Solar was not an energy source being actively considered by Indians when Adarsh Das and Kushagra Nandan set up SunSource Energy with their own seed money after returning from the US in 2010. So, for them, the biggest challenge was to educate their clients, and then handhold them by getting financiers for their captive rooftop solar plants. And the result was a whopping 5X jump in their annual revenue. Das spoke to Praveena Sharma on how solar power had already reached grid parity in the commercial and industrial sectors, and in another 2-3 years, energy sourced from sun would be cheaper than electricity grid in the residential sector too. He said the biggest push for his company's revenues would come from the government's target of 100 gigawatt (gw) solar power, including 40 gw rooftop and decentralised projects, by 2022.
How much has solar energy caught on in India?
Right now, we are focusing on commercial and industrial clients, and not targeting the residential segment. We have done decentralised and rooftop solar power plants for around 60 clients across 12 states. It's conscious choice to concentrate on these two segments. Today, eight times out of 10, we are able to beat the electricity grid rates for the commercial and industrial clients. They pay higher power tariff that includes subsidy surcharge. The residential customers get power at subsidised rates of about Rs 4.50 per unit while these guys (commercial and industrial clients) pay Rs 7.50 per unit. And when there is power outage, diesel generator sets are in, which costs Rs 14-15 per unit. Whereas solar energy's distributed sale cost Rs 7.5 per unit, so the blended (grid, solar and generator) rate comes to around Rs 10 per unit. This is a compelling reason for commercial and industrial customers to go for an option with solar. So, even in the current scenario, solar power has become very competitive.
How were you able to scale up so fast?
It took us a very long to close the first deal but once we began providing third party financing, the whole dynamics of our business changed dramatically. Our revenue started growing at 5X. We are bringing third party financing to projects we are doing for clients who are credit worthy. Either they can buy for the system themselves or we can get it financed for them or we sign a power purchase agreement (PPA) for 15-20 years and sell the power to them. A lot of third party investors who are looking at steady returns of 15-18% have come in. We had almost a 5X jump in our revenues due to this. This year, we doubled our revenue with more than 40% of our systems financed by investors.
How much does a rooftop solar power plant cost?
A 100 kilowatt (kw) rooftop plant would typically cost around Rs 67-68 lakh per annum. If the scale is larger, say 500 kw, the cost would come down to Rs 62-63 lakh per 100 kw per annum. So, it's huge capital cost and even companies, which are not cash-starved or are credit worthy, will do it only if it brings down power cost. So, there are some clients like India Habitat Centre, who do not own a plant. They just buy the power from investors at a rate which is cheaper than the grid. Now, we are seeing clients like insurance major Max Bupa Health Insurance investing in their captive rooftop solar plants and going for another one because of the cost saving and healthy returns.
Do you find the government policy on solar energy supportive for business?
Policy-wise, the less the government intervenes, the better it would be. Where the government can support, and is supporting, is net metering at site. The regulation for it was out in September last year, followed by guidelines for it in February. It is now being enforced in some states. Net metering has been approved for a few of our projects. Also, Prime Minister Modi's target of 100 GW by 2022 including 40 GW on rooftop and decentralised projects, will help us grow at rapid pace.
Has there been any interest from investors to pick stake in your company?
We have been getting unsolicited interests and offers almost on a monthly basis – from India and abroad. So far, we have not done it (sold stake) but we are looking in that direction now as we start increasing our footprint to further scale up. Till now, we have been self-funded and broke even in the first year of our operation. We first wanted these 60 projects developed, functioning and completely proven, and then move to the next level.
What are your future plans?
We are focused on developing, designing and building 400 megawatt (MW) of decentralised solar projects by 2022. Additionally, we are working actively on developing export markets for solar photovoltaic (PV) projects in our market segment internationally, with a focus on South East Asia and Africa, and expect to reach an annual turnover of Rs 500 crore by 2022.
