William D Gallo, president and chief executive officer, tells Sanjay Jog they propose to make India a hub to source solar technology for their international operations. Edited excerpts:
Why has India been chosen to pursue your plans in the solar sector?
India enjoys 250 to 300 sunny days a year and is, therefore, a potentially privileged location for solar power plant projects. We have been awarded a contract by Reliance Power to set up a 250 MW concentrating solar thermal power project in Rajasthan.
This is the second major contract AREVA Solar got after we were awarded a contract to build a 44 MW concentrating solar thermal power addition to a coal fired plant in Australia.
The AREVA Group aims to position itself as a strategic player in the development of renewable energy sources. We have already established our global supply management facility by setting up corporate offices in Mumbai for our core group and the manufacturing base in Chennai, currently used for our biomass project, but we intend to take advantage of this facility for solar projects and expand it in due course of time. India will be a global sourcing hub for solar projects.
I want to repeat that India is one of the biggest countries in terms of solar (energy) that we find anywhere in the world. The National Solar Mission (NSM) is in place and the ministry of new and renewable energy (MNRE) is in the midst of working out more plans. Besides, there are several states, including Rajasthan and Gujarat, which have announced plans to pursue solar power and there is a strong pipeline of projects.
Is your CSP (concentrated solar power) technology suitable for India?
CSP systems are suited for a variety of power plants, from 50 MW to several hundred MW, as well as a diverse range of industrial steam applications. It is most cost-effective, land conservative and water-efficient.
As a technology provider, we will source most of the steel and glass from the domestic market. A large number of our suppliers are planning to set up plants in India. Besides, there is availability of the skills required for assembling and we will rope in local contractors. The design is simple and we find people of the requisite skills for civil, electrical and mechanical elements.
During construction we also help the developer in surrounding works construction and also operate the plant ourselves during the performance guarantee period. Besides, there are other warranties that extend for several years. The other advantage is feed-in tariff, established in the NSM. Besides, there is an enabling regulatory mechanism applicable under the NSM and state programmes.
What is the investment the company plans to make in India?
We will continue to be a technology provider and as per our business plan, we do not intend to be a project developer or an investor. Our job will be to provide a technology and not to compete with our customer, who is the project developer.
However, we will certainly invest in our existing Chennai manufacturing facility. During 2012, the investment will be $15 million, which will be expanded in the years to come.
We plan a work force of 100 people, a third of (our) global workforce for the solar business. We also deploy mobile manufacturing and fabrication onsite for supporting structures, and applications are done on site. We will invest in this segment, too.
The solar field typically comes to $1.8-2 million or Rs 9 crore per Mw. However, it depends on applications and size of the project, with larger projects being at lower cost.
In addition to the solar plant, our technology is best suited for steam augmentation in existing coal-based and gas-based power plants in India. Solar steam enables power customers to increase electricity production at peak periods and reduce plant emissions. This is cost-effective due to the availability of existing infrastructure.
What procedural and regulatory blocks need to be removed to boost investment in solar energy?
Regulatory and market certainties are essential for high investment projects like solar power. We see strong commitment by the government and it really is essential for investors to stay engaged in the long term.
However, changes in policies lead to uncertainties in even sourcing of project finance. The feed-in tariff is a big positive in the NSM but during the reverse bidding procedure, the quality and sustainability of the project should not be compromised by bidding at an unrealistically lower price.
What other markets are you pursuing?
The major markets are India, Australia and the USA. We want to add focus to the Middle East and South Africa, in view of the announcement of major plans (there) in the solar power sector.