Solar policy will help cut equipment costs and make setting up of new solar plants economical, says Ujaas Energy's Joint Managing Director and CFO Anurag Mundra.
About 50-60 percent of the raw materials needed in setting up the solar plant are imported and an integrated solar policy will make setting up of solar power plants at competitive costs, he said.
Equipment manufacturing costs will come down, Mudra said, adding that to make most of the boom in the solar energy space, an integrated solar policy is needed.
Below is the transcript of Anurag Mundra’s interview with Ekta Batra and Mangalam Maloo on CNBC-TV18.
Ekta: First wanted to start with the fact that how exactly is the solar space doing in India, the industry doing in India right now and what is the need for financial assistance if that is the case?
A: Solar is doing fantastic in India. Currently, we have a capacity of around six gigawatts and by 2022, as a country we want to reach around 100 gigawatts. That is approximately 20 times from its current space. We have been advocating this integrated solar policy since long. What is happening out of the total raw material which is required in putting up a solar power plant, almost 50-70 percent is being imported, because many countries, especially countries like China had an early mover advantage and they have the economics of scale. So, their production, their cost of production is cheaper.
As India has such an ambitious target to reach 100 gigawatts in the next five years, we are talking about even take a ballpark figure of Rs 5 crore per megawatt cost. We are talking about a business of around Rs 5 lakh crore in the next 5-7 years. So, roughly, around Rs 1 lakh crore per year. So, 50-70 percent is imported, we are talking about an industry who has a capability USD 10 billion per year of revenue.
But to have that, you need an integrated solar policy which enables us or enables the Indian solar developers to deliver the solar power plant at a very competitive cost. There is also one important fact. The major strength of solar industry or solar power is a distributed generation. What it means that you can have solar power plant, you can generate the solar power at the point of consumption and government through Ministry of New and Renewable Energy (MNRE) is laying a lot of stress to put up a distributed generation across the country.
Very recent, we had heard from MNRE and other stake holders and they are giving targets to every channel partners and all the stake holders to complete this much of work in next one year or so which was never unheard in the industry about this. So, government is very serious if you have an integrated solar policy, what it means that you can manufacture those products in a country. It will lower the cost of inventory carrying for any company. They are many times when you have to pay a high amount for carrying the inventories in your balance sheet or sometimes, you have to let go some particular project, because when you import the product, there is always a lead time of one month or so.
Mangalam: You were talking about the need for an integrated solar policy because equipments can then be manufactured in the country. Is there a lot of competition that you are facing or the equipment manufacturers are facing from China or other foreign countries and if yes, what are you expectations from the policy, what kind of announcements would make our country more competitive?
A: I will say the competition is a second phase, because we are the late entrant. If you look at the global scenario, Indian manufacturers were the late entrant. So, we do not have that economies. So, we can deliver an effective product at a very competitive price. To bridge that gap, you require an integrated solar policy and develop the whole ecosystem around the industry. So, I believe this policy is going to address that. This solar industry is there for the next decade, that is for sure. So, to have the maximum benefit out of this boom in solar industry, you need to have an integrated solar policy.