Stable Commodity Prices Will Make Renewable Projects Viable, Says Sunil Rathi Of Waaree Energies
Sunil Rathi says renewable energy can help India avoid power shortages when demand spikes.
In the last two years, the Indian power sector has seen considerable demand-related stress. This year, the peak demand went up to 220 GW in May, and if that had continued for some more time, India could have witnessed dry-outs as there was not sufficient capacity and resources such as coal, gas, and renewables to meet the peak demand.
In an exclusive interview with BQ Prime, Sunil Rathi, director of sales and marketing at solar panel maker Waaree Energies, said renewable energy—solar and wind—along with hydropower, batteries, and pumped storage will be critical in avoiding the such emergency situations.
Around 15 GW of stuck renewable energy projects, mostly solar, will become viable as commodity prices have started to stabilise in the last two weeks, he said.
Watch the full interaction here:
Read the edited excerpts of the interview here:
What role do you think renewable power can play to avoid a repetition of such a situation?
We have over 400 GW of installed capacity in India, but the problem arose because of a gap in generation compared to installed capacity due to a lack of thermal coal. In such a situation, the role of renewable energy, with over 110 GW of installed solar, wind, and hydropower capacity, becomes critical. Also, I believe with round-the-clock power becoming a necessity and an increase in per capita consumption of power, the role of renewable energy would become even more important, along with pumped hydro storage, to avoid the situations witnessed in the last couple of years.
What role do you see for battery storage in controlling the intermittency of renewable power? Also, how do you expect the adoption to pick up?
The battery will become viable going forward due to scalability, although, at present, pumped hydro storage is being used along with wind and solar because it is more viable. But in the future, with the drop in prices, the combination of a wind-solar hybrid with a battery would become the norm.
At present, the levelised cost of energy with batteries is very high. It becomes viable only during the evening peaks of demand. However, just as the cost of solar panels and tariffs dropped in the last decade and it became peak power, the cost of batteries too would come down.
Sunil Rathi, Director, Sales & Marketing
(Source: Company)
There are over 15 GW of projects that are lying incomplete or have stalled since the imposition of basic customs duties and the notification of the "Approved List of Modules and Manufacturers" by the government. Do you think the government could have waited for the creation of fresh capacities before imposing duties or the ALMM?
The impact is not due to BCD. BCD was well thought out. It was imposed to increase the overall domestic manufacturing capacity, which happened. Today, we have 17 GW of approved capacity on the ALMM list. Another 17 GW is expected to come in the next six months. The government's intentions on sustainability and energy security were the right step. The problem arose with the Russia-Ukraine war, which increased commodity prices, making the projects unviable. Covid-19, supply chain issues, and the semiconductor crisis also impacted the sector.
Although we have seen the prices consistently rise in the last 18 months, we have seen a downward trend in the last two weeks. We anticipate the prices will stabilise and become the new normal, making all the stranded projects viable.
The Russia Ukraine war compounded the problems and led to higher commodity prices. But the prices of domestic panels were jacked up by more than 30% to match the prices of imported panels. This hurt the projects that developers bid on aggressively.
First of all, I completely disagree with this statement. There are 75 manufacturers, and not all of them are operating at full capacity. The majority of plants are shut down, or they are operating at lower capacity for three to four days due to lower demand. The cell prices have been artificially increased by China, which is even higher than the price of their finished product.
Also, on the import of cells, we have to pay a duty of 27.5% along with duties on glass, back sheets, and sealants. Besides, there is a shortage of cells as most of the cell manufacturers in China are also module manufacturers.
The second tender under the solar production-linked incentive is still pending. When can we expect it? Do you plan to participate in the tender?
The tender is delayed, no doubt, but I am not the right person to tell you why it is delayed. We are keen like others, to participate in the tender. Given the government’s intent to make India Atmanirbhar, I think it’s important to focus on the entire value chain, from polysilicon to modules.
Is that the reason why you are expanding your solar cells' and modules' capacity? Do you also plan to build a polysilicon capacity? What is the total size you are looking for each segment?
We are looking at 10 GW of capacity across segments. We are committed to having our first 5.4 GW of cell capacity by September 2023 and then adding another 1 GW by 2024 and 2025. In modules, we are already at 9 GW of capacity and will add a few more gigawatts in 2023. The plan will depend on industry requirements. We believe with the drop in prices, the projects will become viable and demand will go up.