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WindInsider magazine got an exclusive opportunity to interview Arun Tripathi, Head – Energy Business (Solar, Wind, and Energy Storage), Hero Future Energies, and learned about the wind sector performance so far, the status of financing in the sector, and how wind sector can be boosted further. He also spoke about recent developments in the company, challenges faced, and his outlook on the sector’s future.
How do you see the performance of the wind sector so far? What can be done to give it a boost?
The sector can be categorized into pre and post-FIT eras. In the pre-FIT era, It was somewhat incubated by the agencies with the help of policies and regulatory frameworks. Whereas in the post-FIT era, the industry was found wanting in terms of project implementation. The idea was to create a self-sustained environment for this industry, but things have not gone as per expectations so far. The auctions were good, but the lack of synchronization between state and central agencies resulted in a lower number of projects being commissioned vis-à-vis the volume auctioned. The government still needs to support the industry in areas such as land acquisition and various approvals. Localization and indigenization are the keys to success in the reverse bidding era. We understand that reverse auctions take place at a much faster rate than PSA approval and adoption of the tariff; delays in such regulatory approvals raise concern over PPA sanctity, thus dampening investor appetite.
Now with new-age tenders like Hybrid, RTC, Peak power, Wind is set to play a very important role and the future looks promising.
How is the year 2022 progressing for Hero Future Energies? What have been some recent developments in the wind portfolio in your company?
This year we have tried to optimize generation in our existing 600MW portfolio. We have commissioned a 27.3 MW wind project in Telangana and are working on a 76 MW Wind project in Maharashtra. We have been very calculative and cautious when it comes to participating in standalone wind tenders post-2019; after our successful bid in the NTPC Wind tender(300MW); but, going forward wind will be an essential part of our energy solution offerings; be it new-age tenders wherein it is essential to blend wind with Solar or our offerings in C&I segment.
What is your opinion on the present status of financing in the wind sector? What opportunities are likely to arise in the near future?
Wind projects are falling under the renewables category and there are many govt and private players for financing these projects subject to certain conditions. The following are the challenges as of date pertaining to wind project finance-
- Lenders are accepting SECI/NTPC and Good state as off-taker for project finance.
- Pre disbursement condition for land acquisition.
- The cost of finance is still a challenge, and the prepayment penalty is very high to consider the refinance of the project post-commissioning.
- Very limited time is allowed for security creation within which multiple approvals need to be secured and a lot of procedural activities are required to be done.
We may see some new opportunities and avenues for the refinance / construction finance of the projects, such as the introduction of a rupee bond for the project to get the interest benefit along with the increase in tenure.
What has been the toughest challenge you’ve faced in the wind business? How did you overcome the same?
We have faced several challenges in land acquisition and getting approvals in the past 4-to 5 years. The transition from FIT to reverse bidding has more or less been the same for every IPP / OEM in this industry. Delay in regulatory approvals and land allocation by certain states remain major concerns, severely impacting project schedules.
What is your view on the growth of the wind industry in the coming years?
Wind in the coming time is going to be much more critical than ever before; I have no doubt that wind will be an essential part of energy solutions going forward.
Only thing is that the industry needs to be localized and indigenized which further needs support from the government. In my opinion, India is going to emerge as a RE champion or leader in the region and will continue to be the focus of attention, as a huge emerging economy whose energy demand is increasing each day. The regulators, policymakers, developers, and OEMs all know this well and must operate in a synchronized manner for smoother project implementation.