BHEL’s counterpart in the private sector, L&T, sees a mitigation strategy in moving towards renewables. “With a discernible thrust on renewable energy, the award of some contracts in this area has been gaining momentum, which has offset the tapering of prospects on centrally sponsored intensive electrification projects under the ‘Saubhagya’ initiatives,” it noted in its FY20 annual report.
In a recent investor presentation, L&T said its green product portfolio was valued at Rs 31,765 crore. However, L&T has not yet shunned its thermal power engineering procurement and construction (EPC) portfolio. Its annual report lists the emphasis on renewable energy as a risk to the higher growth in the thermal power sector. In fact, L&T expects thermal power to continue to be the country’s mainstay. In its annual report, the company says that the National Infrastructure Pipeline’s projection of a 292 Gw thermal power capacity by FY25, and the retirement of old, inefficient and polluting power plants, indicate that thermal power is going to be predominant in the country’s power generation mix. Thermax is another company which is transforming its portfolio in line with the change in client demand. Ashish Bhandari, joint managing director, Thermax, is not too worried about the transition. He cites the example of how factories that were once used for thermal power projects are now being utilised for renewables. “We recently presented an application which provides our paper industry customer a boiler for waste to heat recovery purposes. The factory is the same plant which was used for thermal power 10 years ago. The transition is one application at a time and done smoothly,” said Bhandari. “Even in the existing thermal plants, there is scope for making them cleaner and more efficient.”
Thermax, as the name suggests, was once a supplier to the thermal power industry. “We are no more into those large independent power plants; we are now more into captive power plants. The demand is coming more from renewables or waste energy,” said Meher Pudumjee, chairperson, Thermax.
Others like ABB have decided to completely move away from the power business. In July, the company completed the divestment of its power grids business to Hitachi. “The divestment allows ABB to focus on key market trends and customer needs such as the electrification of tranxsport and industry, automated manufacturing, digital solutions and increased sustainable productivity,” ABB said in a statement.
like Power Grid, the focus on green energy
means more orders. It floated the idea of Green Energy
Corridors (GEC), an alternative transmission system for renewable energy projects, way back in 2011. In the first phase of GEC, around 20 GW of transmission capacity is being built by the state-owned Power Grid Corporation of India. However, as yet, only two projects have come up in Tamil Nadu and Rajasthan. Another 20 Gw was bid out to private companies.
An additional 66 Gw has been planned to connect renewable projects, of which bidding for 28 Gw has been concluded.
Until recently, power transmission projects were awarded at the national level, connecting two or more regions. However, with the saturation in the national grid and the rising demand for power in the states, the government is moving towards strengthening the system at the state level. India plans to install 175 Gw of solar and wind power projects by 2022.
Companies are also looking at memorandums of understanding (MoUs) to profit from the focus on green energy.
In January 2020, Power Grid entered into an MoU for project management consultancy services for a transmission system to evacuate power from 1500 Mw of solar projects in Madhya Pradesh.
Earlier this month, L&T, through its subsidiary L&T Hydrocarbon Engineering, signed an MoU with NTPC to be an EPC management partner to build a CO2 to methanol demonstration plant at an NTPC power station.
Similarly, BHEL is collaborating with the Railways to set up a first-of-its-kind solar power plant on Railways’ land for feeding power directly into the traction system. Close to 75 per cent of India’s solar power capacity is built on imported Chinese solar cells and modules, which are 20-25 per cent cheaper than domestic ones. Experts point out that indigenous manufacturing giants such as BHEL missed the bus on solar. However, the recent push by the Centre to promote local manufacturing and shun Chinese imports could come as a boon for Indian manufacturers.
Several Indian solar equipment makers are expecting the government to facilitate low-cost loans and other sops for the sector. “Domestic lenders should consider lower rates for the solar manufacturing sector. Government should also reduce the capital cost for solar manufacturing,” said Saibaba Vutukuri, chief executive office, Vikram Solar.