Interview: Animesh Damani

Animesh Damani,
Partner at Artha Energy Resources

“We are not far behind China if we focus on building the ecosystem required for battery manufacturing today. We could attain global leadership in the segment.”

I believe policymakers should focus on building battery manufacturing capacity. We are not far behind China if we focus on building the ecosystem required for battery manufacturing today. We could attain global leadership in the segment, says Animesh Damani, Partner at Artha Energy Resources in an exclusive interview with Manu Tayal, Associate Editor, Energetica India. Damani shared his expert insights and thoughts on various emerging topics in the power sector including financial advice, opportunities for India, policy hurdles, his company’s future plans etc.

“Shed some light on Artha Energy and its journey in the clean energy space?”

Artha Energy had its roots in the United States, where my brother Anirudh Damani had run a startup that traded short and medium power contracts with C&I clients -- what we term Open Access in India. Initially, my brother had started -as a door-to-door sales representative and worked his way up to partner and owning a sizeable portion of the company.
In 2011, both of us came back from the US to India and wanted to continue the energy journey in India. Renewable energy was picking up at the time, and we started as greenfield developers for a large North-American based fund in hydro, solar, and biomass. We continued to develop a sizeable portfolio for many investors in solar and wind.
On the other hand, the experience of working in the Indian power market was very different from the US. The data was difficult to obtain at the time, and the regulatory environment was continually evolving. We set out on a mission to capture data on power generation, consumption, and pricing. After crossing many hurdles, we eventually developed a database that houses granular level data on the power generation and consumption patterns in the country. This database feeds our consultancy services in M&A and current greenfield & brownfield development activities. We are currently in the process of setting up a platform for investment in solar and wind projects.

“How do you see India’s upcoming One Sun One World One Grid (OSOWOG) program?”

OSOWOG is a very ambitious program and is futuristic in vision. Currently, it faces many dynamic elements that go beyond the economics of the program and transcends into geopolitics, infrastructure sharing between member nations, investment contributions, and current trends against globalization. These are early days, and there is a lot to be worked out. There is a need for innovation in transmission so that the benefits of the increased asset utilization are not lost in high transmission costs.

“Can safeguard duty and BCD will go hand-in-hand? Is this practically feasible as per the current Indian scenario?”

The government is very motivated to develop a domestic manufacturing industry for solar to reduce dependency on imports. However, considering the lack of depth in the supply chain infrastructure, it would be challenging to create domestic competitiveness against the Chinese. There is a lot of focus and support required from the government in the form of subsidies, interest subvention, tax holidays, and more to build wafer, ingots, and cell capacity in the country. In every 9-10 months, we observe an upgradation in the technology of cells. It requires expertise and investment in R&D too. Hence, it is an uphill task to build domestic competitiveness. We also must consider the time-lag to build the capacity.
Hence, safeguard and BCD if implemented together will sharply raise the cost of solar power and derail the growth of the sector.

“What do you think policymakers should do to tackle the current situation?”

I believe policymakers should focus on building battery manufacturing capacity. We are not far behind China if we focus on building the ecosystem required for battery manufacturing today. We could attain global leadership in the segment.

“Being a financial expert, in your view, how the financial health of Discoms be improved?”

The financial woes of the Discom stem from high AT&C losses, cross-subsidy structure, lack of investment in upgradation, and over-arching responsibilities.
Firstly, there needs to be a strict implementation of a program to reduce AT&C losses. Discoms need to be heavily penalized for missing targets.
Secondly, there is a need for pricing reforms and to simplify the structure. DBT needs to be implemented, and the installation of a smart meter and pre-paid systems need to be quickly ramped up. Discoms need to move away from a cost-neutral mindset to a profit-making one.
Lastly, the role of the Discoms needs to focus more on grid infrastructure operations and maintenance. The opening of the distribution sector is required that allows for multiple players to ensure fair competition and choice for consumers.

“Why the government needs to do retendering multiple times, or why many tenders in the recent past remained undersubscribed? Is this Covid-19 effect or something else?”

The relentless focus on low pricing for auctions is to be blamed for this. Discoms are reluctant to buy solar power above a certain price level. Such price levels are unattractive for developers; hence, they remain undersubscribed.
We have recently seen multiple PPAs being canceled under force majeure by developers. I believe this to reflect project profitability concerns.
Covid-19 has affected international investor sentiments, but many investors are looking at India emerging strongly from Covid-19. Hence, I don’t think it will affect their appetite for India.

“As per your analysis, how much time-frame backsheets and modules used in the solar projects started showing defects currently in India? What do you think on an average how many projects (approx in %) can sustain for 25-years?”

Many of the thin-film projects have seen very high degradation within 3-4 years of COD. I believe this trend will be witnessed in Polycrystalline modules projects too, wherever cost-cutting overtook the need for a quality BOM for panels. On average, we should see 3-5% of utility-scale projects show higher rates of degradation than estimated within the first 10 years. On the residential and C&I rooftop space, we would see a much higher percentage of project underperforming or failing to last 25 years.
Sustaining a project for 25 years is not only a function of project build quality but also of proper and timely maintenance.

Interview 07/09/2020 by Manu Tayal
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