Below are the excerpts of our recent interview with UB Reddy,Managing Director,Enerfra Projects (India) Pvt. Ltd
What is current installed capacity of Enerfra and How has been your journey so far?
Enerfra is proud to have contributed to the development of 322 MW so far, working with a number of leading OEMs and developers. The journey so far has been good, as the market is growing. Enerfra has also signed on with a leading developer for solar.
Do you think India would be able to reach the target of 60 gigawatts (GW) of wind energy capacity by 2022 especially given the stiff competition the segment faces from Solar energy & withdrawal of certain tax benefits for the wind segment?
India can absolutely reach, and will reach 60 GW of wind by 2022. Let us look at the four key areas for success:
a) Quality Sites: With 32 GW of wind commissioned, India has sufficient sites of good quality to develop another 28 GW to get to 60 GW. Enerfra itself has a number of good quality sites in its portfolio.
b) Investment: As the record 5.4 GW commissioned in 2016-17 shows, there is no lack of investor interest. In fact, investment in renewables in India doubled from $7 billion in 2015-16 to $14 billion in 2016-17.
c) Technology: India has sufficient access to leading edge wind technology and mature manufacturing capacity. While Gamesa and Suzlon are established players, we expect new players as well. Vestas has come back, and Enerfra has been approached by global players who would like to enter the Indian market.
d) Grid Capacity—the Big Question: This is our top constraint. And this is also the lesson from US, Europe, and China. Two things need to happen here.
1. Grid Expansion: to evacuate power from windy to non-windy states. A green corridor has already come up and the central government via PGCIL has shown great cooperation and inclination to invest more. Only the central government is capable of this and they are doing a good job. We feel positive.
2. Grid Compliance: Renewables used to be a small industry that needed protection from regulations. However, in 2016-17, India added 12.5 GW of renewables and 10.2 GW of conventional sources. We see a similar trend globally where renewable capacity addition and investment is higher than that of conventional energy.
Wind and solar are now material contributors to the grid in India, especially in the south and west. For grid safety and reliability, Grid Compliance is now a critical success factor. The government has addressed this by mandating Low Voltage Ride Through (LVRT) for wind, and is about to expand the scope to solar as well as other areas of Grid Compliance.
No industry wants more regulation. However, lack of LVRT has created and continues to create grid safety and reliability issues. The entire industry can collapse unless we are mindful of safety and reliability. So we should welcome this regulation.
India is coming up with good laws. The key to success will be implementation and inspection of Grid Compliance.
Solar is not a competition to wind at all, whether one looks at investment, land, or technology. If anything, solar complements wind in India as the wind season is dominated by monsoons when solar availability is low, and solar dominates in winter when wind is low. Some of India’s most favorable solar locations do not have wind potential, so there is no competition for land.
As to withdrawal of incentives: both wind and solar are now mature and the economics have improved. Government incentives are being withdrawn globally, whether it is in the United States, China, Spain, or Germany. So we should not be surprised when India does the same. Even without GBI or highly favorable depreciation, the industry can thrive due to superior technology, better efficiency, and most importantly, due to the transparent policies of the Modi government. We simply need to keep up the focus on grid expansion and compliance.
What are your views on repowering policies? Do you think they could be game changer for the wind segment?
India certainly has repowering potential. However, there are grid issues in Tamil Nadu, the state with the highest repowering potential. Repowering will require yet more evacuation capacity. Considering these factors, we think repowering in any material form is still a few years away.
What will be the impact of Reverse bidding on the wind energy sector?
Reverse bidding for wind, like the one conducted by SECI in February, combined with direct evacuation to central grid is exactly what is needed to bring in transparency and market economics. It is a great move.
Instead of walking with the crutches of support from the government, the industry can walk faster on its own two feet. The results of a clean and efficient political system are clear: 2.3, 3.5, and 5.4 GW in 2014-15, 15-16, and 16-17 respectively! This is a tribute the leadership in the industry and to the government.
What is your current order book position and what are the projects that you are currently bidding for?
Across the spectrum of EPC for wind and solar, O&M, and Grid Compliance Solutions, Enerfra is engaged in opportunities worth 1,000 to 1,500 crores over the next two years. We are pleased to be pursuing these partnerships with our global partners, which include OEMs, technology companies, and service companies.