Solar projects’ tendering and auctioning have slowed in recent months

Kolkata-headquartered Vikram Solar has been one of the early  movers in the domestic solar space providing solutions at diverse ends – module manufacturing, EPC services and operations and maintenance of solar projects.

In performance terms, the company has been clearly riding the solar wave in the past few years with a 50 percent plus growth trajectory in the topline. In a brief chat with Ritwik Sinha, Karunesh Chaturvedi- Head Corporate Affairs, Vikram Solar explains the recent trends in the business while emphasizing the critical challenges now that the solar business has reached to a clear inflection point…

There has been a visible momentum in the Indian solar sector in the last couple of years. Today nobody can dispute that it has reached to an inflection point. But at this stage, what are those critical concerns which a growing player like you have in your mind?

Indeed, solar sector has grown at tremendous pace is last couple of years. We have also witnessed the solar tariff reaching a new low last year. At this juncture, solar industry has some critical concerns which can affect the future growth Solar sector in India.

Firstly, there is a lot of ambiguity over GST rates on solar power generating system. Secondly, anti-dumping duty and safeguard duty investigation have added up to the uncertainties and EPC players and developers are finding it difficult to bid for the projects. Import of solar modules until now were exempt from any customs duty. However, recently there have been cases where certain importing ports have been charging 7.5% BCD on modules being imported into India because the classification of the HSN code. Developers are caught up in a difficult financial position and they have become risk averse.

Long-term policy trajectory is need of the hour to get away with the uncertainties which have clouded the sector. It will boost the investor confidence in Indian solar sector, which will eventually lead to rapid growth.

How serious is this domestic content issue? The government has been repeatedly saying that the domestic players need to scale up on their own?

India has decided to modify to “Domestic Content Requirement (DCR)” clause in solar projects after WTO decision. Government is planning to implement DCR projects through Central Public Sector Undertakings (CPSUs) which is line with WTO obligations.

We have to understand that solar manufacturing industry in China heavily aided by government agencies in the form of cheap loans and other subsidies which distorts level playing field. Domestic manufacturing industry in India is ready to scale up but it needs a clear market demand trajectory and government support at initial stages. Policy measures such as Safeguard Duty and Anti-Dumping Duty are short term measures to mitigate the situation. Government needs to support domestic industry by building favourable ecosystem and clear trajectory of market demand if we want our domestic manufacturers to take on the Chinese manufacturing giants.

 As a company, you have been maintaining a healthy over 50 percent CAGR in the last three years. How long do you think you can sustain this kind of growth wave? 

 Our profit and revenue growth is a reflection of tremendous solar growth and national solarisation initiatives. Our success is also backed by our focus towards innovation, quality, performance, and customer centricity. We have been in the green energy industry for more than a decade now, and therefore, we have gained a clear perspective of how India is changing and how important it is for India to do so.

So, we are sure that the solar growth trajectory we are seeing now is just the beginning for India, and the country will reach further than the targeted goals with Government and private players working in unison. And with India solar growth, our country will soar, reaching and connecting corners of the country and one day the world with energy.

How does your 2018-19 pipeline look like?

Currently we have more than 280 MW capacity projects in the pipeline. And with Government announcing plans to welcome bids for 20 GW solar capacity (cumulative) projects and 5-10 GW of floating solar power projects, FY18-19 looks to be pretty busy and rewarding for Vikram Solar. Our innovative products, huge and trusted project portfolio, and ties with conservative client circles will surely support us in gaining a major portion in the upcoming solar installation opportunities.

However, we must highlight that a total of 1,456 MW of solar power was tendered and 1,232 MW of solar was auctioned in the third quarter of 2017. This is a considerable decrease from the second quarter of 2017 when 3,408 MW of solar projects were tendered and 2,505 MW projects were auctioned. Solar tender and auction activity also declined steeply in India during November by 25% (tendered) and 98% (auctioned) from October.

Additionally, some tenders have also been cancelled such as- 250 mw solar project by NTPC (auctioned in Oct 2017), due to it breaching the WTO regulation of not selling power to state DISCOMs if the project has a DCR clause.

Increasing tenders, and awarding more projects without cancelation has to be considered if FY18-19 is to be truly progressive for solar.

 

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