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Sameer Gupta, Managing Director , Jakson Power Solutions

17 Mar 2014

Sameer Gupta, Managing Director of Jakson Power Solutions, talks to Shakeb Ayaz about the power scenario in India, the ills plaguing the sector and what his company is doing in the renewable space. Excerpts.

What is your expectation from the government on the policy front?

The Electricity Act was amended 10 years back with the objective of making the industry grow. Thereafter the private sector participated in generation, transmission and distribution. The country has seen significant progress in the past 10 years in the power sector. There are, however, challenges related to fuel availability, environmental clearances, land acquisition and related legal issues. In the past five years there were many power projects which were to come up in the Odisha-Madhya Pradesh belt but have got stuck due to these constraints. India has enough reserves of coal but unless policy clearances get speeded up, fuel availability would continue to be an issue. In the past six months the government has been trying to push reforms and certain policy announcements have been made but the key would lie in their smooth implementation. There is an element of uncertainty as elections are round the corner. Hopefully, we would see stability post elections which would attract lot more investments in this area where there is a clear demand-supply gap.

What are your expectations from the central government and state governments?

The fundamental expectation is clearance of projects which have been on hold and their fast track implementation. While many projects have been cleared in the recent past, fuel allocation as well as financial closure would determine their future. There has to be a political will and consensus between various government bodies for fast track implementation. I am hoping that we have a stable government, irrespective of the political party, as it is stability which can make all the difference to overall growth.

What about foreign private fund monies financing green projects in India and other investments?

Given a choice, foreign investors would consider India for investments as our fundamentals are strong. But due to political uncertainty, bureaucratic hurdles, taxation laws and negative sentiment, investors today would think several times before making an investment in any project in India. Given the potential India has, there is a need to overcome the hurdles so as to attract big ticket investments. Renewable energy in particular has an opportunity to see huge investments once overall investment climate improves.

What do you think needs to be done to boost the transmission and distribution sectors?

Reforms in this sector will play a big role in giving it a boost. We operate at very poor efficiencies and there is an urgent need to modernize as well as make our systems efficient so that losses can be brought down. We need to make the best use of the existing infrastructure. The per capita consumption of power in India is amongst the lowest in the world. With growing middle-class, this is expected to go up exponentially. Keeping this in mind there is a need to modernize and facilitate private investment in this sector which will reduce T&D losses, attract more investments and create an efficient network across the country. I also see an opportunity of “distributed power” based on bio-fuels or renewables like solar power catching up in India. If implemented properly, we can actually provide electricity to many rural areas without making huge investments in T&D systems.

In the north-east we are seeing more push towards hydro power with Arunachal Pradesh tipped to be the hydro power house of the country.

North-east has immense hydro power potential. More than 125 power projects have been allotted particularly in Arunachal Pradesh to private developers but there are issues related to clearances, land acquisition, downstream water flow assessment, infrastructure, financing and power evacuation. Certain small capacity plants in the north-east are on the verge of closure and are no longer financially viable.

But the government in Arunachal Pradesh is now concentrating on bigger projects of more than 100 mw and prioritizing them.

Arunachal Pradesh has the potential of more than 50,000 mw of hydro power. Subject to the state government getting over the bottlenecks, this potential once harnessed can contribute immensely in the development of the state. But this will take some time since hydro projects have a long gestation period. The north-eastern states are now coming up with solar power projects as well. Fundamentally, this part of the country is focusing on renewable power which over long term is a sustainable solution.

Has the country learnt any lessons from the grid failure of July 2012? If yes, what steps should be further taken not to allow repeat of such situations?

India has been over-dependent on outdated coal-based power plants. We need to have modern grids which work on high efficiency and can accommodate spikes on peak demand. Over 50 per cent of our population is still without electricity. Our grids are unreliable and there are leakages in distribution system. This triggers the need for decentralized power or distributed power with focus on renewables. Solar power plants of small sizes or roof-top based solar power plants can be an appropriate solution for such issues as we can get reliable distributed power without really burdening the grids. We can make electricity reach rural areas and make rural electrification initiative a bigger and sustainable success. To add to this, power trading amongst states through energy exchange should also be seriously promoted.

The national grid is there but is there enough transmission and distribution infrastructure for mobility of power?

There is a need to strengthen the grid to deliver power securely and reliably. Power needs to be available for the end user. The existing grid is not futuristic. Looking at the demand forecast, its capacity would need to be enhanced. There should be a consensus on this and collaborative work amongst various state and central bodies to make this happen.

In which verticals of energy is your company Jakson Power present and what are your company’s activities?

Jakson is almost a 70 year old name in India now. Our focus has been on diesel generator sets. We are one of the largest packagers of generator sets in India powered with Cummins engines. In fact our expertise is in providing power solutions with both diesel and gas as fuel but in both the options, rising cost of fuel is a limitation. Not long back, producing captive power from diesel, using gensets, was a cost-effective solution. Due to peak demand shortage, gensets are still used for producing captive power. But with the rising cost of diesel and improved availability of power, their application is shifting more towards emergency and standby power. While the cost of diesel would continue to increase, we do believe that with new gas finds and shale gas becoming a reality, gas may at some point of time become a sustainable solution. In the recent past, Jakson has diversified into areas of distribution systems, electrical contracting and solar power. Our 20 mw solar power plant has been running successfully for over a year in Rajasthan. We are in the process of developing another 10 mw power plant in Uttar Pradesh. We have plans to have a portfolio of 100 mw power plants under Jakson’s banner. We also undertake EPC solutions for other developers and so far have successfully commissioned more than 50 mw solar power plants which includes from customers like NTPC.

How do you rate the renewable energy sector’s performance in India since the thrust is more on thermal?

Globally, including in countries such as the US and China, bulk of the energy comes from coal and fossil fuel. India has amongst the world’s largest coal reserves, good enough to meet our forecasted demand over the next 50 years. Almost 60 per cent of power produced in India comes from thermal sources and if we can figure out solutions to the various issues already discussed around making coal available, we can solve the power problem for years to come. India’s thrust on renewable is right and in the past decade we have witnessed focus on hydro power, wind power and now solar power. Fundamentally, it is clean energy with no impact on environment and if the cost of power produced can be made comparable to that produced from other fuels, there can be no better solution. As of today, almost 10 per cent of the total power produced is from renewable sources. Fortunately, popularity. Apart from this, several state governments such as Gujarat, Rajasthan, Madhya Pradesh and Uttar Pradesh have their own state policies. If aggregated, we estimate almost 35,000 mw of power getting produced out of solar energy over the next 10 years or so in India. The reasons of enhanced focus on solar power are primarily the fact that capital expenditure has come down dramatically over the past five years – a solar power plant that used to cost `15 crore per mw, today can be built for `7 crore per mw which thus makes it a viable option even without subsidies which was not the case till a few years back. We are moving towards grid parity due to rising fuel prices which makes solar or renewables a robust and a sustainable solution.

How do you rate the performance of your company in the renewable space?

In renewable space, our focus is also on solar power. We have invested in our own independent power producers (IPPs) and have forayed into other parts of the value chain including offerings like solar EPCs, solar roof top EPCs, solar equipment like solar inverter sub-stations, string boxes and solar products like solar generators, solar water purifiers. We have plans to invest in total of 100 mw solar power plants over the next three years.

What are the unique offerings of your company?

We have a Global Training Center in partnership with Cummins which is unique in India as it has the capability to offer training on futuristic electronic engines. To our mind, training will have a big role to play as availability of right skill sets is a growing concern for every industry. Our unique offering like “solar generator” would have big potential for rural electrification as it can be designed around the concept of distributed power, therefore eliminating big investments on transmission and distribution. India has enough natural resources including solar radiation, coast line, rivers and land which puts us in a good position to harness renewables. I think we have done quite well particularly in the field of solar power. We have a National Solar Mission and under Jawaharlal Nehru Solar Mission, there is a plan to produce 20,000 mw from solar power by 2022 out of which over 1,000 mw has been successfully commissioned in the past two years. Recently, bids for 750 mw were invited against which there are proposals of over 2,000 mw under this mission which speaks for its acceptance and popularity. Apart from this, several state governments such as Gujarat, Rajasthan, Madhya Pradesh and Uttar Pradesh have their own state policies. If aggregated, we estimate almost 35,000 mw of power getting produced out of solar energy over the next 10 years or so in India. The reasons of enhanced focus on solar power are primarily the fact that capital expenditure has come down dramatically over the past five years – a solar power plant that used to cost `15 crore per mw, today can be built for `7 crore per mw which thus makes it a viable option even without subsidies which was not the case till a few years back. We are moving towards grid parity due to rising fuel prices which makes solar or renewables a robust and a sustainable solution.

How do you rate the performance of your company in the renewable space?

In renewable space, our focus is also on solar power. We have invested in our own independent power producers (IPPs) and have forayed into other parts of the value chain including offerings like solar EPCs, solar roof top EPCs, solar equipment like solar inverter sub-stations, string boxes and solar products like solar generators, solar water purifiers. We have plans to invest in total of 100 mw solar power plants over the next three years.

What are the unique offerings of your company?

We have a Global Training Center in partnership with Cummins which is unique in India as it has the capability to offer training on futuristic electronic engines. To our mind, training will have a big role to play as availability of right skill sets is a growing concern for every industry. Our unique offering like “solar generator” would have big potential for rural electrification as it can be designed around the concept of distributed power, therefore eliminating big investments on transmission and distribution.

What is your order book and revenue position?

In 2012-13, which was one of the toughest years for industry, our gross revenue was about `1,450 crore. In the ongoing financial year 2013-14, which is even more challenging than the last financial year, we would grow by around 6 per cent which we are satisfied with. We have plans to grow by more than 10 per cent in the coming financial year and are quite hopeful of achieving it. Our current order booking is close to `400 crore and we are expecting closure of many orders in the pipeline over the next few months.

What are your international operations and in which country?

We are present in a couple of Saarc countries i.e Nepal and Bangladesh and have offices in Singapore to support our Bangladesh operations. We are exploring opportunities in the Middle-East and Africa, particularly on solar and contracting offerings. We have already secured some orders for solar generators and solar water purifiers from the Middle-East.

Isn’t it interesting that the Middle-East that produces oil is moving towards solar power?

That was bound to happen because the entire Middle- East is blessed with huge amount of solar radiation and large land parcels which are deserts and not usable for any other industry. Solar power is clean and environment friendly, unlike oil whose reserves also are finite. With capex of solar power plants coming down, the Middle- East countries have announced several solar power plants in recent past. In Saudi Arabia alone there have been news of around 40 gw of solar plants coming up over the next 15 years.

What is the kind of investment in the R&D in the renewable space?

Primarily the research is happening in the areas of solar cells. If we see the value chain, it starts from silicon wafer to solar cells to solar panels and then it comes to solar solutions and equipment. Just about five years back, solar cells had efficiency in the range of 15 per cent which today has gone up to 21 per cent. We understand that under lab conditions, there are solutions available to have solar cells of efficiency as high as 40 per cent. Once this happens, land requirement for building solar power plants would come down dramatically thus giving further impetus to the Industry. Apart from R&D on solar cell technology, there is research happening in the field of storage solutions which can unleash huge opportunities in the field of renewable space.