MC Interview | Shifting from pure solar power to hybrid and green hydrogen projects: Amplus Solar CEO

Amplus solar to foray into wind energy for hybrid power.

Amplus Solar, a subsidiary of Malaysian oil and gas conglomerate Petronas, is moving beyond building only pure solar projects to hybrid ones, where power from wind and solar projects are bundled and sold to customers.

In a video conference with Moneycontrol on April 10, Sharad Pungalia, CEO and MD of Amplus Solar, talked about the company’s first inter-state transmission system (ISTS)-connected open access project and its plan to build green hydrogen units for the commercial and industrial (C&I) segments.

He also said that, in FY2024, the company plans to set up new renewable energy units of up to 700 MW, nearly a five-fold increase from 150 MW in the last financial year.

Amplus will soon start the construction of its first solar-wind hybrid power facility in Tamil Nadu.

Give us a lowdown on the ongoing and upcoming renewable energy projects of Amplus Solar.

In Amplus, the focus has always been on the C&I market. As on date, we have at least 1,400 megawatts (1.4 GW) of C&I portfolio with us.

They include both onsite (within the client’s premises) and offsite (large open access projects). Currently, we are doing our first ISTS-connected 360 MW open access project in Bikaner, Rajasthan. This 360 MW project will be commissioned in the fourth quarter of this fiscal year.

All this while, Amplus did not have wind power in its portfolio. Now, looking at the requirements of the market, we've started looking at wind projects as well. The construction of our first project (again in wind-solar hybrid model), which is under active development, will start soon in Tamil Nadu. In addition, we are doing an open-access project.

So, roughly close to about 700 MW is under active construction in Amplus Solar as on date. Going ahead, we are going to take up more hybrid projects (wind and solar) and also a few ISTS projects.

Since Amplus has been undertaking solar projects until now, how tough has it been to complete such projects in the past 2-3 years?

The supply-chain issues, which started with COVID-19, and, more so, the basic customs duty (BCD) that was imposed by the government, taxation, the flip-flop on the approved list of models and manufacturers (ALMM) etc., did have some impact on the overall growth trajectory for the company.

It hit us, especially because we are in the C&I space, where we do direct Power Purchase Agreements (PPAs). We had to go slow on our projects. Now, there has been an order where the waiver on ALMM has been extended for a year.

So, there is a 6-8 months’ window for further ramping up work now. But unless and until there is a clear policy with long-term certainty, planning projects and their timely execution would keep getting impacted.

In what aspects are you seeking clarity from the government?

Look, there is a lot of flip-flop that has been happening in the solar sector. From April last year, the BCD on solar cells and modules was imposed, and, all of a sudden, there was an extension for ALMM waiver till September.

Later, the government clarified that projects which have received approval, prior to a certain cut-off date, will be exempted. Then comes this order that projects which can achieve commercial operation date (COD) by March 2024, will be exempted from the ALMM mandate. Due to uncertainties in the policy, there are major price fluctuations.

For example, if I've already got my module from other sources, and for some regulatory challenge, if the COD of my plant gets delayed by a month, I will not be able to complete it by March 2024. Then what happens to my modules? Do I still get to use them or should I discard them with losses? There is no clarity.

Owing to all these issues, we missed out on or did not participate in projects worth about 300-400 MW, which we would have otherwise taken up. As a result, last year, our growth was only about 150 MW. This year, we plan to commission about 700 MW.

Like other companies in the industry, Amplus is also moving away from plain vanilla solar projects. What is the reason?

The reason why solar project projects were viable was because the government and distribution companies (discoms) were giving banking support. Now, gradually, the discounts are going away and they're taking off banking support. This is where the need to give more electricity to the client for the same contract comes. That’s why everyone is going hybrid, by bundling power from not just solar but from wind also.

Without banking support, I'm able to meet only 25 percent of my customers’ loan requirements. So, if I am able to put solar and wind together, I can achieve 50-60 percent CUF (capacity utilisation factor), which is why we are all moving towards solar-wind hybrid.

Also, I feel the government should increase enforceability. People who are bidding and are not delivering the projects should be penalised. I am saying this because the same issue which is happening in the solar sector where projects become unviable due to unrealistically low bid can happen in closed bids for wind energy projects as well, despite the ban in reverse auction. There also, people can quote crazy numbers.

The government is pushing indigenous manufacturing of high-efficiency solar cells and modules and is offering production-linked incentives for the same. To what extent do you see this space would change India’s solar story and how fast?

It is a good thing for sure, but I feel we have a long way to go on that front. People will set up solar module manufacturing facilities. Then, you will be arm-twisted on the cell level, because you still have to import cells from China.

If people set up a cell manufacturing unit, it goes way down to polysilicon. Now, how many people can manufacture polysilicon in the country? Today, if manufacturers are selling a module for, let's say, 20 cents, then for a cell, they're asking 15-16 cents.

Any investment or divestment plans?

See, we are backed by a very strong sponsor – Petronas. Last year, Petronas formed a separate arm for clean energy solutions - Gentari. So, there'll be three verticals in Gentari – green mobility, green hydrogen, and renewable energy (RE). Amplus Solar is a part of the RE initiative of Gentari.

So, we are not looking at any sort of divestment at this stage. The idea is to keep growing, keep doing the business. There is no divestment goal. As far as investment is concerned, yes, the sponsor has full support and backing and whatever project we can get, which will fit into the philosophy of value-addition and energy transition, the sponsor is ready to put its money behind it.

Please elaborate on the company’s plan to get into the distributed green hydrogen segment.

I want to take the rooftop solar story to green hydrogen. Amplus was the first company to undertake rooftop projects in a systematic manner in the RESCO (Renewable Energy Service Company) model. So, the idea was to get to the customers, ask for roofs, put up a solar project there, sell them power and operate and maintain the project for the entire life of the panel.

I believe green hydrogen is also offering a similar opportunity where all these industries, like glass or steel or fertilisers, can be tapped. These primary industries are also now talking of going green, at least, partially, for now.
So the plan is Amplus will set up electrolysers for the interested company in the C&I sector, and operate and maintain it until its life. Green hydrogen will be sold to these companies just like we sell green electricity to them.

To make the green hydrogen mission successful, the government must actively work on reducing the cost of renewable energy, which accounts for almost 70 percent of the cost of production of green hydrogen.

Does Amplus Solar have any plan to get into the energy storage space?

Going 100 percent green, without storage, is not possible. Today the prices of battery may not make that commercial sense. But we are hoping that as demand picks up, as technology efficiency comes in, prices should go down. That time, battery storage would become an integral part of our offering. We’ve already done 1-2 small projects of 1 MW or so. At this stage, it is quite prohibitory in terms of pricing, and that's why commercially it does not make sense for us to get into it right now. But maybe a couple of years down the line, I hope that it would come in that range where batteries become affordable.