Interview with Gyanesh Chaudhary, CEO and Managing Director, Vikram Solar
Vikram Solar is a comprehensive solar EPC solutions provider with an installed capacity of over 305 MW of solar plants. Research reveals that focusing on domestic manufacturing can save India more than $42 billion by 2030 in forex alone. Domestic solar growth has already created more than 416,000 new jobs (2015), indicating a potential solution for India’s employment scarcity, informs Gyanesh Chaudhary, CEO and Managing Director, Vikram Solar in an interaction with Supriya Oundhakar…
Can you please take us through the journey of Vikram Solar?
Vikram Solar was set up under the aegis of the Vikram Group in 2006 with an aim to carry forward its rich manufacturing legacy. Vikram Solar was born with the idea that solar energy is not just an option anymore; it is a necessity to protect our environment and satisfy the growing energy consumption rate. Back in 2006, when the flurry of Government support that the solar industry enjoys today, did not exist, the finest equipment and machinery were brought from USA, Germany, Switzerland, and Japan to establish world-class manufacturing & technological capabilities. Within just three years of inception, in 2009, we made our first mark in the international solar industry and established an office in Germany- Vikram Solar GmbH. In 2010, Vikram Solar stepped into international EPC business to deliver comprehensive energy solutions globally. Year 2011 saw us installing 3 MW of solar generation capacities in India. In 2013, we contributed to the solarisation of the world’s first fully solarized airport - the Cochin International Airport, in Kerala, India. In 2014, we offered India its very first floating solar panel in West Bengal, introducing the idea of utilizing water bodies to harvest solar energy in wake of ever-decreasing land availability. We successfully completed India’s largest airport rooftop solar installation at Netaji Subhash Chandra Bose International Airport, Kolkata in 2015, and in the same year, we reached 0.5 GW annual PV module production capacities and announced a 2 GW by FY 2020 manufacturing capacity goal. The above achievements were recognised at multiple forums. In 2016, Vikram Solar bagged the National Excellence Awards from MNRE as a domestic solar module manufacturer of the year. Vikram Solar was further felicitated with the ET Bengal Corporate award for Fastest Growing Company that year. In 2017 we achieved an epic double award win at the 5th ET Bengal Corporate Awards, where we bagged the prestigious ‘Fastest Growing Company’ award for the second time in a row, along with the ‘Highest Job Creator’ award.
Today, Vikram Solar manufactures quality solar PV modules ranging from 10 Wp to 345 Wp. Our standard product range is divided in three tiers- 72 Poly cell module, 60 Poly cell modules, 36/18 Poly cell module. Our manufacturing capacity stands at 0.5 GW today, fast approaching the 2 GW mark by 2020, and we are a comprehensive solar EPC solutions provider, with an installed capacity of over 305 MW of solar plants. We have invested more than INR 100 million in Research & Development and product certifications till date.
Presently, Vikram Group has presence in five continents across the globe and has entered into technology and infrastructure collaborations with leading institutions like Fraunhofer ISE in Germany, Meyer Berger, Centrotherm, IIEST, and teamtechnik and we are also a part of HDPV Alliance in USA. These collaborations will bring innovations in module manufacturing through research and knowledge sharing.
The government has set the target of generating one lakh mw of solar power by 2022. What kind of opportunities will it generate for the Indian renewable energy sector?
The 100 GW target by 2022 has created a sense of urgency within the Indian solar sector. Government support increased investor interest, rising energy demand, and global acceptance towards solar energy are opportunities for Indian solar sector to grow. Needless to say financial support through multi-billion dollar commitments, achieved through combined efforts of government and private sector are creating great opportunities for the Indian solar industry. With more than $37 billion investment commitments, Indian solar manufacturing industry will obviously increase, but to make ‘100 GW energy generation capacity by 2022’ a reality, domestic capacity enhancement is crucial. Government offering tax subsidies to manufacturing plants in Special Economic Zone (SEZs) is planning to bring quotas to increase demand for domestic manufacturers.
The shift towards solar sector can help India scale great heights, claiming a large portion in the global energy sector. But to reach these opportunities, the country needs to boost its efforts mainly on the domestic manufacturing front.
What is the current capacity of manufacturing PV module? What are the challenges faced by Indian PV manufacturers?
Our current annual capacity of manufacturing PV modules is 0.5 GW. It is true that Indian Government is taking some great initiatives to make solar a mainstream energy option. Government backed policies, regulations, and initiatives are testament to India’s commitment in developing solar sector. But we cannot deny that there are some challenges in the sector that Government needs to address first. Land scarcity, lack of closer industry-government cooperation, slow skill development, complexity of subsidy structures, delays in land acquiring processes, and lack of safe guards against solar equipment (module) dumping are few of these issues that are slowing down the growth of the solar sector in India.
During the FY 2016-17, 90% of the solar module demand has been met by imports from China and other countries. India has imported 161.5 million solar panels in FY 2014–15, incurring a cost of almost $821 million. The import expenditure has jumped to $1.3 billion in 2015-16. These countries are dumping the solar panels at much lower rates than that in their respective countries. Their local government is facilitating them by export subsidy to the tune of 15 – 17% depending upon their province apart from cheap finance. Besides, most imported modules are of sub-standard quality and cannot sustain solar power generation for the desired period (beyond five years). Low quality imported modules when implemented in energy grid, can damage the energy transmission and jeopardize sustainability. Hence, there is an urgent need for imposing anti-dumping duty on imported solar panels from countries like China. It will provide a level playing field for the domestic solar manufacturing industry, while providing a check on import and use of sub-standard material at the same time.
It is noteworthy in this context, that global markets like USA, Europe, have imposed anti-dumping duties to ensure quality and sustainability of their solar development. The USA’s Department of Commerce, in 2012, determined that Chinese and Taiwanese solar imports were being dumped in their country at margins ranging from 18.32% to 249.96% with the help of subsidies ranging from 14.78% to 15.97%. Based on this revelation, the USA imposed 44.18% duties on solar equipment imported from Taiwan. In 2015, the United States International Trade Commission investigated further on this issue and imposed 50% duties on Chinese imported solar equipment as well. The European Union too imposed anti–dumping and anti– subsidy duties on imports of solar cells and modules from China on 2nd December, 2013. These duties (to the range of 40 – 47%) were levied, for a period of two years, in order to create a level-playing field for European manufacturers also to compete on price. India needs to follow such international precedents to keep up pace with the global leaders.
To tackle the above challenges the government should invest in creating land banks, making it easier for the companies to build factories. Although, Government is welcoming suggestions from private companies to improve its solar development strategies, more active involvement from both parties is required. India needs more skill development campaigns like ‘Suryamitra Skill Development Programme’ to see Prime Minister Narendra Modi’s dream of creating 50,000 skilled solar workers into fruition. A uniform policy structure for subsidies can also help domestic manufacturers and encourage new entrepreneurs to build solar companies.
Floating Solar power
What are the accomplished Solar EPC projects? While accomplishing these projects, what technological hurdles did you face? How did you overcome the same?
We have an installed EPC capacity of 305 MW till date with a number of ongoing projects in the pipeline. Some of our milestone contributions in the solar EPC space are as follows:
In 2013, we gave world its first fully solarized airport at Cochin International Airport, Kerala. We also installed utility scale 40MW power plants in Rajasthan in 2013. In 2014, we offered India its very first floating solar power plant in West Bengal, introducing the idea of utilizing water bodies to harvest solar energy in wake of ever-decreasing land. We successfully completed India’s largest airport rooftop solar installation at Netaji Subhash Chandra Bose International Airport, Kolkata, in 2015. In 2017, we commissioned a 130 MW solar power plant in Bhadla, Rajasthan.
Installing a solar PV plant is less complex than most of the traditional energy generation and transmission structures. But, still there are issues like cost and time pressure that adds to the construction process and complicate things. Moreover, EPC construction within India requires continuous dealing with ministries, local bodies, clients, vendors, internal teams, sub-contractors, while managing operation profitability, which makes it hard for EPC contractors to formulate a simple plan and follow it astutely.
Besides these issues, primary challenges that EPC contractors face in India are:
• Land acquisition
• Engineering challenges due to geographic characteristics
• Power evacuation
Vikram Solar has successfully handled these problems by carefully planning each step and by utilizing an agile operation process powered by upgraded technology and expert manpower.
Rajasthan Solar Project
What is the target for this fiscal?
Manufacturing expansion targets:
Cumulative planned capacity
• By end of FY 2017-18: 1.2 GW
• By end of FY 2018-19: 1.6 GW
• By end of FY 2019-20: 2 GW
EPC growth targets (cumulative year-on-year)
• FY 2017-18: 800 MW
• FY 2018-19: 1 GW
What is impact of WTO ruling against India’s domestic content requirement (DCR) on the sector?
Undoubtedly, the Indian market is showing an incredible growth rate, but we are still far from going toe-to-toe with countries (China, US) that already dominate huge parts of the solar product supply chain.
The key reason behind this is that the exponential shifts in India that have created a platform for record growth and improvement are only a few years old. And our industrial development is still at a stage of infancy while, countries like China and US are backed by decade long growth.
In hopes of helping domestic players to grow and to build industrial reliance, Indian Government opted to impose DCR. We believe it was a right decision. Because, Indian solar manufacturing industry is dealing with factors like competitive price declines due to foreign oversupply, lack of scale, and under developed supply chain. Getting Domestic Content Requirement policy would have given domestic manufacturers a level playing field to compete with foreign players. Imported modules are still 8-10% cheaper than domestic modules today. So, the obvious way to compete with them would be to have better demand in the market, which DCR could have offered. Creating market demand (domestic and international) for domestically manufactured materials can mitigate these problems by pouring in investments and bringing back profits within the country. So, we believe, to develop India into a self-reliant manufacturing hub, Indian manufacturers need policies like DCR. And we are thankful to Indian Government to keep the DCR quota for Government sourced projects.
However, WTO’s misplaced assessment of the policy, proved a logjam as WTO stalled India’s appeal and ruled in favor of the US. But, India still has options to stabilize the situation. Presently, the Government of India is announcing Domestic Content Requirement (DCR) from time to time under the CPSUs scheme, because of the WTO ruling. To protect and nourish the dream of solar reliance, India needs to enhance domestic manufacturing capacities and award more projects within quotas (Last year, only 0.850 GW capacity projects were awarded, out of the 2.5 GW DCR category projects).
The Government has up-scaled the target of renewable energy capacity to 175 GW by the year 2022 which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power. Going ahead, can India become a renewable energy hub?
Yes, India can definitely become a green energy hub by championing solar. The announcement of a 100 GW solar target by 2022, has given the sector the much needed push, bringing in investments and encouraging private players to enter the industry. However, India’s module and cell generation capacity is 5620 MW and 1212 MW respectively. Moreover, its current domestic manufacturing capacity lists 2,700 MW of module and 1,300 MW of solar cells every year. So, there is a clear deficit, which is currently being filled by using imported solar products.
Indian Government has announced policies and quotas for domestic manufacturers, creating demand for their product, and helping them grow. Although, the growth has been significant, rising from a minuscule energy generation capacity (200 MW) just a few years ago to a whopping 2,700 MW and growing, more needs to be done to fulfil India’s dream of solar self-reliance.
Research reveals that focusing on domestic manufacturing can save India more than $42 billion by 2030 in forex alone. Domestic solar growth has already created more than 416,000 new jobs (2015), indicating a potential solution for India’s employment scarcity.
Taking a more aggressive initiative towards enhancing the domestic solar manufacturing capacity can help in meeting the solar energy implementation target (100GW) and prepare India for the mantle of solar super power.
What are your expectations from the government for this sector?
As a domestic manufacturer, Vikram Solar is focused on sustainability in Indian solar sector growth. However, we are worried that low bids might increase the access of low quality imported modules in the industry (as India does not have a uniform law against dumping). We believe that India should focus on long-term sustainability of solar energy generation (which low quality modules are unable to provide) and development of domestic manufacturing capacity, rather than spending on importing modules and reducing bid prices any lower. The Government of India needs to revisit and revive the investigation on imported solar modules from foreign countries. Normalization of import prices will help domestic manufacturers to gain significant advantages, while ensuring a fair playing field, and boosting the Make in India programme at the same time. To boost domestic manufacturing, the government also needs to revisit the SIPS/M-SIPS policy and release the capital subsidy as suggested in the policy.
Today there are skill development campaigns in India like ‘Suryamitra Skill Development Programme’, but we need more industrial training institutions to see the Prime Minister’s dream of creating 50,000 skilled solar workers being realised.
A uniform policy structure for subsidies can also help domestic manufacturers and encourage new entrepreneurs to build solar companies. Nonetheless Vikram Solar is very optimistic about the government backed policies, regulations, and initiatives.
To promote the indigenous solar industry, the government can introduce incentive schemes. The ‘Technology Up-gradation Fund’ implemented in the textiles industry should be introduced in the solar sector as well. The Government should also provide interest subsidies for the solar industry. Incentives such as tax rebates to customers and end users can help increase solar uptake.
Awareness among customers can be a major way to push the uptake of solar power in the country. State Nodal Agencies need to be brought in the loop to assist independent consumers in understanding the benefits and the process of selecting solar energy. Schools, colleges, and education institutions can be imparted proper knowledge regarding the benefit of energy transition and role of solar. This will help increase demand for solar, providing impetus to the industry’s growth in the long run.