Que: Please introduce Energetica India readers to SM Renergy (P) Limited

Ans: SM Renergy (P) Ltd (SMR) was founded in 2017 with the vision to be able to provide cost - effective and quality renewable energy generating systems with a focus on rooftop solar PV. We are a young and dynamic company, having commissioned 4 MWp of turnkey EPC rooftop solar PV projects across India cumulatively and have approximately 3.5MWp under construction. Additionally, we have recently installed the second largest rooftop solar PV plant in Andhra Pradesh.

Apart from executing turnkey EPC projects, SMR has the following verticals -

A. Internal Operations & Maintenance team with over 7MWp of assets under maintenance across India

B. Development of rooftop solar PV projects under RESCO/OPEX model

Que: How do you see the solar RESCO model operating with the introduction of energy storage systems?

Ans: The Renewable Energy Service Company (RESCO) Model has grown strength to strength over the past 3 - 4 years. Rooftop Solar PV is becoming more of a plug and play solution mainly due to decreasing capital costs and increasing confidence in the customer base. Apart from tax liable entities that can afford the initial investment and residential clients, the RESCO model is being adopted quite rapidly across India.

Having raised capital internally and on a project finance basis from our investors this financial year (FY 2019-20), SMR already has a strong RESCO pipeline which will be commissioned between Q1 and Q2. We are confident of growing this asset base exponentially over the years to come.

Energy storage has always been the missing link in the transition towards renewable energy from the current fossil fuel energy domination. Battery systems can support a wide range of services needed for the transition, from providing frequency response, reserve capacity, black-start capability and other grid services, to storing power in electric vehicles, upgrading mini-grids and supporting “self-consumption” of rooftop solar power. While pumped-hydro systems still dominate electricity storage (with 96% of installed storage capacity in mid-2018), battery systems for stationary applications have started growing rapidly. Wider deployment and the commercialization of new battery storage technologies has led to rapid cost reductions, notably for lithium-ion batteries, but also for high-temperature sodium-sulphur (“NAS”) and so-called “flow” batteries.

Like solar photovoltaic (PV) panels a decade earlier, battery electricity storage systems offer enormous deployment and cost-reduction potential. By 2030, total installed costs could fall between 50% and 60% (and battery cell costs by even more), driven by optimization of manufacturing facilities, combined with better combinations and reduced use of materials.
The combination of rooftop solar PV with affordable energy storage system under the RESCO model would not only help customers decrease dependence on expensive power (thermal dominated) from the grid but also increase reliability and decrease intermittent of supply from a cleaner source of energy.

Que: The Indian solar sector still encounters financing challenges. How can this be addressed?

Ans: The Indian solar sector and particularly the rooftop solar sector is dominated by non - recourse financing (collateral based). The primary reason for this is that lenders believe financing this sector is difficult (due diligence and time invested), expensive and risky. There are other modes of financing like - equity and institutional investors and development banks who have been active in this sector but only a handful of rooftop players have gained access.

In a fragmented market where the top 10 rooftop solar players have only contributed to 30% of the installed capacity in India, the balance 70% has been installed by regional and local rooftop players. This basically means that due to the sheer vastness of the Indian rooftop market, lenders would have to develop a robust risk assessment model to analyze credit worthiness of the developer/EPC and the offtaker in order to provide financing and to mitigate risk in a calculated fashion. This would not only help the overall sector to grow but also help financial institutions recover their dues in an amicable fashion. Commercial banks should follow the path paved by the Government of India through the funds/instruments created like - NCEEF, Priority Sector Lending, soft loans from IREDA, Green Bonds etc.

In the developed economies, debt and equity based crowdfunding has also resulted in the growth of the solar sector, rooftop solar in particular.

Que: In regards to government target of 40 GW rooftop solar by 2022, what are your plans for the Indian Rooftop Solar Market?

Ans: SMR has massive growth plans aligned with the Government of India. Our company was mainly focused on private contracts but, will be participating in Government opportunities across India. In the short term, our strategy is to penetrate certain states and regions (with presence) further and dominate due to our high standards of execution at extremely competitive costs. Our medium term strategy would be to expand presence across India and replicate quality work at even better rates (due to cost optimization) in the years to come.

Obviously, and like any other sector, there are various stakeholders that equally contribute towards its success. I'm confident that given the trajectory of events that have unfolded in this sector, we (as an extended family) would be able to achieve this target.

Que: What are the key challenges for the Indian rooftop solar industry?

Ans: From the inception of this sector, the rooftop solar PV sector has grown leaps and bounds. Most of the major teething issues have been streamlined to a great extent by various stakeholders of this sector. However, in order to further stimulate this sector and achieve the target laid down by the Government of India these are a few areas with a further need for intervention -

A. Permits and Approvals - are still a cause of concern to most rooftop solar players. The time and effort required to attain these approvals (particularly the DISCOM NoC, CEIG approval and Net - Metering approval) is of paramount concern.

B. Policy & Regulatory Instability - has been a significant challenge in this sector. Whether it be the imposition of safeguard duty on imported modules and EVA sheets, which had an impact on domestically manufactured/assembled modules, or changes in state policies with respect to rooftop solar - these sudden changes have a deterring effect on the sector which impacts growth and longevity.

Que: What kind of success has the young entity, SM Renergy, achieved in a short span of time?

Ans: In a span of 2 years, SMR has executed over 4MWp of rooftop solar PV projects across India only for private clients. We've catered to reputed commercial, industrial and institutional entities across India. Some of our esteemed clients include - GITAM University, PES University, Tafe Motors, KL Steels, Delhi Public School, Fabindia School, Raj Steel Rolling Mills, Daspalla Group of Hotels, Vizag Conventions and Varun Group.

We have an internal O&M team that maintains rooftop solar assets not only for our projects but also for a number of significant rooftop players in the Indian market. We are currently maintaining assets with a cumulative capacity of 7MWp.