CEE Jan-Mar 2012

Azure Power was incorporated in 2008. How was the external environment during the start– up phase? A lot of good work in solar in India was started in the 1970s. My contribution to the Indian solar industry is in the concept of distributed generation at the tail– end of the grid that not only strengthens the grid, but also provides reliable peak power to several communities in rural India. Owing to an extremely short gestation period and flexibility of scale and size, we can help solve rural India's energy security needs in a timely manner. These projects also provide for education for the next generation on concepts of clean energy and source of livelihoods in adjacent communities. This is great way to bring rural India to the forefront of the inclusive economic growth that has been the goal of our government. I entered the sector knowing fully well that solar as a sector didn't exist in India before that. However, given the availability of abundant solar insolation and demand for energy, it was obvious to me that solar will play a big role in the lives of millions of people who have no access to electricity. There were significant hurdles in getting solar power tariff regulated and permitting of solar power plants in a short period of time. Furthermore, local banks were reluctant to invest significant capital given non-existence of reference projects. As a first mover we could demonstrate our capability by developing something that had not been done before in India. The fact that we had a project running in Punjab was helpful in getting contracts in states like Haryana, Rajasthan and Gujarat. The second movers always get to learn from the lessons of the first mover in this way Azure Power helped pave the way forward for India's solar industry. What are your future business plans to enhance Azure Power's presence in India? At present, Azure Power has a project under every solar policy in the country and has invested significant capital in its operating facilities in India. Azure will continue to supply clean energy to as many households as possible in India. We plan to have 100 MW generating by 2013 enough to power around 1,600 villages in India. How do investors see clean technology start-ups emerging from the country? Are they keen to invest in them? Investors are always looking for opportunities that offer promising returns regardless of sector. Of late given the sharp decline in solar power prices, very large investors are coming into this sector not only with start-ups but also well established companies. At the same time, the hike in coal prices is turning investors away from thermal power towards clean technologies. What measures, accordin~ to you, are needed to promote clean technologies in the country? A consistent, predictable and long term regulatory environment is the key for development of the solar power generation sector in India. We must have clear and long term visibility on solar feed in tariff in India. The government has been active in promoting solar power generation. It has successfully completed the Phase I Batch I allocations and Phase I Batch II allocations have just been completed. The regulatory environment is also being made conducive and solar tariff has been published by the regulator. Getting utilities to offer bankable power purchase agreements (PPA) with adequate payment security is also important for a sustainable solar power market. A credible payment security mechanism is requ ired. The cost of solar power is higher as compared to conventional sources, so in case of a payment default by utilities the banks are left with a non– performing asset in the absence of a credible payment security mechanism. In view of this, NTPC Vidyut Vyapar Nigam (NVVN) has implemented the payment security mechanism to ensure credibility in the payment process. Similarly, we would like to see state utilities to adopt similar mechanism to offer bankable PPAs. The government has taken steps to set up ground mounting stations to publish credible insolation data for solar to help solve the problems of the limited experience of project developers in this sector along with the lack of credible generation data. The market driven mechanisms such as renewable purchase obligations, renewable energy certificates and their bankabi lity will become extremely important in order to attract even greater capital in the sector and development of an ecosystem in the country. Courtesy: The Financial Express, 1 rjh Dec. 2011, P12. 68