India added a record 18 GW renewable energy capacity in FY24 and needs to add 50 GW each year to meet the ambitious target of 500 GW by 2030. In an interview with Aggam Walia, Vineet Mittal, Chairman, Avaada Group, expands on challenges in adding renewable capacity, gives an overview of domestic manufacturing of solar PV modules, and endorses the economic viability of energy storage systems.
India needs to add 50 GW of renewable capacity each year till 2030 to meet its target. How do you see this playing out?
When you forecast anything, the first thing you should have are customers, which we have. The demand exists– you can even do 60 GW and the power growth in the country will be able to absorb that. The issues are on the supply side, like access to the grid and grid availability. Many states have not invested into upgrading their grid. The central government took the initiative of one nation, one grid, one frequency and one regulation, which has not happened throughout the country.
Every state has different regulations for permitting for 220 kV or 132 kV connectivity. It takes ages to get the connectivity from state governments. There are a few states which have streamlined, but other states have to catch up and solve this problem. The second bigger bottleneck is the government’s decision to change all evacuation to high-voltage direct current (HVDC). A lot of components that are used in HVDC are not readily available, so many of the projects are getting delayed to 2029. My gut feel is that India won’t be able to meet the 50 GW target for another two to three years, but post-2028, I see India doing 100 GW a year. By then, your grid will be accessible, HVDC work will be completed, and the grid infrastructure will be enhanced, especially by integrating energy storage solutions.
How do you assess India’s current solar PV module manufacturing capacity?
Currently, there is around 40 GW manufacturing capacity, which is sufficient. I would say that there may be a demand constraint in the short term, but there is a huge opportunity to supply to the rest of the world. If you look at the 15 GW capacity that was executed last year and with the manufacturing capacity at 40 to 43 GW, there is excess capacity which is currently built in India. I am focusing only on domestic but if you combine the international market there is enough for everyone.
Now, there are also multiple players so no one can create a cartel. If the government or a developer like us is running a tender, people should not be able to collude. A US-based company, First Solar, has set up manufacturing in Chennai. Tata’s and Adani’s manufacturing is also operational. There is going to be enough capacity. PLI has also encouraged a lot of players.
In terms of quality and cost-competitiveness, where does the domestic industry stand?
Like in any industry, you have the good, the bad, and the ugly. When we have to source from the local market, we have very stringent quality parameters. We do a pre-dispatch inspection, we look at the quality of cells that are being used to make those modules, we look at the level of automation, and we look at how the modules are performing under the lab environment. If you don’t have good quality inspection, people take shortcuts.
Many smaller organisations have come up where they don’t have proper quality management and there are corners being cut. And in terms of pricing, you can never be competitive with the giant manufacturing capabilities set up by some of our neighbours. Their whole ecosystem is developed so you have to be prepared to pay some premium. But hopefully in the next three to four years, our ecosystem will be developed. Confidence building takes time and because of a lot of NPAs in the past, that hangover of borrowing and growing is still there in the Indian economy. People are looking at a more safer environment and policy consistency to make investments.
Can you give an overview of Avaada’s current business operations and future strategic direction?
By the end of 2023, we completed 4 GW of operating assets and had almost 2 GW of projects under construction. In the last few months, we have completed around 600-odd MW, out of which almost 500 MW are operationalised and connected to the grid. Avaada has a vision to do 30 GW of solar, wind, and storage projects as an independent power producer (IPP) by 2030. Today, we are also a sand to molecule company. We have got Production Linked Incentives (PLI) of around Rs 900 crore to convert the silicon into ingot, ingot into wafer, wafer into cell, and cell into module. The first phase of the factory will be operational in July and by 2026, all the phases will be operational. In future, instead of just selling energy, or electrons, we will sell molecules in the form of green hydrogen, green ammonia, green methanol, and sustainability aviation fuel. Currently, we have a project in Maharashtra where we are setting up 1 MMT of green methanol and green ammonia. We have a .5 MMT green ammonia project in Gopalpur, Odisha for which the EPCM work is going on. We are also considering a few other states for green methanol projects. Last year, we had also raised $1 billion from Canadian investor Brookfield through its Brookfield Global Transition Fund.
Some players in the space have argued that battery energy storage systems (BESS) are economically unviable. What is your view on that?
The statement that BESS is not viable is incorrect. BESS is used for multiple things, like frequency regulation and grid stabilisation because batteries respond very quickly to changes in load and generation, even faster than a gas-based power plant. It helps in stabilising the grid, which is why it is the most versatile rapid deployment capability. When comparing viability, you cannot compare potato and pumpkin with grapes and pomegranate. The estimated capital cost of a new thermal power plant is Rs 8.34 crore per MW. Your electricity is not going to be less than Rs 6 from the new power plant. So, there is no competition with battery energy storage systems and solar-wind hybrid systems.
What factors influence the cost of green hydrogen production?
80 per cent cost of producing green hydrogen is dependent on the cost of electricity, which is used in the electrolysis process. The price of renewable energy is a critical factor. Lower cost of solar, wind, and other renewable sources directly contribute to the reducing cost of hydrogen. But now, the cost of wind is increasing. It takes 300 tons of steel and the cost of steel is increasing. Copper and aluminium costs are also increasing– everything is metal driven. The cost of land is also increasing in India. Second is electrolyser technology and efficiency. Right now, a lot of technology coming in is futuristic. When these technologies come in 2030 or so, then the cost of production will be reduced. In the beginning, like any industry, you have to support projects through government subsidies. Once the market is created, it will be successful.
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