Today's Top Gainer
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Inderpreet Wadhwa, CEO, Azure Power, is a renewable energy enthusiast and has over 18 years experience building large scale infrastructure projects, patented application products, extremely profitable operations, and raising venture/project finance for startups and fortune 500 companies in energy, retail, financial services, telecommunications, manufacturing, CPG, and service industries. In 2007, Inderpreet incorporated Azure Power, which is now a leading solar service provider in India, with a vision for creating energy security in rural India through medium scale Solar PV generation. Inderpreet has relentlessly lobbied generation based incentives in solar sector through Clean Trade initiatives across US and India. He has been instrumental in creating India's first commercial MW scale Solar Power Plant. His work has been highlighted in top tier publications such as Wall Street Journal, Financial Times, Business Today, and Economic Times. He is passionate about rural electrification and energy security through clean energy sources. Inderpreet graduated from Haas School of Business at UC Berkeley and has Bachelors in Electronics Engineering from G.N.D.U, Punjab.
Azure Power is an independent solar power producer and the first private sector company to implement a megawatt scale grid connected solar photovoltaic power plant in India. Azure Power's team has decades of experience building industry-leading companies, executing complex infrastructure projects, and financing high-growth enterprises. Azure Power creates innovative solutions to deliver solar energy to its utility, government, and commercial customers. By providing solar energy as a service, Azure Power manages the entire project process for customers, reducing the upfront and ongoing operational and management costs. Azure Power bagged its first contract with the State of Punjab and got Foundation Capital and Helion Venture Partners to invest in the company. After the commissioning of the power plant in Punjab, Azure go tUS$10mn from IFC, a member of the World Bank group.
Replying to Anil Mascarenhas of IIFL, Inderpreet Wadhwa says, "Solar power is likely to be grid competitive around year 2017."
What makes solar energy so promising in the Indian context?
Among various sources of renewable energy, Solar is the most promising source. The raw material is abundant and the technology is extremely flexible, reliable and moving rapidly towards grid parity. A solar PV project can be done in any size and almost any location in India. For instance, a small 5KW home lighting system can manage energy requirements for a household, a 100KW system can run a small commercial center, a 1MW facility can produce enough power for 20 villages and so on. The modular approach for solar power (PV) expansion is very attractive for the Indian market.
The solar radiation is abundantly available in India and more than 300+ clear sunny days are available in most parts of India. Lastly, the cost of solar power has shown significant reduction year over year and with increase in supply/production a downward trend continues. It is likely that solar power will be grid competitive around year 2017.
What then needs to be done?
Consistent, predictable and long term regulatory environment is key for development of the solar power generation sector in India. We must have clear and long term visibility on solar feed in tariff in India. Getting utilities to offer bankable Power Purchase Agreements with adequate payment security is also important for sustainable solar power market.
What are the regulatory changes that need to be done to boost solar power?
Although the government has promised support, several steps have to be taken to meet the aspirations of the National Solar Mission. First, NSM comes with an estimated US$19bn cost, and the government has committed to funding $900mn for the first phase. Subsequent phases will require additional funding commitments. Second, streamlined project allocation and development in line with the gestation period of such projects will be needed to encourage new age developers to enter the market for rapid capacity build up. Prompt allocation, Power Purchase Agreements and swift permissions will help meet the NSM goals of 1300MW generation in its initial phase. Finally, project allocation criteria needs to be succinct and should be flexible enough so as to allow foreign investments and project finance. To encourage new companies, criteria such as multi-year operations and turnover in India should not be imposed.
There is a need to provide payment security, because these projects require a long term debt (10-15 years to make these projects work). Also, since the Indian banking sector does not have a lot of experience in financing these projects the Government could provide something like a loan guarantee for these projects to private banks so they can finance solar power plants.
Lastly technology innovation must be encouraged and all kinds of technologies should be allowed for implementation without any import restrictions.
What is the percentage of solar power being used in India?
India has a solar-based power generation capacity of over 200 MW, which the government aims to expand to almost 20,000 MW by the end of year 2022 under the national solar mission plan.
The market for solar power worldwide has expanded by over 6 giga watts in the last one year. Within India, last year large scale solar power generation expanded by less than 5 MWs. It is important to ensure that India catches up to other countries and harnesses the massive potential for generating power from the sun. The next 1-5 years will see a massive expansion in the supply of energy generation from the sun in India. We believe that, in line with the National Solar Mission, up to 1 Giga watt (1,000 MWs) of capacity will be brought online by 2013 and 20GW by 2022.
Tell us about Glen Minyard joining the company. What changes do you expect to witness?
Glen, in the position of Vice President, Design and Engineering, is going to be instrumental in scaling Azure’s technology leadership in Solar IPP business. Excellence in PV system design and installation is one of Azure Power’s top priorities and a critical component of our strategy and future performance. Also, solar energy is a new sector in India and requires experienced strategic push.
We plan to expand expertise in the engineering department and to scale our business this year. What makes Glen perfect for this position is:
What is your capacity at present? To what extent do you see it growing in the coming years?
Azure Power has 2MW running and expect to get to 100MW in the next 3 years. Azure plans to implement several MW scale solar power plants across the country. The plants, once fully operational, will produce clean energy; result in avoidance of CO2 emissions and supply regular power to a large number of households. In addition to the 2 MW Solar power plant set up in Awan, Punjab, Azure Power has already inked agreements with Governments of Gujarat, Haryana and Karnataka and is also in talks with State Governments in Maharashtra and Rajasthan. In fact, a 15MW power plant in Gujarat will be ready by mid 2011. The company already has projects of up to 22 MW under development and is in talks to setup projects worth another 30 MW.
Where do you source your modules and inverters from?
Presently, Azure is importing the modules and inverters required to set up the solar power plant from Germany and US. Though there is lot of information that suggests that cells and modules should be sourced from domestic suppliers who have the right product at the right price, it is yet to be seen. From some of the preliminary efforts that we have made in the domestic market most of the suppliers don’t have products available for sale in the domestic market since they are already committed to exports. In fact they are not committing to anything for delivery in this year. Also, the pricing is higher than what the international markets offer.
Briefly explain to us Solar as a service model?
Azure offers clean and affordable solar energy to our customers based on the "Solar as a Service" model. Azure designs, finances, executes, operates, and maintains high quality solar power plants for long term periods (15 – 25 years) and assures long term energy pricing and security. Our customers; whether utilities, governments, or commercial entities, enjoy all the economic and societal benefits of renewable power without having to own or operate power plants.
When governments, utilities, and commercial customers work with Azure Power, through Solar Power Purchase Agreements (SPPAs), they work with one company that controls the entire execution process, without third party reliance. Some of the companies in the market sell systems outright, making the consumers face the high upfront cost of system and AMCs or O&M headaches. With Azure the consumers only pay a predictable energy bill based on consumption.
Currently, while is there is a lot of interest in the solar sector in India, there are no private companies with MW scale grid interactive experience on the ground in India and who have embraced solar as a service model. At this point of time the biggest differentiator is that we are the first IPP (Independent Power Producer) in the solar sector and therefore no one else has the experience we have on ground in India!
What is the cost of setting up a plant?
The cost of setting up 1 MW plant in India today is about Rs170mn, which can be leveraged at 70% debt and 30% equity, Azure Power is all set to do 100 MW in 3-4 years.
Who are your major clients? Who are some of your competitors?
Azure has tied up with State Governments to set up Power plants. Hence the major clients of Azure as of now are Electricity Departments in States like Punjab, Haryana, Gujarat, Karnataka. They are also in talks with other state governments for setting up solar power plants.
The Solar energy market will be a huge market where many companies will be successful at building solar power plants. We look forward to having competitors that help us to build the solar power sector in India. We believe that have many successful participants will increase the opportunity for all companies and provide better, cleaner power to India more quickly. Some of the main competitors would be power companies like Tata, BHEL, Reliance and other individual start ups like Astonfield.