How has harvesting solar energy helped corporates in their aim to go sustainable?
Primary motivator for Corporates in India and globally for adopting renewable energy at scale is to achieve the twin benefits of profit improvement and carbon footprint reduction. Renewable energy, especially solar, has established itself as the technology of choice for new power generation capacity and India's recent achievement in generating the lowest-cost producer of solar power further reflects an ongoing shift towards renewable power.
In India, harnessing solar energy is approximately 30 per cent cheaper than prevailing grid electricity tariffs and is a logical solution for corporates to abate carbon emissions and improve cost efficiency effectively.
Secondly, CleanMax Solar’s innovative OPEX Model allows companies with healthy credit ratings to install solar plants without any capital expenditure, hassle-free. Thus, it is a logical, reliable, maintenance-free sustainable source of energy.
Could you elaborate of some of the key aspects to be considered while initiating the installation process and maintenance of solar systems?
Safety issues are common, especially for rooftop solar installations and maintenance. By proactively incorporating preventive measures for working at heights, it can help to ensure a hassle free installation process. The project technicians should conform to all safety precautions while installing or maintaining solar power system on roofs . CleanMax Solar prioritises the safety of people as well as the system, hence we carry out a Job Safety Analysis (JSA) before every project. This is important to pinpoint potential safety hazards and address them accordingly. Accordingly, necessary precautions are taken to make sure that the Solar PV systems run optimally.
Cost seems to be a major factor that hinders the growth in this sector? How is this being addressed?
The only cost in harnessing solar energy is the upfront cost of setting up solar power systems. It is estimated that in just the first 5 years, you’ll recover the investment equivalent to the cost of installing solar energy system.
The Energy Sale model/ OPEX Model, pioneered by CleanMax Solar, is an added incentive for corporates to adopt solar with a zero upfront cost. With this model, companies do not have to make any upfront investment in a rooftop solar plant and can buy solar power faster due to simpler, secure and systematic procurement approvals. The operations and maintenance of the plant lies with CleanMax Solar during the entire lifetime of the project and the client pays only for the power consumed per unit, which is 30-40% cheaper than prevailing grid tariffs in the specific states.
For example , our client, Viviana Mall, in Mumbai, have installed rooftop solar plant using our OPEX model with a total capacity of 1.58 MW across 5 roofs. The mall now enjoys an annual reduction of INR 10.5 million in energy bills and abates 1,904 tons of carbon dioxide per annum.
The Government has also promoted this model, popularly called RESCO for speedy adoption of rooftop solar across government buildings and education institutions.
What are some of the biggest steps taken by the industry to endorse the rate of adoption of solar energy?
Climate change is today recognised as one of the biggest threats to humanity and our environment. Our dependence on fossil-based fuels is the most signiﬁcant contributor to climate change; thus, addressing energy issues is fundamental to tackling climate change. With India being a growing economy, power consumption is only going to rise, so adoption of alternate forms of energy is the ideal way forward to manage balance between economic growth and sustainable environment.
Some steps taken to ensure higher adoption include:
Specialised bodies introduced by the Government: The specialised bodies formed by the Government of India like the Ministry of New and Renewable Energy (MNRE) and subsequently the Solar Energy Corporation of India (SECI) have played a pivotal role in helping India become one of the fastest adopter of solar energy.
Subsidies and Tax Incentives: The subsidies and incentives provided by the Government since 2010 have been instrumental in adoption of solar energy. Some of the key tax incentives that contributed to the growth specially in initial years is the Accelerated Depreciation Benefit and tax holiday announced under 80-1A, which provided a major relief to renewable energy developers by offering necessary tax breaks.
Hedge against electricity costs: Solar power consumers in India today enjoy better energy security by locking in the cost of solar electricity for a period of 25 years, thereby can hedge against variations in grid electricity prices, which are tied to fossil fuel costs.
Land Availability: Due to the climatic condition of India with 240-300 sunny days in a year, land availability for solar generation is easily found. Most draught prone zones in rural India are arid with high radiation and are viable for setting up large solar parks.
Solar tariffs cheaper than grid: Once solar tariffs dropped below grid electricity tariffs, there has been super quick adoption, which has furthered the economies of scale, diving prices of solar tariffs even lower. For example, in 2010 the cost of solar power was INR 17 per unit in comparison to INR 2.44 per unit in 2018.
With the Government’s support, developers getting long term visibility in terms of project pipeline and actual off-takers witnessing value in adopting solar electricity, India is poised to secure its renewable future.
What are some of the critical challenges in the industry?
While the economics of renewable power are improving day by day, continued growth in the sector also requires a supportive and stable policy and regulatory environment.
Renewable energy projects, like all infrastructure projects, require millions of dollars of investment based on long-term projects, and therefore require regulatory certainty and long-term clarity for investors and lenders to have the confidence to invest. PPA renegotiation, payment delays, safeguard duties, superficial state-wise net-metering regulations and changes in taxation regime do not help foster that confidence.
That being said, one positive element we observe in India is that the growth of renewables is seen as a positive and necessary development by all levels of government, which means that there is a high degree of support in principle. It’s often the volatility, and issues like state power distribution company incentives, which create hindrances.
How is the solar plant installation market geared up for the future?
2019 has seen a continuation, and even a quickening, of the steady global march towards renewables. There is a strong push for corporates to switch over completely to renewable energy, for 100% of their power requirement. This is a very common statement we hear from clients nowadays: how can you help us to reach 100% adopter of green energy?
This growth and positive approach is attributed to the favourable policies from MNRE and SECI as part of National Solar Mission of 100 GW by 2022. While most of the capacity installations come from utility-scale projects through government tendering, we believe that Corporate renewable energy market through open access solar and rooftop solar for commercial & industrial (C&I) consumers have witnessed consistent growth, based primarily on compelling economic proposition to consumers.
As per recent WBCSD 2019 report, India continues to be the second largest market for corporate renewable PPAs for the second consecutive year, with a global share of 7.4% till H1 2019. And since FY 2018 the open access corporate PPA solar market has grown more than 2.5 times to 2.9 GW.
There have also been landmark judgements from APTEL and all the courts of law supporting the rights of consumers to source power directly from captive plants and 3rd party IPPs. This has boosted investor and consumer confidence in creating more solar capacity in these models.