47 minute read
Policy and Legal
UP Regulator Eases Power Procurement From Exchanges For Industry
The Uttar Pradesh Electricity Regulatory Commission, in its recent tariff order dated 29th July 21 for the financial year 2022 has made some key changes that could have a positive impact on the industry as well as renewable energy projects in the state. The regulator announced a reduction of up to 64 paise per unit in the cross-subsidy charges procuring power through Power Exchanges. That makes power procurement from exchanges that much more effective as compared to captive or other options.
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India Energy Exchange (IEX), the premier power exchange in the country, claims that today, over 75 consumers in Uttar Pradesh source electricity leveraging the Exchange platform. The competitive power prices have been helping industries optimize their electricity procurement costs, thereby, leading to increased operational and financial efficiency since electricity contributes a major share of input costs for the industries.
According to Rohit Bajaj, Head-Business Development & Senior Vice President at IEX, “IEX has been seeing significant participation from the open access consumers from the State of Uttar Pradesh. The reduction in cross-subsidy surcharge by the Uttar Pradesh Electricity Regulatory Commission (UPERC) for the open access consumers is a welcome and definitely a progressive step in ensuring industrial and economic growth in the State. All 1 MW and above industrial / commercial consumers can save almost upto Rs 1 per unit. This development enables the State industry to significantly lower their operational costs and accelerate the overall economic growth of the State which is so critical in the COVID pandemic induced economic slowdown”.
Introduction of GTAM (Green Term Ahead Market) has opened avenues for the development of the organized renewable energy market to provide an alternate market-based route to the RE generators to sell their green power and to the buyers to fulfil their RPO at competitive price with flexibility of entry and exit in the market. As states adopt policies to enable easier power trading, it is bound to support many renewable projects, including those that have been unable to tie-up power purchase agreements for their full capacity. Or those with surplus production during certain
Ministry Of Power Contests Fears Of 90K crore Discom Losses in FY 21
The Ministry of power (MoP) challenges the concerns of 90K Crore Discom Losses Fy21.
The Distribution Sector in India is termed as the most important, but also the weakest link in the Power Sector value chain. However, the Sector is also witnessing tell-tale signs of improvement in performance and increase in efficiencies due to a multitude of initiatives made by the Central & State Governments and the DISCOMs themselves. Or at least that’s what the Power Ministry would like stakeholders to note.
In a release from the ministry, as per the Audited Annual Accounts of Power Distribution Utilities, DISCOMs have shown an improvement in their operational and financial performance over the past few years: • The Aggregate Technical & Commercial (AT&C) losses have come down from 23.5% in FY 2016-17 to 21.83% in
FY 2019-20. • The gap between average cost of supply (ACS) and average revenue realised (ARR) narrowed down to Rs 0.28/kWh in 2019-20 from
Rs 0.33/kWh in 2016-17. • The annual Profit After Tax (PAT) figures being negative have also shown improvement from Rs.33,894 Cr in FY 2016-17 to Rs.32,898 Cr in
FY 2019-20.
The release is in response to reports that have published speculations regarding DISCOMs achieving loss levels of Rs 90,000 crore in FY2021. These speculations trace their origins to a report published by ICRA on the Power Distribution Sector in March, 2021. While this report indicates Profit After Tax (PAT) figures of negative ~Rs 50,000 crore in FY19 (which is consistent with the PFC’s Annual Utilities report of FY 2019), the projections of PAT figures of FY 2020 are shown to increase to the tune of negative ~Rs 60,000 crores. This report further builds on these losses and projects total DISCOM losses of ~Rs 90,000 crore in FY2021. One of the reasons ascribed to this speculation is the decline in electricity volume sales in the year 2020-21 due to the COVID induced lockdown.
This report also mentions ~Rs 30,000 crore increase in DISCOM dues to its creditors from March, 2020 to December, 2020, and perhaps assumes this increase in payables, which is essentially a cash flow problem, to directly reflect into additional DISCOM losses in FY 2021 over the projections of FY2020.
MoP Issues Draft Electricity Rules 2021 for Green Energy
The Ministry of Power has released the “Draft Electricity (promoting renewable energy through Green Energy Open Access) Rules, 2021,” seeking comments from stakeholders within 30 days. The draft rules can be accessed here.
These rules are proposed for the purchase and consumption of green energy, including the energy from ‘Waste-to-Energy’ plants. The draft rules address the following counts: renewable purchase obligation (RPO); green energy open access; nodal agencies; procedure for the grant of green energy open access; banking; and cross subsidy surcharge.
With regard to tariff, the draft rules propose: “The Tariff for the Green Energy shall be determined by the Appropriate Commission, which may comprise of the average pooled power purchase cost of the renewable energy, cross-subsidy charges (if any) and service charges covering all prudent cost of the distribution licensee for providing the green energy.”
The drat rules regarding green hydrogen, which is hydrogen produced using electricity from renewable sources, state that the obligated entity, including industries, can meet their RPO targets by purchasing green hydrogen.The quantum of green hydrogen would be computed by considering the equivalence to the green hydrogen produced from one MWh of electricity from renewable sources. The norms will be notified by the Central Commission, said the ministry.
These draft rules also propose the guidelines for green energy open access and state that, “The appropriate commission shall put in place regulations in accordance with this rule to provide Green Energy Open Access to consumers who are willing to consume the Green energy. All applications for open access of Green Energy shall be granted within a maximum of 15 days. Provided that only Consumers who have contracted demand/sanctioned load of hundred kW and above shall be eligible to take power through green energy open access.”
CERC Permits SolarArise Subsidiary to get GST Compensation
The Central Electricity Regulatory Commission (CERC) has ruled in favour of Talettutayi Solar Projects One Pvt. Limited (TSPPL), a subsidiary of Gurugram-based SolarArise, directing Solar Energy Corporation of India Limited (SECI) to pay the solar developer compensation for the increased cost of a project, excluding carrying cost, due to the implementation of the GST laws which created a ‘change-in-law’ event.
The judgement has come along expected lines, and perhaps its most unexpected quality is its delayed arrival, given that GST compensation is a frequent occurrence now, in which carrying cost is never included anyway.
In February 2016, SECI, under Jawaharlal Nehru National Solar Mission (JNNSM) Phase II Batch III Tranche–V, invited proposals by RfS for setting up of solar power projects in Karnataka. TSPPL won the bid to develop a 30 MW solar power project and entered into a PPA with SECI, as per which the scheduled date of commissioning (SCoD) was September 2017. However, in 2017, GST Laws were enacted for levy and collection of tax, w.e.f. July that year, on intra-state supply of goods or services, or both, by the Central Government. Consequently, Ministry of New and Renewable Energy (MNRE) issued an Office Memorandum extending SCoD of the solar power plants on account of the introduction of GST. TSPPL achieved commissioning in January 2018 and commercial operation in February 2018.
TSPPL later approached CERC, submitting that as part of the GST Laws’ enactment, a tax slab of 5% to 28% was introduced with respect to goods and services required for execution, construction and operation of solar power plants. These goods and services were previously either exempted or were under lower tax slabs. The change of tax regime has escalated the capital cost of the project, hence making the tariff quoted at the time of bid for allocation of project unviable, said the solar developer.
TSPPL submitted that the total escalation in cost due to GST implementation was about Rs. 87,90,302. The developer believes that the enactment of the GST Law is squarely covered by the definition of ‘Change in Law’ under Article 12 of the PPA. The Tariff Policy as amended in January 2016 also provides that increase in taxes and levies are Change in Law events, said the developer.
In response, SECI agreed that a number of taxes, duties, cess and levies had been subsumed in GST in July 2017. But it argued that TSPPL must place before the commission the extent to which its project was subject to such taxes existing prior to July 2017 which have been subsumed in GST. TSPPL, said SECI, is proceeding on the assumption that the entire quantum of taxes under GST are payable, which is contrary to the very scheme of the introduction of GST and the intention of the Central Government in rationalising the tax structure in a manner that various existing taxes will get subsumed in GST.
MNRE Invites EoI for Evaluation of Solar Park Development Scheme
The Ministry of New and Renewable Energy (MNRE) has invited Expression of Interest (EoI) from reputed experts and consultancy firms for evaluating the “Development of Solar Parks and Ultra Mega Solar Power Projects” scheme, which the ministry has been implementing since December 2014.
The main objective of the scheme is to set up at least 50 solar parks, each with a capacity of 500 MW and above, by 2021-22, with an estimated Central Financial Assistance (CFA) of Rs. 8100.00 crore under the National Solar Mission (NSM). While the scheme is ongoing in the current financial year, a large number of systems have already been installed or are under installation.
The purpose of the new study is to evaluate the implementation of the scheme by collecting information from state implementing agencies, solar park developers and other stakeholders. Appointed experts will assess the performance of the applications for different stakeholders and recommend on whether the scheme should be continued as it is or be modified in some way.
In order to be eligible to submit the EoI, interested candidates should have an experience of at least 5 years in conducting similar assignments and an annual turnover of at least Rs. 1 crore per year during the last three years will be eligible. Having sector specific experience and in-house capability to manage the assignment will be an added advantage. The consultants shall be short listed inter-alia based on their past experience of handling similar type of studies, strength of their manpower and financial strength of the consultancy firms.
Together with the Expression of Interest, the following details are to be sent: • Details of the constitution, ownership, organizational structure and main activities of the bidder organization, including details of full time professionals. • Unabridged annual reports or audited financial accounts for the last three years. Profile of qualification, experience and number of key staff. • Details of major assignments undertaken of a similar nature, including number of years’ relevant experience; past experience of studies of similar nature; past experience in carrying out studies in the related sector and studies carried out in the region.
After the evaluation of the responses to the Eol, bidders meet the eligibility benchmarks will be shortlisted. The shortlisted consultancy firms will then be invited to submit detailed proposal comprising a technical bid, financial bid, Earnest Money Deposit (EMO) in the form of performance security and related documents.
MNRE Issues RLMM List For Wind Turbines
The Revised list of models and manufacturers (RLMM) for Wind turbines in India has none of the surprises one associates with the ALMM (Approved list of Module Maufacturers) list for solar producers. For where the ALMM list is restricted to domestic manufacturers for now, the RLMM list has as many as 9 out of 14 manufacturers that are foreign firms, or have licenses from foreign firms to make in India.
According to the MNRE, around 70-80% indigenisation has been achieved with strong domestic manufacturing in the wind sector. All the major global players in this field have their presence in the country and over 44 different models of wind turbines are being manufactured by more than 17 different companies, through (i) joint ventures under licensed production (ii) subsidiaries of foreign companies, and (iii) Indian companies with their own technology. The unit size of machines has gone up to 3.00 MW. The current annual production capacity of domestic wind turbines is about 8000 MW to 10000 MW.
That, and the fact that Wind energy is already struggling to find takers on a stand alone basis due to the widening gap with solar power, means any further protection would be counter productive for the growth of the sector.
The latest list also enjoins manufacturers type and quality certification by an Internationally Accredited Certification Body as a mandatory requirement for manufacturers of wind turbines and components and the both certifications should mandatorily include Hub and Nacelle assembly/manufacturing facility in India. The timelines for processing of RLMM applications are: i. Online application for RLMM Registration by OE Ms - Last date 7th of every month (Soft copy through email and Physical Copy); ii. Review by MNRE- Written communication to the OEMs of any shortcomings/gaps by 30th of every month; iii. Replies to be filed with MNRE by OE Ms by 10th of the following month; iv. RLMM Committee to meet on 15th of every month and if 15th is a holiday, it will be held on the following working day; and v. RLMM list to be updated by 25th of every month.
The Concessional Custom Duty Certificates (CCDCs) regime also continues to apply, to encourage further manufacturing of equipment in India.
In 2021, solar capacity overtook Wind energy capacity for the first time in India, a lead that is expected to widen considerably in the coming years. However, Wind generation continues to lead till date, and actual solar generation will probably overtake wind energy generation only in another 3 months or more.
CERC Rules With NTPC in Dispute Involving Solar Firm at Bhadla
In a petition filed by Solaire Surya Urja Private Limited, the Central Electricity Regulatory Commission (CERC) has ruled in favour of NTPC. At issue was a plea to condone delays in the commissioning of these (70x2) 140 MW solar projects or which NTPC had enforced liquidated damages of over Rs 7 crores. Filed under Section 79 of the Electricity Act, 2003 read with Article 16.3.1 of the Power Purchase Agreements dated 02.05.2016 executed between the Petitioner and NTPC Limited, it sought extension of the Scheduled Commissioning Date for two 70 MW solar power projects.
Solaire’s main contention was that the delays were caused by delays in transmission infrastructure. This claim, while true as far as transmission infra delays went, was found wanting when compared to the solar projects actually commissioning dates. Since there was a delay there as well, and NTPC had charged damages only for the period of delay on the solar projects, and not actual start of injection into the grid, the CERC saw it fit to side with NTPC’s view on the issue. An interesting aside to the case was the commissions view that Rajasthan utilities are neither a necessary nor a proper party to the proceedings, since an effective order can be made in their absence and no relief qua the Rajasthan utilities is required to be granted in the present case. A key issue that swung the decision in favour of NTPC was the short notice given to the distribution utilities to provide transmission infrastructure by the petitioner, when a minimum of 60 days is mandated. According to the junior oil minister, Rameswar Teli, under its quest to reduce carbon emissions, India plans to mandate refineries and fertilizer plants to use some green hydrogen.
In a written reply to lawmakers on Monday, Teli said that India’s draft hydrogen policy will mandate a gradual increase in the use of green hydrogen instead of fossil fuels in refineries and fertilizer plants.
Even when the governments and energy companies across the world are speculating on clean hydrogen playing a major role in efforts to lower greenhouse gas emissions, its future uses and costs remain uncertain.
Although he did not give details but noted green hydrogen is yet to be produced in India on a commercial scale due to the high cost of production.
Power minister R. K. Singh also told lawmakers last week that the draft National Hydrogen Mission policy, prepared by the Ministry of New and Renewable Energy (MNRE), was under ministerial consultation.
The policy intends to boost green hydrogen production and its use across multiple sectors, including transportation, he announced. Consequently, the fertilizer minister Mansukh Mandaviya said last month, the use of green hydrogen would cut imports of ammonia and natural gas required for fertilizer production.
The draft policy wants green hydrogen to account for 10% of the overall hydrogen needs of refiners from 2023/24, rising to 25% in five years, a government source said. The respective requirements for the fertilizer sector are 5% and 20%, he added.
India is raising its renewable energy capacity, currently, 92.97 gigawatts (GW), to meet about two-fifths of its electricity needs by 2030 under the Paris climate accord, compared with 36.7% currently.
It wants to raise renewable energy capacity to 175 GW by 2022 and 450 GW by 2030. Mandating production of green hydrogen is one way to create significant demand for renewable energy, at a time when demand growth is struggling, and discoms are unable to get off thermal contracts.
India has already begun the use and announced production of green hydrogen as recently, in July, Indian Oil Corporation Limited (IOC) has announced plans to build the first-ever commercial green hydrogen plant at its Mathura refinery in Uttar Pradesh.
NTPC Renewable Energy Ltd. (REL) had also signed a Memorandum of Understanding (MoU) with the Union Territory of Ladakh to set up the country’s first Green Hydrogen Mobility project.
Recently, JSW Energy’s wholly-owned subsidiary, JSW Future Energy Ltd. partnered with an Australian firm Fortescue Future Industries (FFI), to explore opportunities to develop green hydrogen projects in India. Last week, Indian Railways invited bids to explore if diesel-fuel trains could operate using hydrogen.
Mandating Green Hydrogen Use In Fertilisers and Other Sectors Key, Says Minister
Indian Govt. Confirms Solar Imports Down To $571 million in 2020-21
Yesterday, the Union Power and New and Renewable Energy Minister Raj Kumar Singh while addressing the Lok Sabha announced that India’s solar cells and modules imports fell to $571.65 million in the last financial year (FY20-21) from $2.16 billion and $1.68 billion in FY1819 and FY19-20, respectively.
Till July end, India had imposed tariff and non-tariff barriers such as a safeguard duty on solar cells and modules imported from China and Malaysia, for promoting domestic manufacturing. China alone accounted for $494.87 million of $571.65 million worth of solar cells and module imports by India in 2020-21. Followed by Thailand that accounted for $18.76 million worth of Solar PV cells/ modules imported, followed by Vietnam ($14.97 million) and Taiwan ($11.28 million).
The government has been trying to protect domestic production and ramp up domestic manufacturing through various steps, including imposing Basic Customs Duty from 2022. But, till recently, India’s domestic manufacturing capacity is not enough to fulfill the solar target of 280 GW by 2030. India’s cell-making capacity is a little over 3 GW a year. The module production capacity in the country is around five times that of solar cells, yet it mostly depends upon China for solar cells and modules imports. However, that seems set to change fast, as Singh explained.
Singh replied to a question asked in the house saying, steps taken to promote domestic manufacturing of solar PV cells and modules include a modified special incentive package scheme (M-SIPS), Production Linked Incentive (PLI) Scheme. The Scheme has provisions for supporting the setting up of integrated manufacturing units of high-efficiency solar PV modules by providing Production Linked Incentive (PLI) on sales of such solar PV modules. The scheme was approved with a financial outlay of Rs. 4500-crore for five years.
For the solar energy sector, on 07.04.2021, the Cabinet approved a Production Linked Incentive (PLI) Scheme, namely, ‘National Programme on High-Efficiency Solar PV Modules’, with an outlay of Rs. 4,500 crore. Though on the same date, the Cabinet also approved another Production Linked Incentive (PLI) Scheme for White Goods (Air Conditioners and LED Lights), with an outlay of Rs. 6,238 crore, the same is not intended for the solar energy sector. (b): Solar PV cells and modules are already being manufactured in the country. To further enhance domestic manufacturing of solar PV cells and modules, the Government has taken the following steps: 1. Modified Special Incentive Package
Scheme (M-SIPS) Scheme of Ministry of Electronics & Information
Technology: The scheme mainly provides a subsidy for capital expenditure – 20% for investments in
Special Economic Zones (SEZs) and 25% in non-SEZs. The Scheme was open to receive applications till 31st
December 2018.
NSEFI Welcomes APTEL Judgement Outlawing PPA Curtailment
The National Solar Energy Federation of India (NSEFI) has welcomed the judgement of Appellate Tribunal For Electricity (APTEL) in the matter of “deemed generation” filed by the NSEFI on the behalf of its members against the Tamil Nadu Electricity Regulatory Commission’s (TNERC) order passed in March 2019, denying the said deemed generation.
NSEFI is a non-profit organization with the objective of solar power development. It is an umbrella organisation representing solar energy companies active along the whole photovoltaic value chain, project developers, manufacturers, engineering companies, financing institutions and other stakeholders.
APTEL, in its judgement, has allowed compensation at 75% PPA tariff along with 9% interest on curtailment for reasons other than “grid security.”
Speaking on this judgement NSEFI CEO Subrahmanyam Pulipaka said, “This is a landmark judgement by Hon’ble APTEL. This will go a long way in reinstating confidence in the entire Renewable Energy sector and will hold utilities and SLDCs accountable for curtailment.”
The key highlights of APTEL’s judgement are as follows: • “For the period of 01.03.2017 to 30.06.2017, the respondents [TNERC, MNRE, etc.] shall pay compensation for 1080 blocks considered by Power
System Operation
Corporation (POSOCO), during which the curtailment instructions were issued for reasons other than grid security, at the rate of 75% of
PPA tariff per unit along with 9% interest within 60 days from the date of this order.
Both SLDC & DISCOM [TNERC] shall jointly pay these amounts. The computation shall be made separately for individual members of the Appellant
Association based on the curtailment period/ blocks falling in 1080 blocks. • APTEL also ordered that for future curtailments, they have to compensate curtailment at full PPA tariff. • POSOCO shall carry out similar exercise for the period up to 31.10.2020 on the same lines and submit report to
Respondent Commission within 3 months. Tamil Nadu
SLDC and Appellant are directed to submit details to
POSOCO.
Major CERC Judgement on Safeguard Duty Payment, Discount rate, Liability
In a detailed 97 page order, the Central Electricity Regulatory Commission has passed an order that covers multiple petitions filed by 34 solar power developers, SECI itself, and involving multiple discoms across the country. The CERC was forced to move to this format as the queries were broadly the same, and required to be settled for clarity and to prevent any further redundant arguments. We list below the key issues as identified and summarised by the CERC, followed by the commissions response to each. The order was passed by a 4 member bench of the commission, chaired by P.K. Pujari, Chairperson. Considering the length and complication of the issues involved, and in the interest of timely dissemination, we will be holding off for adding any analysis to this order, as some of our readers always request. Issue No. 1: Whether the annuity methodology proposed by SECI is just and equitable and can be approved? • The discount rate of annuity payments shall be 10.41% towards the expenditure incurred by SPDs on account of Change in Law (GST Laws or Safeguard Duty, as the case may be). • The liability of SECI/ Discoms for
‘Monthly Annuity Payments’ starts from 60th (sixtieth) day from the date of orders in respective petitions or from the date of submission of claims by the
Respondent (SPDs), whichever is later.
In case of delay in the Monthly Annuity
Payment beyond the 60th (sixtieth) day from the date of orders in respective petitions or from the date of submission of claims by the Respondent • (SPDs), whichever is later, late payment surcharge for the delayed period Order in Petition No. 536/MP/2020 & Ors. corresponding to each such delayed
Monthly Annuity Payment(s) shall be payable as per respective PPAs/PSAs. • The “Tenure of Annuity Payments” shall be for 13 years.
The annuity payment liability shall be a part of the existing payment security mechanism as stipulated in the PPAs and already established under the PPAs by making suitable provision for the annuity payments. Issue No. 2: Whether interest cost on Customs Bonds executed by some SPDs is covered under Change in Law and whether it should be allowed to be recovered in lumpsum as a separate element? • The prayer of SPDs that the interest on Customs Bond should be covered under Change in Law and should be paid in lumpsum as separate element is disallowed. Actual cash outflow (due to levy of safeguard duty) for which bonds have been executed will be payable and claims for Change in
Law towards Safeguard Duty will be governed by orders in the petitions where the matter has been adjudicated.
Issue No. 3: Whether the cut-off date for payment of GST/Safeguard Duty claims in respect of orders passed by this Commission needs clarification? • Cut-off date for Safeguard Duty Claims:
The invoices related to supply of the goods can be raised only up to the COD for all the equipment as per rated project capacity that has been installed and through which energy has flown into the grid. • Cut-off date for GST Claims: The invoices related to supply of the goods can be raised only up to COD for all the equipment as per the rated project capacity that has been installed and through which energy has flown into the grid. in case of supply of services related to goods procured up to COD, the invoices are to be raised within 30 days of supply of such services, which cannot be later than 30 day of COD.
Issue No. 4: Whether there is implication of taxes and duties levied by the appropriate Government on monthly annuity payment and whether the same should be allowed as pass through on actual basis? • The SPDs shall have to pay all statutory taxes, duties, levies and cases etc. On
Monthly Annuity Payments that may be required to be paid as per the terms of
PPAs.
Issue No. 5: Whether the principles decided in this Petition can be made applicable to all the current petitions pertaining to GST and Safeguard Duty pending before this Commission? • Since the pending petitions were not tagged along with the current Petitions, no general Order can be passed.
Ready For High Tide At Jakson Group
Sameer Gupta
Chairman & MD Sundeep Gupta
Vice – Chairman & MD
At the closely held Jakson Group, known until recently for its prowess in the diesel genset market rather than renewable energy, setbacks are usually taken in its stride. The group has faced its share of challenges in a legacy almost as old as Independent India, thanks to its modest beginnings in 1947.
The two big disruptions recently have been the 2007-8 market meltdown and more recently, the 2017-18 period, when the firm weathered both a slowdown in its core gensets business and growth pangs in its new EPC business.
Come 2021, the firm is primed to seize the moment and prepare for what it hopes will be some of its strongest growth years, riding the new wave of renewable energy. In doing that, it will vindicate quite a few industry watchers who have always looked at the group as an agile, well run set up. As Sameer Gupta, Chairman and Managing Director leading the second generation of the family in the firm reminds us, “ Today, we have a board that is probably as good, or better than many public limited firms”. Interestingly, the firm’s move into solar happened on the basis of a recommendation from consultants at PWC, who the firm hired after the Lehman crisis and slowdown of 2007-8. “We realised it was not prudent to be so dependent on basically one line of business, and were eventually advised to get into three lines of business by PWC. Solar, Gensets and EPC broadly”.
While stories about IPO plans for the 2600 crore group return, Gupta is quick to add that there are no immediate plans, perhaps waiting to see the groups’ strategy play out a little before considering the big move. Just so you know, the management is hoping that the solar business, which delivered around RS 1200 crores to the firm in revenues till this year, will grow 3.5 to 4 times over the period to 2025. So just how has the Jakson group reinvented itself?
Perhaps the most visible move is the group’s move to build its cell manufacturing of 1 GW. Before that, it hopes to start production from its module plant from October, where capacity has been ramped up to 500 MW. Aggressive EPC plans, along with a focus on electrical contracts complete the picture for the firm.
“ Rooftop solar, particularly in the C&I segment has massive potential, and we have always been clear about expanding there with tight control over our sourcing and quality”, adds Sameer Gupta. Deputy Managing Director Sandeep Gupta adds “ Our own cell manufacturing should provide an additional 5-6% cost advantage, which is vital in this competitive segment”. He adds that considering India’s ambitious 450 GW renewable targets for 2030, of which close to 300 GW should come from solar, the C&I segment will be key. “ I don’t see utility scale additions beyond 13-14 GW per annum. The gap will have to be filled by the rooftop C&I segment, and we are planning for that”, he adds. The C&I segment is also an area of strength for the group, and its focus is on simply offering complete energy solutions that work for its clients, be it a genset, solar rooftop or a storage backed offering linked to either.
For the Jakson group, it’s positioning as distributed energy specialists and expert contractor is a natural evolution from its dominance in the genset business in the markets it operates in. A customer base of 60,000 previous customers also gives it unique insights, access and knowledge about the thinking in commercial and industrial firms across the country.
Which is one reason Sameer is still cautiously optimistic about the gensets business. “ We see three levels in the genset business, the smaller variants between 5-75 kVA, the mid range till say, 500 kVa, and the higher range which can go upto 3 MW or even more sometimes. The improvement in power supply, availability will impact the smallest range the most, while the bigger variants will continue to see demand well into the next 15-20 years”, he asserts. The only challenge to this continued growth for diesel gensets is ESG norms (Environment, Social and Governance) norms, where he expects to see more and more firms move to abide with better
standards. That means lower , but still consistent growth of 4-5% CAGR over the next decade, according to Sameer. Sandeep adds that even as the use of gensets has gone down as the power situation has improved, they provide the kind of guaranteed, instant power that few options do right now. For critical back up, they will continue to have a use case for many firms until that changes.
The firm has plans for residential rooftop also, as its own module production ramps up. An interesting move here is the plan to build the latest, high output modules with output upto 600 W from its upcoming plants. Sharing their insights, Sandeep says that the bane of utility scale solar, low cost and an even lower (balance of system) price is not as much of an issue in the C&I segment. “ Commercial firms do not necessarily have abundant land. So space is a constraint, making the case for better designed plants with higher output in the same space. Also, we urge them to take the long view, and not just the initial capex. Solar today delivers savings to you whatever way you look at it, whatever be its share in your total energy mix”.
The long time presence and brand visibility is also an advantage when it comes to the still untapped residential segment, reckon the brothers. “We already have a strong presence on the ground, and will look to increase touch points as well as increase communication outreach as (module) production comes online, says Sameer. Sandeep adds that the firm was constrained in the retail segment with a small manufacturing capacity. Like gensets, it prefers to make the key components here too, and with a larger manufacturing capacity, will expand presence across the country, moving beyond its stronghold in Northern India. “ We will expand our network with channel partners, and what we bring there is a complete kit, so that we have complete control over quality. That frankly will also be the assurance for the end customer, because otherwise quality can be very inconsistent from many of the installers out there today”. On the future shape of the residential rooftop market, Sandeep adds that he expects strong regional players to dominate, even as there will be the odd TATA group that has a national presence.
An area the firm had entered very early, but has stayed away for the past couple of years is its IPP(Independent power producer) or developer plans. “ Money is money, whether it comes from shareholders, banks, or even customers,” says Sameer. “ We have evaluated the recent bids for larger projects, and to us at least those prices were not delivering the kid of returns we look at”, he adds. Sandeep remembers how the solar plans started off slowly, with an initial focus on being developers. “ It was the Manmohan Singh government that announced a 20 GW target for the country in 2010, I think, and we decided that the time was ripe to get in”. The firm won in one of the initial bids, and got a 20 MW power plant, which it put up in Rajasthan along with a PPA with NTPC. From that PPA price of Rs 8.50 to the current price of well under Rs 3, the firm has quietly transitioned to a solutions provider from a developer. Sameer also highlights the firms plan in the Solar O&M space, as the installed base grows in the country. “ From about Rs 25 crores last Financial year, we hope to generate Rs 35 to 40 crores in the coming year from Solar O&M. As the overall market ramps upto to 100 GW and more of installed capacity, I don’t see why O&M can’t deliver 400-600 cores of revenue to us”.
Like the move to solar O&M, the firm is also a convert to storage backed solutions, using Lithium-ion batteries for now. For now, because Sandeep is clear that in the medium to long term, other storage options will grow too, be it non Lithium options for batteries, or even Hydrogen to fuel their gensets and more. For now, the firm is clear that it will provide all the options that make sense for its clients needs. Sandeep informs us that “while we don't plan to manufacture batteries per se, but we do plan to manufacture battery base systems. So what we will be doing is we will be buying the battery and then doing the packaging, the controlling software, the management system that complete the thing - that we will be doing in-house, but the battery or the cells per se we don't plan to manufacture”. “We have repositioned ourselves as a distributed energy firm. We are offering solar rooftop in C&I, energy storage solutions, and also hybrid solutions, where we ask our customers how we could optimise your energy needs and requirements. Our gensets team should be able to , and does offer complete solutions today, including rooftop solar where required”.
A lesser noticed but strong part of the growth mix for the group is its electrical contracting business and export markets. From sub stations to transmission lines, the firm does it all, and sees massive opportunities in the segment. “ Between Solar(manufacturing), EPC, and our work with railways electrification and other electrical work, we have a clear pathway”, adds Sameer.
Both the brothers see immense opportunities for exporting services, especially in Arica and the Middle East. Sameer likens it to a ‘golden window of opportunity “ for the next 5 years, which India must grab. That is also the nub of their belief that the country must build a strong domestic manufacturing base across the value chain, to ensure that the opportunity is not squandered away. A recent project, executed in Togo in Africa, is just the beginning of what the firm hopes will be many such wins in Solar EPC.
The whole ethos of the
company is energy independence
As the energy market continues to open up In India, it’s throwing up a number of opportunities for firms . One such firm is Australia based Sunpower Renewables, which has focused on storage based solutions using Lithium Ion batteries. Starting with a simple solar lantern back in 2016, the firm today is offering an array of portable storage products that it claims are seeing strong traction In India too. We caught up with Rahul Kale, Founder and CEO, and Nitasha Badhwar, Chief Strategy Officer, to understand the experience and expectations from India.
RAHUL KALE
Founder and CEO, Sunpower Renewables
So give us your introduction to Sunpower Renewables first. Rahul: We are an Australian firm based in Melbourne, Victoria, I have been the founder and now, CEO. Our whole core focus has been on product development and innovation, where we develop very innovative solar- portable solar lithium generators. What we’ve done is we’ve integrated all the different components of a solar power plant into a single compact device which becomes a plug and play unit, and can replace power requirements for backup like diesel generators, home ups inverters with lead acid batteries. And we mean that. All the different components of the solar plant with additional features like an in-built Inverter, MPPT charge controller, a pure sine wave UPS, a reversible net meter and an in-built Li-Ion battery pack for energy storage. Thus, ours is a complete, direct substitute and replacement for those units. We are one of the only companies in the world who have got a range of products, from the smaller handheld portable units to larger units used for residential and commercial purposes. Our closest competitor on the larger end of the spectrum is Tesla with Powerwall, and even they don’t have a portable version whereas all our machines are portable. We’ve been developing this product for the last 5-6 years. We started commercialising our technology in 2018, 2019. We’ve been in India for the last couple of years, and have seen significant growth and demand for our products being generated in the country. Our products are Australian made, all are manufactured in Melbourne and obviously as the pandemic is fueling more and more demand for electricity, the demand for our products is also going up exponentially.
Nitasha: I’d say our product really aids and affects the growth of solar renewable in the country, and everywhere else. Like Rahul said our range allows for anyone to use our product. So that means you could use a handheld if you’re going on a car trip, and you can use it to use storage for the house as well as for your business, or anything else. Beyond that we’ve been winning a few awards in Australia and internationally for the sort of innovative research that's gone into our product, which is one of its type.
How are customers using these products? Use cases. Rahul: The use cases for the products are very varied. Anywhere where electricity is required, our products can be used. You have your traditional segments like residential, commercial, industrial and off grid. We can see our products being used in defence sector, they’re being used in humanitarian aid, they’re being used in the medical industry at the moment during the pandemic for mobile hospitals. They’ve been used to power satellite phones in the pacific islands. We’ve seen them used for agricultural pumps and other agricultural equipment. We use them to charge electric vehicles for portable power. So literally, anywhere where there is power requirement. Fueling strong demand. Especially in a country like India, where a lot of people are still dependent on diesel generators or home UPS inverters as energy backup. Ours is a much better, cleaner, greener and more affordable option than any of the existing solutions that are available.
NITASHA BADHWAR
Chief Strategy Officer, Sunpower Renewables
What is your current manufacturing capacity? Rahul: Currently, we have a capacity to manufacture close to two and a half megawatts of storage products per year. For a market like India, as our growth and demand grows in the country, we are looking to move some of our assembly lines to India.
With your own set up ? Or through a partner? Rahul: We have a couple of distributors who are capable and prepared to take over the assembly lines over here. In stage one we’ll look to move some assembly lines and in the near future when we hit our target of 5 MW sales for the Indian market, then we will look to move the manufacturing over here as well.
These manufacturing numbers seem low, when we hear about GW sized setups all the time. Rahul: See, we’re looking at a completely different segment over here. You’re looking at solar panels and large scale utility products. That’s a very different market. We are looking at the diesel generator market or the home UPS inverter market, where there’s lead acid batteries. Two completely different markets. For a capacity like what we’re talking about in terms of 5 megawatts in energy storage, that’s still a very large number.
So far, the sectors you mentioned in India, be it defence, hospitals and emergency uses, the requirement has been urgent, and possibly cost was not the main issue. What about wider acceptance? Nitasha: In the last few years, solar panels and storage have continued to depreciate in price whereas diesel has continued to increase. We’ve all seen our bills, where, you know, the price of diesel is going up and significantly impacting all industries. People are opting for our product because it’s a one time cost, whereas with diesel you’re continuing to pay every month, and there’s a lot more maintenance. This tends to be maintenance free, and there’s not much effort required to set up either. As we mentioned, it’s a plug and play product. So the second you pick it up, you plug it in, and you’re ready to go
Rahul: So in terms of cost comparison to diesel generator, the payback is around 8-9 months and the life of our product is anywhere between 10-12 years, so essentially you’re getting almost 10 years of free power by opting for our machine. To understand this payback figure, consumption wise, if you look at a residential diesel generator that's used in a residential home, take a 5 or 7 kva generator or 10 kva generator. The cost of the generator plus the running cost with the maintenance and cost of diesel versus our cost for an equivalent product in our range, you’re looking at about an 8 to 9 month payback. By integrating it with solar electricity(generation) during the day, you can use the in-built batteries to power them during the non-peak usage between the evening- night phase and early morning.
And what is the maximum capacity you offer currently? Rahul: maximum capacity is around 50 kWh of storage in a single unit. It doesn’t necessarily end at 50kWh of storage. What happens is you can add multiple units just like the Tesla Powerwall, as its modular.
Nitasha: You know, one of the biggest challenges that we’ve had till now, was awareness. 2-3 years back, when we launched people were not aware that a product like this exists. Whenever they wanted to go for energy backup they still used to go for diesel generators or those bulky lead acid batteries, like if you look at your home inverter and the ups, they come with those bulky lead acid batteries which are inefficient and last as little as 2 years and are costly. Our products completely replace that- its more technologically advanced, its smaller and compact, it’s portable, you could literally pick it up in the car. We’ve got customers in Delhi who used the product in their homes during the year, and in the summer when they go up to Shimla for their summer holidays, they take the backup into the car and they take it up and power their homes in the hills. It becomes a lot more versatile in its usage and adaptability, rather than a bulky little battery bank as energy backup.
So on a per kilowatt basis, would you be able to share a number? Like what does it actually cost? Rahul: So per kilowatt we’re roughly about 75 to 80 thousand rupees per kilowatt hour (kWh). And when I say that remember that we have all the components already in our machine. So if you look at other units you have to buy a separate inverter, you have to buy a
separate battery, so all those costs add up, whereas ours has no reissue cost and everything is already part of that cost.
What about your portable sets, what is the lowest capacity and cost in your range? Rahul: So our lowest capacity is as small as a 130 watt hour battery, and we’re selling that for about 17500 rupees. We have seen a lot of success in tier two, tier three cities or in the remote camping kind of market when they want to go off grid for camping especially in this pandemic time where international travel is hit, every ones travelling domestically. So many people are taking our units and travelling with that. The larger units obviously go into the lakh range, a few lakhs depending on the size of the battery. While the cost per watt hour also reduces, our 10 kilowatt hour unit, we’re selling for roughly about seven and a half lakhs rupees. We’ve had a customer in the Andaman islands who has installed a 60kWh unit- so they’ve got a 150 kWh unit and one 10kWh unit. Above 30kWh unit, we also have three phase units. So we have got single phase and three phase, both types of units.
Nitasha: We like to think of this as bespoke electricity. According to your need is how much you buy, whereas with diesel, you might be lighting one light, but would have to burn that much diesel to get your generator running.
Sectors like fuel stations, telecom tend to be huge consumers of back up power. Hows have you done there/ We’ve had customers at a few petrol stations, and for petrol stations it’s a very different kind of value proposition. If you look at existing solar solutions they’re only put up for office lighting or canopy lighting. At a petrol station If there was any electricity shortage, even for one petrol pump nozzle, they have to run the entire diesel generator, which is usually a 5-20 kVa generator leading to inefficiency and wastage. What we’ve managed to achieve with our machine- so our machine has a ups in built in it, and the cutoff from electricity to our machine is 0.08 microseconds. So when the electricity goes off, there is no disruption in the power. The petrol pump nozzle can actually put on our machine directly. So even if there is no electricity, petrol pumps have not just recorded a drop in their operational cost, but also reported an increase in revenue.
How long should a 10 kilowatt battery last considering normal usage during a power cut? It depends on the load you put on. If we take a standard standalone home for example, with one or two ACs running, you have a load of about 3kW. So if there’s no electricity at all or no solar at all you’re getting 3-4 hours of backup with the ACs on. Without the ACs on, obviously, you’d get a much longer backup. Our whole point- the whole ethos of the company, is energy independence. The idea is that you should be able to live off-grid.
How about diesel gensets in the telecom space? Rahul: We’ve had success in Australia, in the Pacific Islands. In India, we’ve installed a couple of our units in the mining industry with privately owned mines. Austrade is helping us get connections with a few telecom players here to see how we would broaden our reach into the sector. In the Pacific islands, they were using battery tech from Germany in the telecom towers. They’ve replaced those completely with our products. For such a high value, modular structure, theft would be a risk. How can we control that? Rahul: All the machines come with a GPS feature. A mobile application enables you to remotely monitor performance, output. One of the anti-theft and antidamage measures we have taken is to build a cabinet around it to make sure it is protected. In a direct aid program financed by the Australian High commission in Rajasthan, we installed our units across 14 education institutions, and all these units are powered by our machines making them energy independent. We encased a small cabinet around the machines to make sure they are not tampered with.
Nitasha: With the larger units, you have the option off keeping the wheels on as these come with a break lock. This is meant to keep them in position, otherwise the wheels scan be removed. Keep in mind that the larger machines are heavy. A 10 kW unit would be about 250 Kilos.
What about recycling or buyback options? Rahul: There are two things that we are working on. One is that our life span for the battery is roughly around 10 years. Only the efficiency drops to 80 %. As a young firm , we are still some time away for that cycle to start. But we do plan to recycle those batteries . We are one of the founding members of the Victorian Cleantech
cluster. We are working not just to recycle the batteries but also improving the efficiency of used batteries. Extend its life. Well maintained batteries can last over 15 years, though we can’t claim that yet. In our R&D centre we are seeing over 15 year life cycles. Another option is to source used EV batteries as a battery for our product and sold at a much lower cost for the off grid market. Since these batteries only lose efficiency, but are still at 80% levels, which is good enough for stationary storage in many cases.
What is the current warranty on your products? We offer a 2 year warranty. Life span is about 10 years. The warranty is extendable warranty upto 5 years at a cost.
How are you selling in India? Rahul: In India we have multiple distributors to reach our customers. Prepandemic, we were focusing solely on selling through our distributors who already had a customer base. Post pandemic, we’ve had to ramp up our digital assets, our social media strategy and Again, pre-pandemic we are going solely through our distributors who already had a customer base. Post pandemic, we’ve had to ramp up our digital assets, our social media strategy, our PR activities. We are now on Amazon, we recently tied up with croma. Pre-pandemic, we were selling a lot of the larger units. During the pandemic, buying habits have changed. Suddenly, we have seen a big uptake in the handheld range also, By the middle of 2022, we will still see a lot of growth in the hand held segment but the larger segment will come back stronger. People are looking at cleaner, greener, more affordable options.
What is the current size and future targets for Sunpower Renewables? Rahul: Our topline currently is close to 8 million dollars. We are growing at 150% a year. Just the diesel energy replacement market is around 2.5 billion dollars. By 2023, we hope to do business worth 25 million dollars here. In the next 5 years, 50. Have you raised any funding? Rahul: We are debt free, no external funding. So self funded, a self-sustained business.
Nitasha: We will be launching some new products by the end of this year that we are very excited about. One option is dealing with last mile anxiety with EV cars. We will be offering a product that will boost the car batteries a little, giving it the added power to move to the nearest charging station if required. Do you see a further drop in prices helping? What’s the Ideal price point? Rahul: The challenge we have is not the price point , its more the awareness. This market has really surprised us. Feedback says that the assumption is that we largely sell handheld pieces. For the larger pieces of 10 KW for residential or business use, a Rs 7.5 lacs unit with an asset write off is not an issue.
As Australia, your home market is a market where rooftop solar has been a big success, and off grid applications too, how has that helped you design and validate your products acceptance? Australia has been quite successful in implementing its solar rooftop strategy through clear and regulated policies, along with Government incentives to promote the adoption of rooftop solar like tax breaks and subsidies. Since the last 2-3 years, there have been Federal and State incentives to promote the inclusion of batteries as part of the solar rooftop offering. This has helped us tremendously during our product development phase as we are able to test and validate our products, technology, and its commercial suitability real time in the market. We have tested our products in different industries, locations and customer segments to understand their performance across different weather and consumption patterns. Our partnership with the Calperum Environment Station in South Australia is an excellent example of this where they are using our handheld and grid connected products for independent and sustainable energy generation. The data we get from the station helps us in validating our product performance. Having our R&D centre in Melbourne helps as we can incorporate these learnings quickly into our product development cycle and continuously improve our product quality and performance. In the end we feel this rigorous and thorough testing has led the team to create an extremely versatile product, durable and capable of performing in extreme conditions and situations.
