Saur Energy International_August Issue

Page 45


Setting Up Solar Business In India According to Bhupesh Trivedi, CEO REECODE Energy Solutions, Solar businesses are surely profitable. However, it is a matter of desires. As an investor, if your desire is equity IRR of 25-30%, solar is surely not for you. But if you are looking at steady, annuitytype and low-risk IRR of 14-16%, you can definitely invest in solar. The above is specific to the business of generating and selling power through solar. Other solar businesses include manufacturing and providing services to consumers and investors in projects. Solar is an overly-government-dependent business sector and has consequently its own risk factors and rewards. Surya Jeedigunta, CEO- SNJ SOLAR says

profitability of solar business depends on number of units generated, the tariff at which you sell and the quality of equipment. Also there are Green incentives such as REC and Accelerated depreciation. Tariffs at which solar power projects were awarded have come down from over Rs.12 a kilo watt hour in 2010 to below Rs.5 in 2016 due to the drop in the global photovoltaic module prices. The lowest discovered price so far is Rs.4.34 a unit. Therefore solar becomes a good business opportunity not only for large scale power projects but also for rural and roof top applications. In the case of large scale power plants, the cost of capital (debt rate) and CUF (capacity utilization factor) plays a key

role in the profitability. So, low cost and high quality equipment is paramount in determining the profitability of large scale projects. For rooftop, Govt. subsidy and current tariff determines the profit margin. Net Metering is a scheme that will remove the need of batteries thereby reducing the cost of systems and making it viable. Mux Narasimhan Managing Director & CEO at PlaySolar has a very different opinion; he says the solar business is profitable in certain sectors depending on business models. Pure play component manufacturers or EPC players are unable to make their own destiny compared to Project Developers. For example, there are several players like Azure, Renew, Tata Power Solar and Adani Green Power