Renewable energy market in India is expanding like never before. The sector has been witnessing a flurry of activity, particularly since the government announced its ambitious target of 175 gigawatts of clean energy capacity by 2022.
Several leading clean energy companies such as SunEdison have shown keen interest in investing in India. And solar energy projects have been particularly popular among investors.
Many firms are also including India in their expansion plans for the coming years. Fortum is one such company, which has been testing the waters in India since 2013.
In January the company developed a 10-megawatt solar photovoltaic project in Madhya Pradesh. It was the first to be commissioned under Jawaharlal Nehru National Solar Mission Phase II, Batch I.
Earlier, in June 2013, Fortum had registered its presence in the Indian market by acquiring a 5-megawatt solar power project in Rajasthan.
The acquisition was meant “to understand the Indian energy landscape” and the project developed in Madhya Pradesh is the next stage of investment. Sanjay Aggarwal, Managing Director, Fortum India, says the company has plans to invest significantly in the country.
“We started looking at Asia toward the end of the last decade, analyzed various countries and decided couple of years back to have confidence in India,” Sanjay says.
“We are building up local competencies, bringing in our well defined way of working and ramping up our organization. We have studied the market in detail, and are now ready for our next phase.”
Till about a decade back Fortum been focusing solely on Nordic region. It has since included Poland, Baltic Rim and Russia in its portfolio. The company is now scouting greater opportunity in India.
“We are cautious in our approach; we analyse the markets, do initial seeding, learn from the experience and slowly start placing bigger investments. That’s Nordic thinking. We pace out our work and always have a long term view,” Sanjay says.
With high insolation and 300–330 sunny days on average available each year, India is a lucrative market for solar energy investors. The country has potential to provide more than 700 gigawatts capacity, according to an estimate.
And for Fortum the Indian government’s target of 100 gigawatts of solar power by 2022 is an unequivocal expression of political will and support for development of the sector. Sanjay says the costs of solar power can quickly reach grid parity once capacity development crosses a threshold with support by way of incentives.
“Hundred gigawatts is an aggressive target but with time and bid announcements, India is moving step by step toward the target,” Sanjay says. “Government of India has followed up the revision of targets with actual interventions at central and state levels in allocating resources for development of solar parks, allocating monies to various government agencies involved in this activity.”
The Fortum MD sees immense potential for solar power development in Madhya Pradesh, Rajasthan, Andhra Pradesh and Tamil Nadu. Eventually, India could also see the company investing in storage and microgrids if it is satisfied with the potential India offers for such projects.
But India is not a challenge-free investment destination. Sanjay says the company does face hurdles such as the lack of uniformity in tariffs across states and difficulties with acquisition of land.
However, there is room for optimism. “Land acquisition and evacuation challenges will be mitigated by creation of solar parks with evacuation facilities,” Sanjay says, and adds, “With roadblocks removed, developers need to have technical, project management and financial capabilities to harness this opportunity.
Globally Fortum is focusing on replacing retiring capacity and to build new environmentally-benign power generation.
“In 2014, about 64 percent of the electricity Fortum produced globally and 94 percent of energy it generated in the European Union was free of carbon dioxide.”
Ajith Kumar S