“The renewable energy sector is set to take off in coming years in India,” says K S Popli.
Please give us an overview of the Indian Renewable Energy Development Agency Ltd.
Indian Renewable Energy Development Agency Ltd (IREDA) is a non-banking financial company. IREDA promotes, develops and extends financial assistance for renewable energy and energy efficiency, conservation projects. It was established in 1987, and since then it has been promoting renewable energy projects. Now in India, renewable energy sector is taking off. In this scenario, the role of IREDA becomes really very important as it is the only dedicated financial institution which is financing renewable energy projects. We have sanctioned more than 2000 projects so far and our asset book is more than rs.8000 crores.
IREDA: At a Glance
>>Indian Renewable Energy Development Agency Limited (IREDA) was established on 11th March, 1987 as a Public limited Government Company under the Companies Act, 1956 and it promotes, develops and extends financial assistance for Renewable Energy and Energy Efficiency/ Conservation Projects.
>> IREDA has been notified as a “Public Financial Institution” under section 4 ‘A’ of the Companies Act, 1956 and registered as Non-Banking Financial Company (NFBC) with Reserve Bank of India (RBI).
>> IREDA’s mission is “Be a pioneering, participant friendly and competitive institution for financing and promoting selfsustaining investment in energy generation from Renewable Sources, Energy Efficiency and Environmental Technologies for sustainable development.”
>> IREDA’s Motto is “Energy for Ever.”
What is your view of the overall renewable energy sector in the country?
Government of India has set the target of generating 30000 MW in next five years. This speaks quite clearly that focus is on generating more and more renewable energy in the country. This will give us energy security and access to energy. Apart from these, renewable energy will help us in generating green power. I feel that the targets are achievable. We should help in facilitating development of the projects.
Please shed some light on the cost effectiveness aspect of the renewable energy.
There are issues with renewable energy. This is a capital intensive sector. I can say that cost of solar energy projects were `20 crores per MW till four-five years back. So the cost of solar power generation was around `18-19 per unit. But over the years the cost has been decreased. It is now around `6-7 per unit. If we look at the wind energy, which is the largest among the renewable sources, the cost is coming between `4-4.50 per unit. This is at par with the cost of thermal power per unit. I feel that there will be huge scaling up in the field of renewable energy sector.
“Government of India has set the target of generating 30000 MW in next five years. This speaks quite clearly that focus is on generating more and more renewable energy in the country. This will give us energy security and access to energy. Apart from these, renewable energy will help us in generating green power. I feel that targets are achievable. Only thing needed is that we should help in facilitating development of the projects.”
What is the scenario in the wind energy sector?
The wind energy sector has reached the stage of maturity. In terms of performance wind energy sector is doing well as envisaged in the detailed project report. The scenario in this sector has changed over the years. People have started investing in wind energy sector. Luckily there are no non-performing assets with us in this sector. It gives lot of comfort to bankers also. In the last 2-3 years solar energy sector has also done well. But now credibility is getting built up for the solar energy sector. I think people are now getting more into the solar field. Recent developments also show that confidence is increasing among the developers. There is no dearth of investments in the solar energy sector. I feel that solar energy will get at par with wind energy in terms of installation in coming two years.
IREDA’s Quality Policy
IREDA is committed to maintain its position as a leading organization to provide innovative financing in Renewable Energy & Energy Efficiency/Conservation and Environmental Technologies through efficient systems & processes for providing total satisfaction and transparency to its customers.
Please share your analysis on the progress of wind energy sector and the future potentiality of this sector.
In the last year of the 11th five year plan period, more than 3500 MW capacity was installed in the wind energy sector. Target of 15000 MW generation has been set for next five years. We need to install almost 11000 MW capacity for wind energy sector in coming three years. Thus target can be achieved. The ministry has also taken up the issue of having offshore windmills. But I think it will take some in India to go for offshore windmill system. Though work in this sector has already been started.
What is the scenario of private or government company participation in the renewable energy sector?
Let me explain the hydro energy sector first. Earlier Large Hydro Project (LHP)s were completely government owned. But in the Medium Hydro Project and Small Hydro Projects, participation of private companies were more. We have seen some big players getting into this sector. In the last decade private sector has gained more experience to be associated with the renewable energy industries. But there are some problems with private companies who are into manufacturing. In the solar energy sector issues are little complex.
IREDA is basically a financial institution. Please elaborate on the financial health of the company.
Since the inception of the company, IREDA has been a profit making company. In the last five years our profits after taxes have gone up from `57 crores to more than `200 crores. Company’s net worth has gone up to almost `1900 crores in last five years from `500 crores. We understand the sector. There are some bad projects. But it is a learning process. We are learning from our mistakes. NPAs are manageable. We believe that this sector has got good potential.
What are the challenges before IREDA?
As far as policies are concerned, Ministry is taking up feedbacks from the stakeholders and from various conferences. The support is also forthcoming for IREDA. Sector wanted cheap funds and I think they are going to be made available under the National Clean Energy Fund. Other challenge was renewable purchase obligations. Ministry is trying to address this concern by taking some effective steps. But I think problems will be keep coming and we have to overcome the problems and challenges. It happened with the mainstream energy sector also. I can say that the things are moving in the renewable energy sector.
Please share your vision for IREDA with us.
IREDA has grown up more than 4 times in last five years and we want to grow 4 times again in the next five years. That will be a great achievement for our organization. It will help us in building critical mass as our asset base will be more than `20000 crores in next three to five years. On the other hand, observing last five year’s growth trend I am very confident that the renewable energy sector will grow more by next ten years.