What is the vision of Azure Power?
Azure Power’s vision is to provide affordable and reliable solar power solutions for generations. The basic purpose of Azure Power is to be the lowest cost-producer of solar power in the world. Azure designs, finances, executes, operates, and maintains high-quality solar power plants for long-term periods (25-30 years) and assures long-term energy pricing and security. By providing solar energy as a service, Azure Power manages the entire project process for its customers, reduces costs of generating electricity, and provides long-term, predictable pricing.
What is your background?
I am a renewable energy enthusiast, with over 18 years of experience in building large-scale infrastructure projects, patented application products, extremely profitable operations, and raising venture/project finance for start-ups and Fortune 500 companies in energy, retail, financial services, telecommunications, manufacturing, CPG, and service industries. I am a serial entrepreneur, and have built several successful technology ventures in the Silicon Valley over the past fifteen years.
How did you come up with the idea of starting Azure Power?
Even while working for Fortune 500 companies in US, I was always passionate about contributing to India’s rural development and infrastructure needs through a sustainable venture.
After a successful stint in Silicon Valley, I thought of starting a venture that would have a direct and positive social impact with respect to improving livelihoods in rural India. During my travels to India in 2007, I researched the rural economy and considered information delivery and micro-finance opportunities. However, during these travels, I realized that people in rural India are still in need of improvements in the basics of life such as food, water and power. Given my undergrad in electronics engineering, passion for solar power development, and the impetus of the Indian government policy around rural electrification, clean energy delivery to rural households through distributed solar power generation was the obvious choice. That is how Azure Power was incorporated in 2008.
How did you arrange for the initial investment required to start Azure Power?
I bootstrapped the company.
How big is your team, presently?
We have a team of 150 highly talented, resourceful and experienced individuals.
Who are your major clients?
We create innovative solutions and provide affordable solar power to our customers that range from utilities, government and commercial customers to rural communities.
What have been the major drivers of growth for you?
The major growth drivers for us were access to international technology, as well as dedicated and experienced senior management. As a first-mover, ahead of national incentives and international investment in the MW-scale power generation in India, we could demonstrate our capability by developing something that had not been done before in India.
The fact that we had a project running in Punjab was helpful in demonstrating capabilities and securing contracts in states like Haryana, Rajasthan and Gujarat.
Moreover, a favourable environment in terms of policies and supported framework in states like Punjab, Gujarat and Rajasthan have helped us stride forward successfully in the Indian solar sector and, thus, helped pave the way forward for India’s solar industry.
What are the major challenges that you face? How do you cope with them?
A consistent, predictable and long-term regulatory environment is the key for development of the solar power generation sector in India. We must have clear and long-term visibility on solar feed in tariff in India. The government has been active in promoting solar power generation. It has successfully completed Phase I of the National Solar Mission. The regulatory environment is also being made conducive, solar tariff has been published by the regulator and market driven mechanism are also being promoted.
Further, availability of long-term solar radiation data on ground in multiple locations is essential for lenders to assess the project potential. The government has taken steps to set up ground monitoring stations to publish credible insolation data for solar energy, to help solve the problems of the limited experience of project developers in this sector.
Timely permitting experienced engineering, procurement and construction companies are essential for bankable contracts for financing of solar projects. Owing to the short gestation period of these projects, timely permitting - including land acquisition and power evacuation - become necessary. To encourage this, the government should consider the development of a single-window clearance mechanism. This is something that is lacking in India, and is a major challenge.
How can India’s SMEs benefit from the use of solar power?
Though the generation of electricity from solar energy is expensive today, with the generation-based tariff offered by the government, it becomes economically viable to the investor. This source of power could be used during peak demand times, like opportunities where there is a need for energy requirement during the day, like schools, hospitals, agriculture. India has almost 50,000 MW of standby diesel genset capacity, and solar power is definitely an answer to replace diesel-based power.
Furthermore, in India today, diesel is used by small commercial enterprises as well as large buildings (private and public) to generate electricity during grid outage. Given that power generation from diesel is highly polluting and is increasing India’s dependence on oil imports, solar energy could play a crucial role here. Even though solar power is still expensive in contrast to conventional sources of power in tangible costs, as observed, the cost of solar power has shown significant reduction year over year and with an increase in production, a downward trend is expected to continue.
How has the public response been to Azure Power?
Azure Power’s plants help create positive impact on the social and economic development of the local communities. Azure Power employs team members and service providers from the local communities near the project site and is hence helpful in creating employment opportunities locally. Moreover, the power plants are situated on community land, that is now generating income and more reliable power for the local communities.
This has helped generate positive reviews from the local communities. Since electricity has a multiplier effect, Azure Power’s plants in rural areas have helped promote sustainable development and have been able to empower the communities as a whole.
What are your expansion plans?
At present, Azure Power has a project under various solar policies in the country, and has invested significant capital in its operating facilities in India. Azure will continue to supply clean energy to as many households as possible in India. Azure Power has a portfolio of 54MW and a strong pipeline of 200+ MW and, hence, continues to demonstrate its commitment to inclusive growth through clean energy generation for grid-connected, rooftop and off-grid initiatives pan India. We plan to have 100MW generating by 2014 enough to power around 1,600 villages in India.
What are your thoughts on the solar power industry in India at present?
India has made impressive progress in the field of electricity generation since independence. In terms of generation, while new capacity has been added, the gap between demand and supply has, by and large, increased. In order to meet India’s objectives of inclusive growth through rural electrification and meeting the country’s growing demand for power, solar energy is the most promising renewable energy source, given the 300+ days of sun in India.
The solar sector in India has witnessed noticeable growth in the last few years owing to favorable policy and regulatory mechanisms. In 2010, the government of India announced the Jawaharlal Nehru National Solar Mission, which is one of the major global initiatives in promotion of solar energy technologies. The Mission aims to achieve volume production, local manufacturing, R&D and rapid diffusion and deployment of solar technologies across the country at a scale which leads to cost reduction and aiming to achieve the grid tariff parity by 2022.The installed capacity of grid connected solar in India is 1,040MW and off-grid solar is 92MW, according to government data.
In order to increase the share of power purchase through renewables, the government of India has mandated State Electricity Regulatory Commissions (SERCs) to specify renewable purchase obligations (solar and non-solar) for each state in India, which is the minimum percentage of the power purchased by distribution utilities to be sourced from solar power. In addition to this, there are Renewable Energy Certificates (RECs) which represent the attributes of electricity generated from renewable energy sources. RECs can be used by the obligated entities to demonstrate compliance with regulatory requirements, such as Renewable Purchase Obligations.