Clean Future in conversation with Nishant Arya, Executive Director of the USD 1.35bn JBM Group, on his ambitious plans to invest INR 1600 crore in the RE domain, the many challenges faced by new IPPs and why he is unfazed by cut-throat competition in the domestic market.
What were the key reasons behind your recent foray into the Renewable Energy sector with JBM Solar Pvt Ltd?
Let’s look at the broader picture before talking about our foray into renewable energy sector. Green energy is the only answer to reduce incremental pollution and thereby prevent increase in temperature. All major economies of the world realise this fact and are making a collective effort to invest in green energy.
The International Solar Alliance and Paris Agreement are the steps in this direction. Indian government is also committed to increase the share of clean energy to 175 GW. Of this, 100 GW is planned to come from solar power.
These are ambitious numbers and the corporate sector has to take active interest. JBM Group is committed to contribute in achieving the target. We plan to invest Rs 1,600 crore in renewable energy space in the first phase and are working on multiple projects under the initiative.
What is the current status of your INR 120 cr solar power plant at Haryana?
JBM Solar Pvt. Ltd. is developing Haryana’s largest solar power plant at an investment of INR 120 crore. The project I located in Barwas village (Bhiwani district) and will have a capacity to generate 20MW. Prior to this, we have also commissioned a 250KW rooftop solar installation at the India Habitat Center, Delhi.
What according to you are the biggest challenges faced by new IPPs entering the domestic RE market?
India is among those select countries that receive highest solar radiations on the planet. India on an average receives solar radiation intensity of about 200MW/KM2 which translates to 5000 trillion kW/hour energy per year.
Similarly, we also have a tremendous potential in other related domains like bio gas, wind and hydro. While the corporate sector are keen to leverage these opportunities to their optimum potential, it is important that the industry is provided with a sound and stable investment environment where critical components like project structure and funding don’t change with a change at the helm of these government authorities.
How do you see the recent drastic fall in solar tariffs impacting your company and the market scenario in India?
The recent fall in solar tariffs is the result of too much competition without a focus on long term sustainability of projects. If we look at the numbers, the tariff used to be around INR 15 per unit of solar power half a decade back and fell to an all-time low of INR 2.44 per unit in the auction of Bhadla solar park in May 2017.
The main argument behind the low bids is that input costs will fall in future when economies of scale are achieved. One can argue this in the case of solar panels. However, there are multiple components that go into setting up and operating a project. How can anyone say that all prices are going to fall? What about inflationary pressures in the economy? What about cost of funds? All these questions remain unanswered.
Tell us about your plans to expand to wind energy and bio mass in the next phase?
Wind energy and bio gas are unexplored segments of renewable energy so far. We see these as the next big contributors to THE renewable energy basket of India. It is not possible to share any numbers at present, but we are talking to government authorities and industry players on setting up waste-to-energy projects.
Some experts argue solar can never replace conventional energy in India given the absence of storage, due to the high costs involved.
That’s a very good question. Yes, storage is expensive and that’s a hindrance in expansion of solar footprint of the country. But the best thing about technology is it is ever evolving, creating improvements in terms of utility as well as costing as it progresses.
The government is seriously looking at storage as a field open to innovation. We are also working on storage. In fact, in another venture of JBM Group we are working with European transport equipment major Solar Bus & Coach S.A. to set up a complete solution for e-mobility in the country.
This includes storage, charging and zero emission mobility. We may apply our learning’s in that initiative to set up a storage solution for renewable energy in near future.
What is your strategy to achieve your stated target of 3000 MW by 2018?
In 2015, we had announced plans to set up a capacity to produce 3000 MW renewable energy by 2018. The sector has not developed the way we had envisaged and therefore we are redrawing the road-map. While we are continuing to scout for projects from government and third parties, we are also actively working on reducing our dependence on conventional energy.
We are going to set up 50 MW captive capacity for renewable energy in the next few years. Under the strategy, we have already set up solar plants at Manesar plant.
How confident are you of making inroads in this highly competitive RE market given the presence of bigger & established players and why?
We are not competing with anyone. I agree the RE market is highly competitive and that has led to the reduction in solar tariffs of late. For the reasons I enumerated earlier, it will be interesting to see how many of these projects see the light of the day and how many of them will actually survive in the long run. We are not in the race of winning projects for the sake of numbers. We are taking a long-term view and participating with financial sustainability in focus. There is a huge market for serious players like us.
Lastly how do you see the RE market evolving moving forward given the government’s ongoing thrust on sustainable development & clean energy for all?
The government wants to take the share of renewable energy to 175 GW by year 2022 and I see the authorities working in earnest to achieve the target. It is for the private sector to act responsibly and bid with a long-term focus on the sector. There are plenty of opportunities in the market and all stakeholders can contribute to the growth of the sector.