Renewables Need Viable Tariff Policy
[Astonfield is implementing India's first 50-mw solar plant in Gujarat which, Shah and Sen claim, will be "an important milestone for the solar initiative in the country."]
What inspired you to enter the Indian renewable energy sector?
India is a country which is adaptable to different climate, and renewable sources such as sun, waste and biomass are in abundance, which can be converted to energy. Compared to coal and nuclear power projects with greater capacity, renewable energy projects with lesser capacity will be more viable and cost-effective. We came to India in 2005 and are slowly progressing with a concrete structure for the country to move ahead. We are going to generate power under three modules: solar, biomass and waste-to-energy. Things may not move as fast as they do in Germany, France, UK or USA, but we are very bullish about our prospects and opportunities in India. We build, operate and own the plants that we implement.
We are mobilising billion-dollar investment in India and for that we are into negotiations with many financial institutions through asset-based management.
Where does Astonfield stand in renewables? Has the global crisis affected your business?
We would like to position ourselves as a market leader in coming years. We will not compromise on our quality at any level. The global meltdown has not affected our projects mainly because of the continuing cost reductions of solar panels, nor do we expect to be adversely affected by the economy in the future. Emerging markets and developing nations are posed to execute a major spend on infrastructure by 2015, to the tune of $2 trillion. At least half of this spend will go toward energy production. There will never be a shortage of demand for power, and in countries like India, it is now not a question of whether we should spend on energy production, it is how much and how fast can we spend to make energy security in India a reality for all.
What do you think is the solution to the present-day energy crisis?
Renewables could be the answer to the present energy crisis in India. Conventional energy plants take at least five to six years to come up and all the thermal plants are based on coal. In this country nobody wants anybody to mine coal; instead, there is pressure on the government to import coal to control the price. These plants also require a lot of land.
On the other hand, renewable energy plants require less land. We decided not to acquire land through the state government and we have a land acquisition team. For each project with a capacity of 5 mw to 10 mw, the land requirement is between 25 and 55 acres and the communities we serve will benefit through the electricity produced to be fed to the local substation. In renewable energy projects, the displacement of people is significantly less or non-existent. Our mega projects will come up in Gujarat or Rajasthan which have vast tracks of desert land.
What is your view on India's renewable energy policy?
Our opinion is that, for the last few years, the government has become serious about the renewable energy sector and has put in place a renewable energy policy. The government has created tariff orders to allow commercially viable renewable energy projects with less capacity.
Tariff is very important as, in solar power, one cannot get high returns; only 15 per cent as per the policy. We have worked with the Gujarat government for creating a levelised tariff. We are awaiting a viable policy from the Centre.
However, there is a vast gap between the government's thinking on renewable energy and that of the financial institutions and banks. They should be made aware of the sector and the opportunities available for developers and investors.
Which are some of your upcoming projects?
Currently, we have received approvals from five states, West Bengal being the first. In India, at present, the total capacity of grid-connected solar photovoltaics is 2.5 mw.
We have received approval for setting up the first 5-mw grid-connected solar plant, the biggest so far, in Bankura, West Bengal. We have acquired land for this project and civil construction work has started. We are also expecting the approval for another 5-mw grid-interactive solar plant in Bankura by the end of February. We are looking for companies with expertise and financial assistance to work with us.
Also in West Bengal, we have received clearance for a 10-mw biomass plant in Gangarampur and we are in the final stages of negotiations for a 54-mw municipal solid waste-to-energy project in Dhapa, a 186-hectare waste site in Kolkata. In Haryana, we plan to set up 5-mw (3 mw & 2 mw) solar plants. We have also received approval for a 5-mw solar power plant in Rajasthan.
In the south, we will mostly look at solar and waste-to-energy modules. Recently, we got the approval for a 10-mw solar plant in Karnataka and we are negotiating with the Kerala government for a waste-to-energy unit. Karnataka Renewable Energy Development Corporation Ltd has asked us to work with them for 100 mw solar electrification across the state. We will not take up biomass projects in Tamil Nadu and Andhra Pradesh as the cost of rice husk is very high and tariff very low.
In Maharashtra, we have negotiations with the Municipal Corporation of Greater Mumbai for two solar and waste-to-energy modules.
You also signed an MoU with Gujarat for solar power plants.
Yes, we will set up a 50-mw solar plant for which the land will be in our possession within 90 days. We are still absorbing the state renewable energy policy. It will be a four-five year deployment programme. A couple of megawatts will be implemented this year. We hope to implement the first 50-mw solar plant which will be an important milestone for Astonfield and for the solar initiative in India.
Where do you see Astonfield in India in five years?
Nearly 80 per cent of our operations will be in India. It will be our global hub in the field of engineering, excellence and operations. Our bulk of businesses will be India.