As India sets ambitious target for renewable energy sector growth, a number of opportunities have opened up. These include inverters, back up facilities, smart grids, net metering, distribution management systems for large solar parks, and Green Energy Corridors.
Anil Chaudhry, Country President and Managing Director, Schneider Electric India, in an exclusive interaction with BusinessLine details the potential it holds for his Euro 27 billion revenue company. Excerpts:
How do you see the unfolding opportunity in the renewable energy sector in India?
This is the priority for the country seeking to keep up COP 21 commitments while balancing use of fossil fuel and renewables to meet growing energy requirements. The target of 175 giga watt by 2022 including 100 GW of solar is visionary and at Schneider Electric we consider this a good opportunity.
During the financial year we expect to see good ground covered in terms of the target of 15,000 MW addition by March 2017. We play a big part in the AC/DC part, solar inverters, sub stations, grids and in evacuation after power generation both as an EPC and turnkey player.
Schneider Electric has over the years consolidated its operations in India with a series of acquisitions and mergers. How do you see this panning out?
India is a strategic and an important growth market for us... In the backdrop of taxation reforms in the form of GST to be rolled out soon and an upswing in ease-of-doing business, we perceive India as an important investment destination. Sectors like energy, buildings, IT, solar and infrastructure, in which Schneider Electric has a strong presence, are likely to see higher growth momentum in 2017.
The business opportunities in smart cities, smart grids, renewable energy space must be particularly attractive?
Be it smart cities, smart grids or renewable energy, opportunities are going to be driven by three key trends – Decarbonisation, Decentralisation and Digitisation. Schneider is very well positioned to leverage these trends.
India is well and truly on the path of decarbonisation with a target to reduce share of non-fossil fuel to 40 per cent by 2030. To achieve this, it needs to be energy efficient in power consumption in industries as well as buildings. Similarly, decentralisation is the key growth driver in renewables. Schneider has a strong manufacturing base in solar equipment with a 25 per cent presence in India’s total installed solar capacity. As India’s solar capacity increases, Schneider will also expand its presence in the sector.
Digitisation is another important trend... It involves convergence of operational technology (OT) and information technology (IT) which can create many fold opportunities in the field of smart grid, grid modernisation and use of Internet of Things (IoT) to ward off cyber threats to electricity grids.
What about solar, wind and other segments in the country?
We are bullish on the growth prospects in the renewable segment, especially solar. As of today, we have powered 2 Giga Watts (GW) of solar capacity through our range of solar equipment like inverters, transformers and other mid-voltage equipment supplied under the Jawaharlal Nehru National Solar Mission. In the next few months, we are expected to add another 500 MW of solar projects under our portfolio, which will add up to 2.5 GW. Our presence in the sector has grown over 50 per cent in the last one year. In 2016 alone, we supplied equipment for 500 MW of solar capacity, as against 1.5 GW in last four years.
The power sector has been passing through tough times. How do you see its prospects in 2017?
It is true that the power sector has seen sluggish growth due to weak demand. However, we feel that this will be temporary as most of the structural issues are being addressed by the government. These relate to fuel availability due to surge in domestic coal production, rapid capacity expansion in coal and renewable power. Secondly, transmission bottlenecks are being addressed with expansion in network. However, the power distribution segment has been the Achilles heel on account of the inability of power discoms to purchase power due to their weak financial position. This aspect is being addressed with the UDAY scheme and the financial health of discoms is expected to improve.
How do you see the renewable energy sector growing? Do you see accelerated pace in deployment of projects?
On the back of strong government push, a target of producing 175 GW of renewable power by 2022, along with a global commitment to increase share of non-fossil fuel power to 40 per cent of electricity generation definitely points to a green future.
With solar tariffs plunging to historic lows, India has become a hotbed of the next solar revolution. This is expected to see an increase in number of projects, both for the industry as well as for Schneider Electric.
Energy efficiency and automation is one big opportunity for a diversified MNC like Schneider. Which are the segments you see with potential upside?
As we see it, automation will drive efficiency improvement and government initiatives like Make in India and Smart City Mission, which have automation at their core. Currently, the share of automation in India’s manufacturing sector is only one-fifth that of developed economies. Manufacturing sector’s contribution to India's GDP is around 17 per cent. Although evolving steadily, when compared to global benchmarks of manufacturing sectors contribution to GDP in advanced economies, it is evident that Indian manufacturing has massive untapped potential. While manufacturing is all pervasive across industries, we expect increasing regional as well as country-wide demand across four key sectors – power & oil and gas; water and waste; water and mining; metals and minerals.
How do you see opportunities in smart cities, smart networks, smart grids and smart meters?
India needs to invest in technology and infrastructure to improve the quality of life of its citizens. However, this is not an easy task given the demographic profile and various socio-economic factors. The opportunity is to grow within this limitation. This calls for innovative methods and technologies... In the power sector, grid management through smart grids, grid stability, connected devices and Internet of Things (IoT) will be important to reduce the high incidence of T&D losses. Similarly, smart cities will involve use of clean energy, quality and reliable power, advanced water metering and management methods, green buildings and smart homes which are energy efficient and safe. While all of these offer a big window of opportunity, it is something which the country cannot do without in future.