requirement. And today, Indian manufacturers exporting to the US have become efficient enough to make a case for buying over other alternative countries. The exports are definitely key, but not critical.

 Q. But the margins obviously are far better there in the US market?

Almost the same now. There is competition from across the globe today, so it’s a great market for customers. 

 Q. What do you feel about the PM Surya Ghar Scheme? Do you believe it’s making a difference on the ground yet?

It’s too early. We are speaking about one crore roofs. And after announcing the scheme, a lot of changes have been made in terms of state regulations, permissions, approval. As more and more deployment is going, more and more learnings are coming up. As we get learnings the government is acting proactively on that. They’re using a lot of IT. They’re changing the rules, focusing on ease of installations almost. I have seen that every week something new is coming up. Personally, I think this is a game changer and we will see demand exceed the 1 crore target over the next few quarters.

 Q. What about the C&I sector? Because traditionally, we’ve all been covering utility scale a lot more with a little bit of C&I. But now of course, top EPC firms which are listed announcing fresh C&I wins all the time. Do you believe C&I segment could be as big or bigger than utility scale in India soon?

 We supply our modules to the C&I scales on a regular basis and we are seeing steady demand in that market. Today, for anybody who is using power, for him, solar is making sense. Not just captive or grid power, economically, I will say almost across the country, solar is there at the top of the consideration stage. Economically, it makes sense. So yes, we will certainly see C&I continue to drive strong solar demand as well, and possibly as much as utility scale soon.

Q. What about the prospects in green hydrogen for solar? Because, again, as I understand it, for the Indian target of 5 million tons per annum, just for that renewable capacity required might be almost 120 gigawatts, theoretically. When do you think this demand actually start becoming visible in the market? Because right now, obviously, it’s mostly talk.

See, the tenders are already there now for green ammonia and green hydrogen. The first large one has come out now, and the second is there in the market. So obviously these projects, we will see on the ground since the tenders are getting allotted. Tenders have their own process and timelines. Let us say in two to three years, we will see the production of green hydrogen as well as its impact on renewables capacity in the country.

Q. Speaking of tenders, I’ll move on to the fact that one of the striking things about the solar sector has been the heavy regulatory overhang, right from manufacturing where you have PLI schemes to the pressure of Chinese imports and countermeasures to the high dependence on utility scale solar through tenders. Even at the retail level, there is the matter of going through state discoms for installations and more. Have you considered what is that one single measure which could change things? 

One nation, one regulation, helps a lot. We have seen it where it has worked, but definitely it is difficult in the energy sector. The way government is working, and we have seen now in solar rooftop, how the policies are coming. I think we will continue to see this focus on ease of doing business, as solar is the pre-eminent option when it comes to meeting key green targets. 

Q. I remember two to three years back, writing about the fact that in China, they were almost 50 to 60 solar firms listed, whereas India barely had one or two. And this lack of access to public market was a huge challenge for Indian firms. Today, of course, its a different picture with multiple firms accessing markets and your own IPO eagerly awaited. What do you feel about the valuations being commanded by firms in India?  

So valuation is purely a market driven phenomenon and the investor’s perception. Not something I am an expert at or have a view.  But there is no doubt that opportunities exist in the sector, and there is a long runway of growth and opportunities for strong firms. Our own IPO plans are moving head, the draft prospectus is with SEBI for approval, we will move as soon as the process is complete. 

Q. What About your US manufacturing plans?

Those plans are on track. Plant Machinery is on the way, and we expect to start production from September this year.

Q. In India, we are seeing that most solar capacity is concentrated in the top 5 states or so. Does that worry you? Any state where you have higher expectations now? 

Who is the first or second? That doesn’t matter a lot. The important thing is whether the other states are understanding that this is the way to go. In my opinion, yes. We are seeing everyone is talking about it.  That is the important thing, and we expect many more states to start playing catch up soon.