For Make in India to succeed, we need to compete with Chinese imports: SB Energy CEO
SB Energy, which is backed by Softbank, is looking at a major play in the renewable energy space. Its CEO Raman Nanda spoke to TOI about the company’s plan and evolution of the industry and dismissed charges of indulging in cartelisation. Excerpts:
How do you see the pace of progress of solar energy in India? Given the cheap access to coal, should India invest in clean coal technology?
Solar, now below Rs 3, is already cheaper than half of India’s power which is at Rs 3.52 and rising. With solar this cheap, the true pace of progress is only limited by how quickly land and grid can get ready. The government’s 500 GW target by 2030 is viable. With clear and reliable policy, the industry will work hard to ensure India emerges as the global leader in this industry of the future.
Since Narendra Modi became PM, the government has taken the necessary steps to transform a megawatt industry into a global gigawatt industry, and they did it in a way that it captured the world’s imagination. There are three building blocks; first, land. No nation that I know of has created solar parks at such scale and speed. These parks are being developed across India. Second, the grid. The government’s real efforts to implement its Green Corridor plans have resulted in near-zero curtailment for solar. And third, the PPA. After Madhya Pradesh set the benchmark, the National solar PPA standard has been improved. India has demonstrated global leadership in firmly establishing these three building blocks.
What are the missing pieces in the jigsaw puzzle that will help in speeding up execution?
A lot has been done but you are right. Things need to speed up. To achieve 500 GW, the industry needs to ramp up to 30 gigawatts a year, which is 3x our current pace. It will take $200-300 billion fresh investment by 2030. To attract this scale of investment, we should upgrade the Solar PPA to international standards. Only then can we attract serious global investors at the $100 billion scale. We also need to accelerate work on modernising the grid, implementing Green Corridor plans and developing Solar Parks. Only when these building blocks are in place can the industry gear itself up to deliver.
Do we need a bigger scale for the ‘Make-in-India’ piece to fall in place?
To compete with the World’s best, we need to think big. Eight of the world’s top 10 manufacturers are in China. They benefit from huge scale, 50 GW+, a mature, dynamic and resilient local supply chain, and generous government incentives. For Make in India to succeed, we need to compete with Chinese imports. We need to think big. A few gigawatts here or there won’t make a difference. If we don’t think at scale, it will be challenging for us to compete.
And even if we get the scale right, we should be clear that it will take a few years for the industry to become truly competitive. This will not happen overnight. There is no magic bullet.
Storage should also be ‘Made in India’. This industry is still small globally, but getting ready for vertical lift-off. Now is the time to attract them to India and become the global leader in storage, another technology of the future.
How are two recent developments, a weaker rupee and the safeguard duty, going to impact tariffs and manufacturing plans for solar equipment?
We have already seen a 20-30 paise increase, a 10% bump up in winning tariffs. This is due to the weakening rupee and rising bank interest rates. We are yet to see the full impact of Safeguard Duty. The industry is doing its best. Module prices are down and EPCs are constantly reducing prices. But financial and regulatory headwinds are out of our control. They will continue to impact solar tariffs.
A robust, competitive manufacturing industry at scale could eliminate these issues in one stroke. And boost jobs, industry, and GDP.
Where do you see the company in next five years?
Our goal is to be a scale player. We began in 2015 and have spent our first three years working hard to build our first Gigawatt. We are ready to commit to being a long-term partner in the Prime Minister’s bold Vision for Renewable Energy for India, through fair, open and transparent processes.
Do you see the cost breaking the Rs 2 barrier very soon?
Let’s not forget that we’ve watched a rapid drop from roughly Rs 18 to Rs 2 in 9 years, which is just incredible. Given bare bone margins today, there has to be a tectonic shift for tariffs to come down further. I don’t think it’s going to happen in the near term. And, this is the wrong focus. With solar so cheap today, our attention should be on building a robust high quality industry at scale, which can in the next five years become the world leader, create millions of jobs here at home, save billions of dollars in exports, boost the economy and contribute towards energy independence. The industry can attract $100s of billions of foreign investment, a lot of which will get invested in the remotest parts of India. Just think of the opportunity for inclusive growth, by investing billions into clean infrastructure in the remotest parts of India.
When you say tectonic shift, what do you mean by that?
Back to the tectonic shift to go below Rs 2; the first step is reliable policy: a dependable calendar of projects at scale will allow the industry to re-imagine what we can do as developers, designers, suppliers, builders, financiers, and operators. How we can better use technology and scale to eliminate unnecessary cost and waste.
Source: timesofindia.indiatimes.
