1 00:00:00,080 --> 00:00:02,640 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:02,960 --> 00:00:06,760 Speaker 1: the BNAF podcast. Earlier this year, India's are passed China 3 00:00:06,880 --> 00:00:09,360 Speaker 1: to become the most populous country in the world, and 4 00:00:09,440 --> 00:00:12,119 Speaker 1: with the rise in its population coupled with an increase 5 00:00:12,160 --> 00:00:15,800 Speaker 1: in their industrial output, India's energy consumption is growing fast 6 00:00:15,840 --> 00:00:19,400 Speaker 1: as well. So how is India's energy system changing and 7 00:00:19,440 --> 00:00:23,160 Speaker 1: are renewable energy auctions being effective in making their grid cleaner? 8 00:00:23,440 --> 00:00:25,759 Speaker 1: Have the structures put in place by the Modi government 9 00:00:25,880 --> 00:00:29,280 Speaker 1: created the necessary incentives to move away from things like coal? 10 00:00:29,680 --> 00:00:32,360 Speaker 1: On today's show, I speak with Rohan Godre who's based 11 00:00:32,400 --> 00:00:35,360 Speaker 1: in bnif's New Delhi office, and he covers these sorts 12 00:00:35,360 --> 00:00:38,280 Speaker 1: of topics in detail and his research. We go through 13 00:00:38,320 --> 00:00:41,360 Speaker 1: things like the current structure of India's energy market. We 14 00:00:41,440 --> 00:00:45,159 Speaker 1: also talk about the domestic independent power producers and global 15 00:00:45,200 --> 00:00:48,280 Speaker 1: companies that are bidding in these renewable energy auctions, and 16 00:00:48,320 --> 00:00:51,199 Speaker 1: then of course India's involvement in the global race to 17 00:00:51,240 --> 00:00:54,000 Speaker 1: net zero. I thought you may also be interested to 18 00:00:54,080 --> 00:00:56,680 Speaker 1: know that BNAF is a network provider of the B 19 00:00:56,800 --> 00:00:59,560 Speaker 1: twenty taking place in India later this year. For those 20 00:00:59,560 --> 00:01:01,920 Speaker 1: who are not familiar, the B twenty is the official 21 00:01:02,040 --> 00:01:05,399 Speaker 1: G twenty dialogue, but for the global business community. On 22 00:01:05,440 --> 00:01:07,399 Speaker 1: the twenty fourth of August, B and EF will be 23 00:01:07,440 --> 00:01:10,559 Speaker 1: hosting our annual New Deli Summit, and it'll take place 24 00:01:10,600 --> 00:01:13,880 Speaker 1: the day before the official B twenty meetings kickoff. So 25 00:01:13,920 --> 00:01:15,920 Speaker 1: for those who may already be traveling to the B 26 00:01:16,000 --> 00:01:18,759 Speaker 1: twenty or want to view the event remotely, you can 27 00:01:18,800 --> 00:01:21,880 Speaker 1: find out more about it at about dot BNF dot 28 00:01:21,920 --> 00:01:24,959 Speaker 1: com Forward Slash Summit. You'll be able to see the 29 00:01:25,000 --> 00:01:28,680 Speaker 1: agenda and speakers for this and other upcoming summits taking 30 00:01:28,680 --> 00:01:31,480 Speaker 1: place around the world, as well as videos from prior ones. 31 00:01:31,600 --> 00:01:33,440 Speaker 1: I'll also include the link in the show notes. You 32 00:01:33,520 --> 00:01:36,320 Speaker 1: can easily find it there. If you like this podcast, 33 00:01:36,560 --> 00:01:39,200 Speaker 1: also make sure you subscribe and you'll receive alerts to 34 00:01:39,240 --> 00:01:42,920 Speaker 1: future episodes. Also consider giving us a review on Apple 35 00:01:42,959 --> 00:01:45,760 Speaker 1: Podcasts or Spotify, as it does help other people discover 36 00:01:45,840 --> 00:01:47,800 Speaker 1: the show. And if you're on Twitter and you'd like 37 00:01:47,840 --> 00:01:50,680 Speaker 1: to subscribe to at podcasts, you'll be able to find 38 00:01:50,680 --> 00:01:54,240 Speaker 1: out about new episodes of Switched On and other Bloomberg podcasts. 39 00:01:55,160 --> 00:01:58,600 Speaker 1: As a reminder, BNAF does not provide investment or strategy advice, 40 00:01:58,720 --> 00:02:00,800 Speaker 1: and we have a complete discos at the end of 41 00:02:00,840 --> 00:02:03,920 Speaker 1: the show. And now let's speak with Rohit about India's 42 00:02:04,040 --> 00:02:17,440 Speaker 1: energy system. Hi, Rohit, thank you very much for joining 43 00:02:17,520 --> 00:02:18,359 Speaker 1: us on the show today. 44 00:02:18,480 --> 00:02:21,000 Speaker 2: Thank you, Dina. Pleasure being here. So I think this is. 45 00:02:21,000 --> 00:02:25,720 Speaker 1: The first time we've done a truly country focused episode, 46 00:02:25,800 --> 00:02:27,960 Speaker 1: and so we're going to try and see how much 47 00:02:28,160 --> 00:02:30,200 Speaker 1: content we can cover in the time that we've got, 48 00:02:30,240 --> 00:02:32,880 Speaker 1: which is an ambitious task given that the country that 49 00:02:32,919 --> 00:02:35,240 Speaker 1: we were here to talk about is India, which just 50 00:02:35,360 --> 00:02:40,160 Speaker 1: recently became officially the world's most populated country and certainly 51 00:02:40,280 --> 00:02:44,520 Speaker 1: has a complex but extremely fascinating energy system. So I 52 00:02:44,600 --> 00:02:47,160 Speaker 1: look forward to learning a few things from you today, 53 00:02:47,200 --> 00:02:50,040 Speaker 1: and I guess let's start off by talking about the 54 00:02:50,040 --> 00:02:53,480 Speaker 1: current state of play. So could you describe what the 55 00:02:53,600 --> 00:02:55,800 Speaker 1: energy system looks like in India today? 56 00:02:56,000 --> 00:02:58,200 Speaker 2: It's a very big topic, but let's just start with 57 00:02:58,280 --> 00:03:00,240 Speaker 2: where we are today, so I'll give you a high 58 00:03:00,320 --> 00:03:03,480 Speaker 2: level overview of the sort of demand and supply situation 59 00:03:03,560 --> 00:03:05,680 Speaker 2: on the power side that we have. So demand for 60 00:03:05,760 --> 00:03:10,680 Speaker 2: electricity is growing very quickly. In fact, last year, electricity 61 00:03:10,680 --> 00:03:13,919 Speaker 2: demand grew by nearly ten percent and this is expected 62 00:03:13,960 --> 00:03:17,559 Speaker 2: to continue. So that's a lot of new demand for electricity. 63 00:03:17,760 --> 00:03:20,600 Speaker 2: And as you said, India is the world's most populous country, 64 00:03:20,639 --> 00:03:23,600 Speaker 2: but the population is still growing, the economy is growing, 65 00:03:24,040 --> 00:03:27,360 Speaker 2: and almost every household is now connected to the electricity grid. 66 00:03:27,680 --> 00:03:31,600 Speaker 2: So having said that, the per capita consumption of electricity 67 00:03:31,600 --> 00:03:34,520 Speaker 2: in the country is very low. It's about one third 68 00:03:34,600 --> 00:03:38,840 Speaker 2: of the world's average and about one fifth of China's. 69 00:03:39,040 --> 00:03:41,200 Speaker 2: So that just gives you a sense of how much 70 00:03:41,320 --> 00:03:44,760 Speaker 2: more power demand could grow in India. Now, just going 71 00:03:44,760 --> 00:03:47,520 Speaker 2: to the supply side, right, it is dominated by coal, 72 00:03:47,920 --> 00:03:51,440 Speaker 2: so about three fourth of the electricity generated last year 73 00:03:51,520 --> 00:03:54,760 Speaker 2: came from coal fired power plants. But having said that, 74 00:03:54,880 --> 00:03:58,920 Speaker 2: almost every megawat of new capacity being added now is 75 00:03:59,000 --> 00:04:02,920 Speaker 2: either wind or solar. So while the legacy assets are 76 00:04:03,000 --> 00:04:06,360 Speaker 2: mostly coal, new additions that we are seeing our wind 77 00:04:06,440 --> 00:04:08,640 Speaker 2: and solar. And a lot of that has to do 78 00:04:08,720 --> 00:04:11,240 Speaker 2: with the targets. So there was a twenty twenty two 79 00:04:11,320 --> 00:04:15,480 Speaker 2: target of one to seventy five gigawat, which not surprisingly 80 00:04:15,600 --> 00:04:17,400 Speaker 2: was missed, but I hope we can come back to 81 00:04:17,440 --> 00:04:20,000 Speaker 2: talk more about that. And now looking forward, there is 82 00:04:20,040 --> 00:04:23,000 Speaker 2: a twenty thirty target and I just want to say 83 00:04:23,040 --> 00:04:26,320 Speaker 2: here that look in India a lot of announcements are made, 84 00:04:26,600 --> 00:04:31,200 Speaker 2: they are not official targets. The nationally determined contribution or 85 00:04:31,240 --> 00:04:35,000 Speaker 2: the climate pledge made officially is quite simple. It says 86 00:04:35,000 --> 00:04:37,960 Speaker 2: that by twenty to thirty the country will have five 87 00:04:38,080 --> 00:04:44,039 Speaker 2: hundred gigawats of non fossil fuel capacity, which is hydro, wind, solar, nuclear, 88 00:04:44,080 --> 00:04:46,359 Speaker 2: all of that, and the long term goal is to 89 00:04:46,400 --> 00:04:49,400 Speaker 2: be net zero by twenty seventy, so that's about fifty 90 00:04:49,480 --> 00:04:49,960 Speaker 2: years away. 91 00:04:50,200 --> 00:04:53,120 Speaker 1: So the goal is in terms of total gigawatts as 92 00:04:53,120 --> 00:04:56,159 Speaker 1: opposed to in terms of a percentage of the overall system, 93 00:04:56,320 --> 00:05:00,719 Speaker 1: which then brings us to this. Well, you uniche stated 94 00:05:00,880 --> 00:05:04,039 Speaker 1: that demand is going up year on ear. What is 95 00:05:04,040 --> 00:05:08,240 Speaker 1: the primary reason or set of reasons that demand is increasing. 96 00:05:08,560 --> 00:05:11,960 Speaker 2: It's a multitude of reasons put together. So it's a 97 00:05:12,360 --> 00:05:15,640 Speaker 2: developing country that's getting richer. So as you have more 98 00:05:15,640 --> 00:05:18,840 Speaker 2: households and certainly more people in the country, there is 99 00:05:18,880 --> 00:05:20,880 Speaker 2: a lot of cooling demand. For example, there are a 100 00:05:20,880 --> 00:05:23,760 Speaker 2: lot more household appliances that are getting used, a lot 101 00:05:23,800 --> 00:05:26,800 Speaker 2: of small and medium industries. And then on the other side, 102 00:05:27,120 --> 00:05:31,040 Speaker 2: the government is pushing for growth from the manufacturing sector, 103 00:05:31,520 --> 00:05:34,719 Speaker 2: which is a heavy user of electricity. So that's what's 104 00:05:34,839 --> 00:05:39,280 Speaker 2: driving growth currently, but moving forward, Apart from all these reasons, 105 00:05:39,320 --> 00:05:44,120 Speaker 2: it's also increasing electrification, so a greater reliance on electricity 106 00:05:44,120 --> 00:05:48,400 Speaker 2: compared to say other fuels be it oil, gas, be 107 00:05:48,480 --> 00:05:52,000 Speaker 2: it biomass, traditional biomass. And the reason is also one 108 00:05:52,000 --> 00:05:55,680 Speaker 2: of self sufficiency. So the country wants to have more 109 00:05:55,680 --> 00:05:59,320 Speaker 2: of its energy produced within the country, and India does 110 00:05:59,360 --> 00:06:03,080 Speaker 2: not have that level of oil and gas reserves, so 111 00:06:03,200 --> 00:06:06,560 Speaker 2: it is going to be electricity, possibly green hydrogen if 112 00:06:06,560 --> 00:06:07,520 Speaker 2: this is to be achieved. 113 00:06:07,680 --> 00:06:10,440 Speaker 1: So you reference the legacy part of the power system 114 00:06:10,520 --> 00:06:13,680 Speaker 1: that actually really was quite reliant historically on coal and 115 00:06:13,720 --> 00:06:17,960 Speaker 1: that new build is greener, cleaner technologies. But with this 116 00:06:18,080 --> 00:06:21,279 Speaker 1: existing coal infrastructure, is this something that the country is 117 00:06:21,320 --> 00:06:24,760 Speaker 1: looking to wind down in order to reduce their overall 118 00:06:24,760 --> 00:06:27,800 Speaker 1: emissions or is it really just about building new capacity 119 00:06:27,839 --> 00:06:28,560 Speaker 1: on top of that. 120 00:06:29,160 --> 00:06:32,360 Speaker 2: I think it's the latter, because really retiring coal at 121 00:06:32,360 --> 00:06:35,159 Speaker 2: this stage would make it very difficult to supply the 122 00:06:35,200 --> 00:06:39,520 Speaker 2: country's power needs, and as a developing economy, it is 123 00:06:40,360 --> 00:06:43,720 Speaker 2: nearly impossible to have that level of solar and wind 124 00:06:43,760 --> 00:06:45,919 Speaker 2: growth to meet your power needs if you start to 125 00:06:45,960 --> 00:06:48,400 Speaker 2: wind down assets. And that is part of the reason 126 00:06:48,440 --> 00:06:51,320 Speaker 2: why the net zero target is a twenty seventy goal, 127 00:06:51,680 --> 00:06:54,600 Speaker 2: rather than say a twenty to fifty one like most countries, 128 00:06:54,720 --> 00:06:57,640 Speaker 2: or even a twenty sixty target. But what happens over 129 00:06:57,720 --> 00:07:00,480 Speaker 2: time is that the newer coal plants getting b are 130 00:07:00,800 --> 00:07:05,000 Speaker 2: more efficient technology, so that should help emission factors come down, 131 00:07:05,200 --> 00:07:07,680 Speaker 2: and once you start to build more wind and solar 132 00:07:07,880 --> 00:07:10,880 Speaker 2: than obviously the share in the generation also starts to change. 133 00:07:11,000 --> 00:07:14,160 Speaker 1: When you say more efficient technology, are they embracing CCS 134 00:07:14,200 --> 00:07:17,400 Speaker 1: ccus or are they looking at is there something else 135 00:07:17,400 --> 00:07:18,320 Speaker 1: that I might be missing? 136 00:07:18,640 --> 00:07:23,000 Speaker 2: It's super critical ultra supercritical cold plants. The problem with 137 00:07:23,120 --> 00:07:27,040 Speaker 2: CCS is that all said and done, at the current moment, 138 00:07:27,160 --> 00:07:31,840 Speaker 2: it is an expensive technology and India cannot afford to 139 00:07:31,880 --> 00:07:36,080 Speaker 2: have high electricity prices at the moment, and so CCS 140 00:07:36,120 --> 00:07:39,720 Speaker 2: perhaps might come into play in the twenty thirties once 141 00:07:39,760 --> 00:07:41,880 Speaker 2: it is proven. Once there are a few projects that 142 00:07:42,000 --> 00:07:44,520 Speaker 2: do it economically, but at the moment we are not 143 00:07:44,640 --> 00:07:47,920 Speaker 2: seeing the power sector using CCS at all. 144 00:07:48,200 --> 00:07:51,720 Speaker 1: So you reference certain goals for the future, so one 145 00:07:51,760 --> 00:07:54,440 Speaker 1: out of twenty thirty and then a net zero target 146 00:07:54,520 --> 00:07:57,720 Speaker 1: for twenty seventy, which is kind of the furthest out 147 00:07:57,720 --> 00:07:59,840 Speaker 1: that I've heard. I mean, I believe China is twenty 148 00:07:59,840 --> 00:08:03,400 Speaker 1: six six, and then many other places are twenty fifty, 149 00:08:03,800 --> 00:08:06,160 Speaker 1: which is a more aligned to where we need to 150 00:08:06,160 --> 00:08:08,920 Speaker 1: be from what the IPCC is telling us on net 151 00:08:09,000 --> 00:08:11,680 Speaker 1: zero targets. Is there a twenty fifty goal of any 152 00:08:11,760 --> 00:08:14,840 Speaker 1: kind in terms of percentages, even if it's not net zero. 153 00:08:15,160 --> 00:08:19,920 Speaker 2: So there is no twenty fifty goal, although certain bureaucrats 154 00:08:19,960 --> 00:08:22,360 Speaker 2: have come out and said that look, by twenty forty seven, 155 00:08:22,560 --> 00:08:25,240 Speaker 2: we want to be self sufficient. The Prime Minister has 156 00:08:25,280 --> 00:08:27,600 Speaker 2: said we want to have all of our energy made 157 00:08:27,640 --> 00:08:30,480 Speaker 2: in India, but I think that's coming from a very 158 00:08:30,520 --> 00:08:34,160 Speaker 2: different perspective of more of the geopolitical angle rather than 159 00:08:34,360 --> 00:08:37,679 Speaker 2: a climate change angle. Now, my personal take on this 160 00:08:37,800 --> 00:08:41,079 Speaker 2: is that currently it's been set to twenty seventy, if 161 00:08:41,160 --> 00:08:44,160 Speaker 2: technology costs were to come down faster than expected, if 162 00:08:44,240 --> 00:08:46,880 Speaker 2: we are to have technology breakthroughs, or if there is 163 00:08:47,040 --> 00:08:51,600 Speaker 2: some financing commitments from the developed world, then twenty seventy 164 00:08:51,720 --> 00:08:55,120 Speaker 2: leaves room for the government to then bring it to 165 00:08:55,200 --> 00:08:59,640 Speaker 2: save twenty sixty sixty five something earlier, something more aligned 166 00:08:59,640 --> 00:09:00,680 Speaker 2: with what the world needs. 167 00:09:01,040 --> 00:09:03,840 Speaker 1: So you reference that, first of all, the countries very 168 00:09:03,880 --> 00:09:07,800 Speaker 1: interested in having independent energy sources. So wind and solar 169 00:09:07,920 --> 00:09:10,840 Speaker 1: are coming to the fore, but truly they are part 170 00:09:10,840 --> 00:09:13,840 Speaker 1: of global supply chains. And you also reference that India's 171 00:09:13,840 --> 00:09:17,080 Speaker 1: looking increasing their manufacturing. Is there any overlap there in 172 00:09:17,160 --> 00:09:20,160 Speaker 1: terms of actually manufacturing some of the equipment that will 173 00:09:20,200 --> 00:09:22,199 Speaker 1: be used in the wind and solar industry or will 174 00:09:22,240 --> 00:09:26,120 Speaker 1: they be as reliant on foreign sources of equipment in 175 00:09:26,200 --> 00:09:28,920 Speaker 1: order to get these projects off the ground and going forward. 176 00:09:29,160 --> 00:09:31,400 Speaker 2: I think that's a great question, and it's quite topical 177 00:09:31,480 --> 00:09:34,400 Speaker 2: with all the discussions in the US even in Europe 178 00:09:34,400 --> 00:09:37,600 Speaker 2: for example, around manufacturing. Now let's just separate the wind 179 00:09:37,640 --> 00:09:40,280 Speaker 2: and solar sectors for a bit, because the wind sector, 180 00:09:40,720 --> 00:09:43,560 Speaker 2: a lot of the components are already made in the country, 181 00:09:43,840 --> 00:09:46,760 Speaker 2: so you have Vestas and the Siemens and the G's 182 00:09:46,800 --> 00:09:49,080 Speaker 2: of the world that make turbines in India, So that 183 00:09:49,120 --> 00:09:53,679 Speaker 2: sector is sort of okay with domestic manufacturing. Solar is 184 00:09:53,720 --> 00:09:57,720 Speaker 2: the one that was heavily reliant on imports, especially for modules, 185 00:09:57,880 --> 00:10:01,080 Speaker 2: and that was seen as a kind of opportunity to 186 00:10:01,200 --> 00:10:04,319 Speaker 2: make more in India. Also aligned with the broader perspective 187 00:10:04,360 --> 00:10:07,439 Speaker 2: I talked of manufacturing in India. So there are various 188 00:10:07,480 --> 00:10:10,920 Speaker 2: measures being taken to reduce the dependence in imports, and 189 00:10:10,960 --> 00:10:13,800 Speaker 2: a big one that I talk about is this subsidies scheme. 190 00:10:13,840 --> 00:10:17,000 Speaker 2: It's called a production linked incentive, or in simple words, 191 00:10:17,000 --> 00:10:20,680 Speaker 2: it's giving a little bit of money depending on your 192 00:10:20,760 --> 00:10:24,120 Speaker 2: sales of India made goods, and that has a total 193 00:10:24,200 --> 00:10:27,880 Speaker 2: of three billion dollars billion with the capital B on offer. 194 00:10:28,080 --> 00:10:30,600 Speaker 2: And there are a lot of factories coming online, so 195 00:10:30,720 --> 00:10:34,400 Speaker 2: there is close to fifty gigawatt of new solar panel 196 00:10:34,440 --> 00:10:37,559 Speaker 2: manufacturing that should come online in the next three years. 197 00:10:37,800 --> 00:10:40,680 Speaker 2: So the expectation or the hope of the policy is 198 00:10:40,720 --> 00:10:44,640 Speaker 2: that you will have less dependence on imports. Now all 199 00:10:44,679 --> 00:10:47,360 Speaker 2: this sounds fine, it's the fact of the matter is 200 00:10:47,400 --> 00:10:50,520 Speaker 2: that if you make panels in the country, then you're 201 00:10:50,520 --> 00:10:54,280 Speaker 2: having to import some of the upstream components from somewhere else. 202 00:10:54,480 --> 00:10:57,880 Speaker 2: So it's not totally self reliant yet, but it is 203 00:10:57,920 --> 00:10:59,760 Speaker 2: a move towards that goal. 204 00:11:00,440 --> 00:11:04,360 Speaker 1: So a commonly used means by which to get more 205 00:11:04,559 --> 00:11:08,440 Speaker 1: clean energy or I mean actually energy installed on any 206 00:11:08,480 --> 00:11:11,120 Speaker 1: grid at this point in time is to look at auctions, 207 00:11:11,240 --> 00:11:14,360 Speaker 1: and India certainly has relied on auctions in order to 208 00:11:14,440 --> 00:11:17,880 Speaker 1: increase the amount of projects that are actually being launched. 209 00:11:18,400 --> 00:11:21,360 Speaker 1: What is the current situation though, because there have been 210 00:11:21,640 --> 00:11:24,040 Speaker 1: high years and actually twenty twenty two was not the 211 00:11:24,040 --> 00:11:26,880 Speaker 1: best year in the auction space for India specifically. So 212 00:11:27,400 --> 00:11:29,480 Speaker 1: first of all, I guess what happened in twenty twenty 213 00:11:29,480 --> 00:11:32,640 Speaker 1: two for India's clean energy auctions and how are things 214 00:11:32,640 --> 00:11:35,080 Speaker 1: starting to shake out as we're getting into twenty twenty three. 215 00:11:35,280 --> 00:11:38,800 Speaker 2: You're right in that India has really made the auction's 216 00:11:38,960 --> 00:11:42,280 Speaker 2: a successful mechanism of the growth of wind and more 217 00:11:42,320 --> 00:11:46,040 Speaker 2: so solar capacity in the last seventy eight addios. Now, 218 00:11:46,800 --> 00:11:48,760 Speaker 2: the beauty of the auctions has been that they have 219 00:11:48,840 --> 00:11:52,920 Speaker 2: been transparent, they have been fairly standardized and clear, and 220 00:11:52,960 --> 00:11:55,520 Speaker 2: they have allowed all sorts of participants to come in, 221 00:11:55,600 --> 00:12:00,360 Speaker 2: whether it's local companies, foreign companies, anyone and everyone. So 222 00:12:00,400 --> 00:12:03,880 Speaker 2: that's really helped push down the prices of wind and 223 00:12:03,920 --> 00:12:07,480 Speaker 2: solar and that has created a cycle of increasing demand 224 00:12:07,559 --> 00:12:10,840 Speaker 2: or acceptance of these technologies. Now, what happened last year 225 00:12:11,200 --> 00:12:15,160 Speaker 2: perhaps was an anomaly because auction volumes dropped. Now it 226 00:12:15,240 --> 00:12:18,240 Speaker 2: might be a multitude of reasons coming together, to do 227 00:12:18,360 --> 00:12:21,600 Speaker 2: with interstrate hikes, to do with certain buyers of power 228 00:12:21,720 --> 00:12:24,960 Speaker 2: not really looking to buy lots of renewables, certain agencies 229 00:12:25,240 --> 00:12:27,320 Speaker 2: waiting and taking a stock of where they want to 230 00:12:27,320 --> 00:12:29,720 Speaker 2: go with the auctions, or sort of waiting for a 231 00:12:29,760 --> 00:12:32,600 Speaker 2: broader policy from the government. What has happened in twenty 232 00:12:32,640 --> 00:12:35,600 Speaker 2: twenty three is quite heartening. So in the month of 233 00:12:35,640 --> 00:12:39,560 Speaker 2: April alone, there were close to five gigaward of new 234 00:12:40,160 --> 00:12:43,440 Speaker 2: wind and solar capacity awarded through auctions, which is quite 235 00:12:43,440 --> 00:12:45,760 Speaker 2: a lot. To put it in context, I think all 236 00:12:45,800 --> 00:12:49,480 Speaker 2: of Europe in the first quarter did five gigawards through auctions. 237 00:12:50,120 --> 00:12:52,480 Speaker 2: India in the month of April did very close to 238 00:12:52,520 --> 00:12:56,360 Speaker 2: five gigawards through auctions, and the government has also praised 239 00:12:56,360 --> 00:12:59,959 Speaker 2: its ambitions on the auctions front, so now it says 240 00:13:00,080 --> 00:13:04,120 Speaker 2: it wants to do fifty gigawart off auctions every year, 241 00:13:04,280 --> 00:13:07,800 Speaker 2: and looking back annually we have had about twelve to 242 00:13:07,880 --> 00:13:10,880 Speaker 2: fifteen gigawats auctioned, so it's a three x that we 243 00:13:10,920 --> 00:13:13,800 Speaker 2: are looking at now. So the hope in the industry 244 00:13:13,840 --> 00:13:16,280 Speaker 2: is that this will really act as a goal or 245 00:13:16,320 --> 00:13:18,800 Speaker 2: a target that will spur more activity and that will 246 00:13:18,840 --> 00:13:21,920 Speaker 2: really get things rolling again even faster than they were before. 247 00:13:22,200 --> 00:13:24,600 Speaker 1: And do you believe that auctions will continue to be 248 00:13:25,200 --> 00:13:29,240 Speaker 1: one of or if not the largest policy mechanism in 249 00:13:29,320 --> 00:13:33,360 Speaker 1: order to actually encourage the rollout of clean energy capacity 250 00:13:33,400 --> 00:13:34,240 Speaker 1: in the future. 251 00:13:34,520 --> 00:13:37,200 Speaker 2: I certainly think they will be one of the major means. 252 00:13:37,559 --> 00:13:40,360 Speaker 2: And like I said, because they've been transparent, because they've 253 00:13:40,400 --> 00:13:43,760 Speaker 2: been successful, and because they are well understood. I think 254 00:13:43,960 --> 00:13:46,360 Speaker 2: all the stakeholders, whether it's the government, whether it's the 255 00:13:46,400 --> 00:13:49,719 Speaker 2: participating companies, are all quite familiar and happy with how 256 00:13:49,720 --> 00:13:53,520 Speaker 2: the auctions have worked. Which, just to take just as 257 00:13:53,520 --> 00:13:56,679 Speaker 2: an aside, India's had a checkered history with auctions. There 258 00:13:56,679 --> 00:13:59,080 Speaker 2: have been scams on the telecom auction side, on the 259 00:13:59,080 --> 00:14:01,680 Speaker 2: coal auction side, and it's very heartening to see that 260 00:14:01,840 --> 00:14:04,800 Speaker 2: on the renewable side things have worked spookly. Now coming 261 00:14:04,840 --> 00:14:08,040 Speaker 2: back to where we see that growth options is certainly one, 262 00:14:08,280 --> 00:14:11,640 Speaker 2: but the other area of renewables growth is going to 263 00:14:11,679 --> 00:14:15,679 Speaker 2: be demand from corporations or what we call commercial industrial 264 00:14:15,679 --> 00:14:19,640 Speaker 2: customers who want to procure wind and solar powered directly 265 00:14:19,680 --> 00:14:22,080 Speaker 2: for their own use and for their own reasons. And 266 00:14:22,160 --> 00:14:25,080 Speaker 2: that's the market that's also picking up quite fast, and 267 00:14:25,160 --> 00:14:28,280 Speaker 2: we expect more activity to happen on that front as well. 268 00:14:28,520 --> 00:14:30,920 Speaker 1: So what are those reasons? Because I can see from 269 00:14:30,920 --> 00:14:33,360 Speaker 1: the government standpoint how they're looking at options and then 270 00:14:33,360 --> 00:14:36,000 Speaker 1: they're also looking at targets and wanting to deliver those 271 00:14:36,040 --> 00:14:38,240 Speaker 1: on the global scale. They are the hosts of the 272 00:14:38,280 --> 00:14:41,280 Speaker 1: G twenty this year, so this is definitely something where 273 00:14:41,320 --> 00:14:43,960 Speaker 1: they're in the center of the limelight right now on 274 00:14:44,000 --> 00:14:47,440 Speaker 1: a number of different fronts on the world stage. What 275 00:14:47,520 --> 00:14:51,520 Speaker 1: are the companies though operating in India? What's their interest 276 00:14:51,680 --> 00:14:54,840 Speaker 1: and incentive in order to encourage this sort of rollout. 277 00:14:55,160 --> 00:14:57,680 Speaker 2: So let's look at what are the motivations that companies 278 00:14:57,720 --> 00:14:59,720 Speaker 2: have and what does the market look like. A lot 279 00:14:59,720 --> 00:15:03,440 Speaker 2: of Indian companies now have some flavor of net zero 280 00:15:03,760 --> 00:15:07,120 Speaker 2: decarbonization kind of target, and a lot of investors are 281 00:15:07,120 --> 00:15:10,640 Speaker 2: paying closer attention to the ESG performance of these companies, 282 00:15:10,880 --> 00:15:14,720 Speaker 2: and presumably renewables is a relatively easy way to get 283 00:15:14,880 --> 00:15:16,600 Speaker 2: up to speed on your at least the E part 284 00:15:16,640 --> 00:15:19,320 Speaker 2: of it. So it's a mix of pressure from the 285 00:15:19,360 --> 00:15:22,840 Speaker 2: supply chain, from your investors, and also being prepared for 286 00:15:22,880 --> 00:15:26,680 Speaker 2: the future because everyone recognizes the fact that going green 287 00:15:26,800 --> 00:15:30,240 Speaker 2: is where the future lies now. An additional factor pushing 288 00:15:30,240 --> 00:15:33,200 Speaker 2: companies is that the market regulator in India, the Capital 289 00:15:33,280 --> 00:15:37,320 Speaker 2: Market Regulator is requiring listed companies to make even more 290 00:15:37,640 --> 00:15:41,720 Speaker 2: ESG related disclosures, so there's again pressure from the regulatory site. 291 00:15:41,800 --> 00:15:44,720 Speaker 2: But most importantly data I think it's about the money 292 00:15:45,160 --> 00:15:48,800 Speaker 2: because new wind and solar in most states now is 293 00:15:48,920 --> 00:15:52,480 Speaker 2: cheaper to procure than to buy electricity from the grid. 294 00:15:52,680 --> 00:15:55,640 Speaker 2: So as a company, it is a no brainer now 295 00:15:55,680 --> 00:15:58,400 Speaker 2: that you're looking at options for this kind of direct 296 00:15:58,400 --> 00:16:01,960 Speaker 2: procurement or power purchase agreements rather than stick to what 297 00:16:02,000 --> 00:16:03,520 Speaker 2: you have been doing for the longest time. 298 00:16:03,720 --> 00:16:05,920 Speaker 1: Well, let's then dig in a little bit. You mentioned 299 00:16:06,160 --> 00:16:09,840 Speaker 1: ESG criteria, so environmental, social and governance, which I would say, 300 00:16:09,840 --> 00:16:12,280 Speaker 1: if I have to boil it down to its most 301 00:16:12,520 --> 00:16:16,640 Speaker 1: simple definition, it really is the language with which companies 302 00:16:16,760 --> 00:16:19,600 Speaker 1: and those in the finance community communicate to one another 303 00:16:19,720 --> 00:16:24,160 Speaker 1: regarding how they are delivering on certain environmental, social or 304 00:16:24,200 --> 00:16:28,760 Speaker 1: governance standards in a numerical sense. So BNAF focus more 305 00:16:28,800 --> 00:16:31,000 Speaker 1: on the E end of things. And as we look 306 00:16:31,040 --> 00:16:33,960 Speaker 1: at that, let's talk about the first of all, those 307 00:16:34,000 --> 00:16:36,480 Speaker 1: who are financing the projects. So if you could give 308 00:16:36,520 --> 00:16:39,640 Speaker 1: me a bit of an understanding on where the financing 309 00:16:39,720 --> 00:16:42,520 Speaker 1: is coming from, and then additionally what their exposure and 310 00:16:42,600 --> 00:16:43,720 Speaker 1: interest is in. 311 00:16:44,080 --> 00:16:49,040 Speaker 2: ESG financing is definitely something that's changed very quickly in 312 00:16:49,040 --> 00:16:51,600 Speaker 2: the last five years, and there's a lot more activity 313 00:16:51,600 --> 00:16:53,920 Speaker 2: on that front. Now let's break it down onto the 314 00:16:53,960 --> 00:16:57,000 Speaker 2: equity financing site and the dead financing site. On the 315 00:16:57,040 --> 00:17:00,880 Speaker 2: equity side, there's a bunch of different investors. There's the 316 00:17:00,960 --> 00:17:05,159 Speaker 2: domestic conglomerates to your Adani's and the Tatars and the 317 00:17:05,200 --> 00:17:09,000 Speaker 2: other Teberlas names that an Indian audience will quickly recognize 318 00:17:09,000 --> 00:17:12,000 Speaker 2: who are now entering the renewable sector. Then there are 319 00:17:12,040 --> 00:17:15,479 Speaker 2: your oil and gas companies, whether domestic or global. So 320 00:17:15,520 --> 00:17:19,040 Speaker 2: you have BP shell total energies who are looking at 321 00:17:19,040 --> 00:17:21,680 Speaker 2: this as an opportunity as a part of their broader 322 00:17:21,800 --> 00:17:25,399 Speaker 2: transition or broader play at diversification. You also have a 323 00:17:25,440 --> 00:17:29,040 Speaker 2: lot of foreign fund managers who again are driven purely 324 00:17:29,640 --> 00:17:32,359 Speaker 2: by the size of the opportunity and the market interest 325 00:17:32,440 --> 00:17:34,879 Speaker 2: that exists in India. And then finally you have a 326 00:17:34,880 --> 00:17:38,240 Speaker 2: lot of foreign utilities, So there are companies from Europe, 327 00:17:38,240 --> 00:17:41,159 Speaker 2: there are companies from Southeast Asia who are looking to 328 00:17:41,240 --> 00:17:45,080 Speaker 2: bring in their expertise of project development into the Indian context. 329 00:17:45,640 --> 00:17:48,240 Speaker 2: So that's the sort of few big classes of equity 330 00:17:48,240 --> 00:17:50,919 Speaker 2: investors we have and that's brought in a lot of 331 00:17:51,000 --> 00:17:53,960 Speaker 2: expertise as well in terms of the financial engineering, in 332 00:17:54,040 --> 00:17:56,680 Speaker 2: terms of how the equity is structured and how returns 333 00:17:56,680 --> 00:18:00,040 Speaker 2: are generated. On the debt side, traditionally a lot of 334 00:18:00,119 --> 00:18:04,160 Speaker 2: coal fired plants were funded by public sector banks in India, 335 00:18:04,280 --> 00:18:08,240 Speaker 2: a sort of government owned commercial banks. For renewables, it's 336 00:18:08,320 --> 00:18:11,679 Speaker 2: a lot more diversified. We have had debt come in 337 00:18:11,760 --> 00:18:14,960 Speaker 2: from foreign banks, we have debt coming in from Indian banks, 338 00:18:15,119 --> 00:18:18,800 Speaker 2: and there are also green bonds being issued very commonly now. 339 00:18:19,119 --> 00:18:21,280 Speaker 2: In fact, I'm just working on a piece looking at 340 00:18:21,359 --> 00:18:23,320 Speaker 2: what's happened in the last six seven years and it's 341 00:18:23,320 --> 00:18:26,720 Speaker 2: more than forty billion dollars of bonds that have gone 342 00:18:26,760 --> 00:18:30,240 Speaker 2: into clean power projects. So that's again an interesting space 343 00:18:30,280 --> 00:18:32,760 Speaker 2: because bonds are very well suited to these sort of 344 00:18:32,800 --> 00:18:36,000 Speaker 2: infrastructure projects where they are very kpex heavy, but then 345 00:18:36,040 --> 00:18:39,199 Speaker 2: you have regular cash flows and bondhold doers love that 346 00:18:39,440 --> 00:18:42,359 Speaker 2: once the asset is commissioned, they are perfectly suited to 347 00:18:42,920 --> 00:18:44,840 Speaker 2: having payouts at regular intervals. 348 00:18:45,080 --> 00:18:47,400 Speaker 1: If you had to describe the state of financing of 349 00:18:47,760 --> 00:18:51,000 Speaker 1: clean energy projects in India right now, would you say 350 00:18:51,240 --> 00:18:54,399 Speaker 1: that it is an appealing market for investors and that 351 00:18:54,520 --> 00:18:57,680 Speaker 1: companies are flooding in or has there been a cooling 352 00:18:58,080 --> 00:18:59,760 Speaker 1: as of late, because there has been a cooling and 353 00:18:59,840 --> 00:19:02,400 Speaker 1: other parts of the world due to raising interest rates 354 00:19:02,440 --> 00:19:04,879 Speaker 1: and other factors. Is it at the scale and pace 355 00:19:05,000 --> 00:19:07,879 Speaker 1: needed in order to meet not just twenty seventy goals, 356 00:19:07,880 --> 00:19:10,679 Speaker 1: which are very far away, but twenty thirty goals. 357 00:19:10,960 --> 00:19:15,399 Speaker 2: The sort of interest that the capital markets, so the 358 00:19:15,440 --> 00:19:19,399 Speaker 2: financial players have in India's renewables has held and the 359 00:19:19,440 --> 00:19:23,800 Speaker 2: reason is that if you look across developing markets, India 360 00:19:23,840 --> 00:19:27,920 Speaker 2: presents one of the largest opportunities. So all the banks, 361 00:19:28,119 --> 00:19:31,199 Speaker 2: all sorts of money managers want to be present in 362 00:19:31,240 --> 00:19:35,000 Speaker 2: this market. So we don't see a dearth of capital 363 00:19:35,040 --> 00:19:38,520 Speaker 2: being available for funding projects. When we speak to people, 364 00:19:38,640 --> 00:19:41,440 Speaker 2: the common refrain is that it's not a lack of capital, 365 00:19:41,680 --> 00:19:45,360 Speaker 2: it's a lack of good projects or bankable projects, and 366 00:19:45,400 --> 00:19:47,840 Speaker 2: that's what's holding back the market really, because there is 367 00:19:48,240 --> 00:19:52,040 Speaker 2: enough money which has ESG mandates attached to it, which 368 00:19:52,080 --> 00:19:55,520 Speaker 2: is looking to diversify away from certain markets, and there 369 00:19:55,560 --> 00:19:58,960 Speaker 2: are enough ways of raising capital either through the domestic 370 00:19:59,040 --> 00:20:01,840 Speaker 2: or international markets. Now, it's right that in the last 371 00:20:01,920 --> 00:20:04,439 Speaker 2: year interest rates have gone up, not just in India, 372 00:20:04,480 --> 00:20:07,240 Speaker 2: but across the world, which has raised the cost of 373 00:20:07,320 --> 00:20:10,320 Speaker 2: capital for renewable energy projects as well. So yes, in 374 00:20:10,359 --> 00:20:13,800 Speaker 2: the short run, projects are more expensive than they were, 375 00:20:13,840 --> 00:20:15,560 Speaker 2: say two years ago. But then you look at the 376 00:20:15,600 --> 00:20:19,480 Speaker 2: long period that these assets operate twenty five years, thirty years, 377 00:20:19,680 --> 00:20:22,399 Speaker 2: And what Indian power producers have done very well is 378 00:20:22,440 --> 00:20:25,720 Speaker 2: they sort of have these structures of regular refinancing of 379 00:20:25,840 --> 00:20:29,240 Speaker 2: assets where three four five years later you get a 380 00:20:29,240 --> 00:20:31,960 Speaker 2: fresh loan and then presumably rates are lower. You sort 381 00:20:31,960 --> 00:20:34,040 Speaker 2: of have a mix of equity and debt. You try 382 00:20:34,040 --> 00:20:36,200 Speaker 2: to mix in different forms of debt in order to 383 00:20:36,240 --> 00:20:38,119 Speaker 2: lower your cost of capital. And so I think that 384 00:20:38,280 --> 00:20:42,120 Speaker 2: expertise will really be quite helpful in times when not 385 00:20:42,200 --> 00:20:44,160 Speaker 2: just interest rates have gone the other way, but even 386 00:20:44,160 --> 00:20:47,240 Speaker 2: the rupee has depreciated quite sharply. That has also hurt 387 00:20:47,440 --> 00:20:49,120 Speaker 2: Indian IPPs well. 388 00:20:49,119 --> 00:20:52,000 Speaker 1: And let's talk about those Indian IPPs and a little 389 00:20:52,040 --> 00:20:55,920 Speaker 1: bit more so it's a competitive market. Can you explain 390 00:20:56,080 --> 00:20:58,520 Speaker 1: a little bit more how first of all, what those 391 00:20:58,560 --> 00:21:01,240 Speaker 1: companies are and how they interact with one another, just 392 00:21:01,240 --> 00:21:04,240 Speaker 1: so we have a better understanding of the Indian independent 393 00:21:04,280 --> 00:21:06,320 Speaker 1: power producers and what they're up against. 394 00:21:06,760 --> 00:21:10,200 Speaker 2: So again, several different types of players in the market. 395 00:21:10,359 --> 00:21:13,159 Speaker 2: You have your pure play renewable ips or companies that 396 00:21:13,200 --> 00:21:16,560 Speaker 2: are focused exclusively on building wind and solar projects and 397 00:21:16,640 --> 00:21:19,240 Speaker 2: a lot of these companies have come into existence in 398 00:21:19,240 --> 00:21:23,040 Speaker 2: the last decade. Then you have your conventional power companies 399 00:21:23,119 --> 00:21:26,000 Speaker 2: who have been in India's power sector for quite some 400 00:21:26,119 --> 00:21:28,800 Speaker 2: time and who over the last five six years have 401 00:21:29,000 --> 00:21:32,560 Speaker 2: recognized so that it went as areas of new growth. 402 00:21:32,680 --> 00:21:36,119 Speaker 2: And then you have your foreign utilities I mentioned the 403 00:21:36,160 --> 00:21:39,720 Speaker 2: ones from Europe Southeast Asia who are present in this market. 404 00:21:39,880 --> 00:21:42,679 Speaker 2: And finally you have I would say asset owners are 405 00:21:42,680 --> 00:21:46,720 Speaker 2: money managers who are not really into project development as such, 406 00:21:47,240 --> 00:21:50,240 Speaker 2: but who view themselves more as long term asset holders 407 00:21:50,280 --> 00:21:53,520 Speaker 2: who are quite comfortable taking on assets once they're commissioned. 408 00:21:53,720 --> 00:21:56,480 Speaker 2: And so there is that class of investors as well. Now, 409 00:21:56,800 --> 00:22:01,160 Speaker 2: these companies compete very strongly, whether it comes to new projects, 410 00:22:01,160 --> 00:22:04,439 Speaker 2: whether it comes to buying portfolios of buying assets. And 411 00:22:05,000 --> 00:22:08,199 Speaker 2: the market is in a very dynamic state because you 412 00:22:08,280 --> 00:22:11,520 Speaker 2: have companies exiting because that's the strategy. You have new 413 00:22:11,560 --> 00:22:15,080 Speaker 2: companies entering depending on where they want to expand their operations. 414 00:22:15,720 --> 00:22:18,359 Speaker 1: So one of the companies that's quite important to the 415 00:22:18,400 --> 00:22:21,159 Speaker 1: Indian energy market is A Donnie Green. They actually have 416 00:22:21,320 --> 00:22:24,879 Speaker 1: a stated objective of becoming one of the worlds, if 417 00:22:24,920 --> 00:22:27,879 Speaker 1: not the world's largest renewable energy company by twenty thirty 418 00:22:28,280 --> 00:22:30,840 Speaker 1: and their parent company, A Donnie has been in the 419 00:22:30,880 --> 00:22:34,919 Speaker 1: news a pair amount lately regarding some allegations around some 420 00:22:35,400 --> 00:22:38,000 Speaker 1: accounting irregularities. Let's put it that way. If you want 421 00:22:38,040 --> 00:22:39,880 Speaker 1: to dig in in a little bit more detail, Bloomberg 422 00:22:39,880 --> 00:22:42,159 Speaker 1: News has covered this in detail, and I would suggest 423 00:22:42,200 --> 00:22:45,520 Speaker 1: reading an article there. But let's talk about A Donnie 424 00:22:45,560 --> 00:22:50,080 Speaker 1: Green and really what's happening with their parent company caused 425 00:22:50,080 --> 00:22:52,000 Speaker 1: them to slow down in any way, and do we 426 00:22:52,040 --> 00:22:55,159 Speaker 1: think it'll have an impact on what's actually happening in 427 00:22:55,200 --> 00:22:57,359 Speaker 1: renewables role out in India and kind of can you 428 00:22:57,400 --> 00:23:00,680 Speaker 1: explain just what this company is in their role in 429 00:23:00,680 --> 00:23:01,240 Speaker 1: this market. 430 00:23:01,320 --> 00:23:04,040 Speaker 2: Let's address the elephant in the room data because everyone's 431 00:23:04,080 --> 00:23:06,560 Speaker 2: being talking of Adani, So let's see what happens in 432 00:23:06,600 --> 00:23:09,399 Speaker 2: the rebuilt side. So Adani Green is one of the 433 00:23:09,480 --> 00:23:12,119 Speaker 2: listed companies under the Adani Group and it is a 434 00:23:12,160 --> 00:23:16,120 Speaker 2: company that develops and owns wind and solar assets, as 435 00:23:16,119 --> 00:23:18,640 Speaker 2: simple as that. And in the name it says that 436 00:23:18,800 --> 00:23:22,439 Speaker 2: so Adani Green of course was part of the allegations made, 437 00:23:22,720 --> 00:23:26,240 Speaker 2: but we don't see it having affected their portfolio because 438 00:23:26,280 --> 00:23:29,200 Speaker 2: the allegations were made on the financial or the accounting 439 00:23:29,240 --> 00:23:32,280 Speaker 2: side of it. The portfolio or the projects that they 440 00:23:32,280 --> 00:23:35,399 Speaker 2: have remain in place, and almost all of them have 441 00:23:35,600 --> 00:23:38,800 Speaker 2: firm long term of take agreements in place, which means 442 00:23:38,800 --> 00:23:41,359 Speaker 2: the money should keep rolling in. Now, Adani Green has 443 00:23:41,440 --> 00:23:44,879 Speaker 2: reported soaring profits for the quarter ending March. It has 444 00:23:44,960 --> 00:23:48,040 Speaker 2: a big pipeline of projects that are under development or 445 00:23:48,119 --> 00:23:51,520 Speaker 2: under construction, and so on that front, it's the company 446 00:23:51,520 --> 00:23:55,600 Speaker 2: seems okay now looking at what is its role in 447 00:23:55,640 --> 00:23:58,600 Speaker 2: the broader Indian renewals in a resector, you're quite right 448 00:23:58,640 --> 00:24:01,480 Speaker 2: in that they are the largest owner of winded solar 449 00:24:01,520 --> 00:24:04,000 Speaker 2: assets in the country at the moment and they have 450 00:24:04,080 --> 00:24:07,720 Speaker 2: bigger plans. But having said that, their share in the 451 00:24:07,800 --> 00:24:10,919 Speaker 2: market is only eight to ten percent, which means it 452 00:24:11,040 --> 00:24:13,680 Speaker 2: is not a case of a monopoly, a duopoly or 453 00:24:13,720 --> 00:24:16,440 Speaker 2: two or three big companies pulling ahead of which Arani 454 00:24:16,520 --> 00:24:19,040 Speaker 2: is one. And so even if the worst were come 455 00:24:19,080 --> 00:24:22,080 Speaker 2: to pass, we don't see it affecting the long term 456 00:24:22,119 --> 00:24:24,960 Speaker 2: growth story of India renewables because like I said, there 457 00:24:25,040 --> 00:24:28,800 Speaker 2: is enough diversity in the investors, in the developers who 458 00:24:28,800 --> 00:24:32,160 Speaker 2: are already operating within India, and so we don't see 459 00:24:32,200 --> 00:24:35,159 Speaker 2: the long term prospects of India renewables being linked to 460 00:24:35,280 --> 00:24:36,040 Speaker 2: just one company. 461 00:24:36,600 --> 00:24:39,400 Speaker 1: So we've discussed some of the companies operating in this space. 462 00:24:39,560 --> 00:24:43,560 Speaker 1: We've discussed financing, and we've discussed auctions in policy incentives, 463 00:24:43,920 --> 00:24:47,040 Speaker 1: and also some of the policy incentives then being focused 464 00:24:47,040 --> 00:24:51,400 Speaker 1: on becoming domestic energy producers. And also the fact that 465 00:24:51,880 --> 00:24:54,879 Speaker 1: now as the most populous country in the world, what 466 00:24:55,040 --> 00:24:59,800 Speaker 1: about jobs You referenced manufacturing and how India is actually 467 00:25:00,000 --> 00:25:03,120 Speaker 1: looking at this, But you know, reruurable energy in other countries, 468 00:25:03,200 --> 00:25:06,240 Speaker 1: let's say the United States for example, and the Inflation 469 00:25:06,320 --> 00:25:10,520 Speaker 1: Reduction Act is in many respects very much focused on jobs. 470 00:25:10,800 --> 00:25:13,560 Speaker 1: Is the Indian government also looking at the jobs that 471 00:25:13,600 --> 00:25:16,520 Speaker 1: this sector could create and is that really front and 472 00:25:16,640 --> 00:25:19,800 Speaker 1: center or is it more of a side conversation to 473 00:25:20,040 --> 00:25:24,480 Speaker 1: a wider conversation around providing energy access to such a 474 00:25:24,560 --> 00:25:25,560 Speaker 1: large number of people. 475 00:25:25,880 --> 00:25:28,280 Speaker 2: Then I think it goes hand in hand because there 476 00:25:28,320 --> 00:25:32,520 Speaker 2: are multiple objectives behind the idea of having more manufacturing 477 00:25:32,520 --> 00:25:36,000 Speaker 2: in India. So it's a combination of being self reliant 478 00:25:36,400 --> 00:25:39,119 Speaker 2: in that you are not affected by policies in certain 479 00:25:39,160 --> 00:25:42,359 Speaker 2: countries or certain supply chain issues. And it's also about 480 00:25:42,400 --> 00:25:45,600 Speaker 2: creating jobs, because that's an imperative in a country that 481 00:25:45,760 --> 00:25:49,119 Speaker 2: is relatively young, that has a growing population, and where 482 00:25:49,480 --> 00:25:53,159 Speaker 2: jobs are necessary. The jobs are required, so manufacturing is 483 00:25:53,640 --> 00:25:55,679 Speaker 2: going to drive the growth of those jobs. Now, what 484 00:25:55,800 --> 00:25:58,520 Speaker 2: is India doing in terms of manufacturing in the teen 485 00:25:58,560 --> 00:26:01,399 Speaker 2: tech sector? I spoke pre about the solar side. There 486 00:26:01,440 --> 00:26:05,640 Speaker 2: are similar schemes already in place for manufacturing electric vehicles 487 00:26:05,680 --> 00:26:08,679 Speaker 2: and for battery storage systems in India. So that is 488 00:26:08,720 --> 00:26:12,640 Speaker 2: the PLI scheme or the subsidies handed out for making India. 489 00:26:12,720 --> 00:26:15,919 Speaker 2: The industry is expecting and hoping for such incentives to 490 00:26:16,000 --> 00:26:20,040 Speaker 2: also come in say for hydrogen electoralizers, for offshore wind 491 00:26:20,080 --> 00:26:23,800 Speaker 2: for example, because those are also areas where future growth 492 00:26:23,840 --> 00:26:27,959 Speaker 2: is seen and therefore manufacturing in India would have natural synergies. 493 00:26:28,160 --> 00:26:31,280 Speaker 2: I'll also make one more point when we'll discuss the IPPs. 494 00:26:31,640 --> 00:26:35,080 Speaker 2: A lot of these companies who were typically good at 495 00:26:35,240 --> 00:26:39,159 Speaker 2: building and owning projects are now moving into manufacturing, and 496 00:26:39,280 --> 00:26:42,240 Speaker 2: part of the reason is to secure their supply chain. 497 00:26:42,400 --> 00:26:44,440 Speaker 2: But part of the reason is also that it's seen 498 00:26:44,440 --> 00:26:47,960 Speaker 2: as the next opportunity companies that are looking for where 499 00:26:48,040 --> 00:26:50,359 Speaker 2: is my next stage of growth coming from? How do 500 00:26:50,440 --> 00:26:54,520 Speaker 2: I distinguish myself from peers recognize that perhaps manufacturing is 501 00:26:54,560 --> 00:26:58,320 Speaker 2: the one that has a straight linkage with their current expertise. 502 00:26:59,000 --> 00:27:01,160 Speaker 1: Now for thinking about some of the things that are 503 00:27:01,440 --> 00:27:06,280 Speaker 1: perhaps common reasons for delays to projects or certainly obstacles 504 00:27:06,280 --> 00:27:08,840 Speaker 1: to cross, I'm wondering if India has this in common 505 00:27:08,840 --> 00:27:10,960 Speaker 1: with other parts of the world, and one actually has 506 00:27:11,040 --> 00:27:14,000 Speaker 1: to do with land constraints and permitting to where you're 507 00:27:14,000 --> 00:27:16,840 Speaker 1: actually going to put these projects. Granted, will think that 508 00:27:16,880 --> 00:27:18,720 Speaker 1: these are probably going to be integrated in with the 509 00:27:18,760 --> 00:27:23,000 Speaker 1: auction schemes, but are there concerns regarding land use and 510 00:27:23,160 --> 00:27:26,160 Speaker 1: how much space, wind and solar may take up in India? 511 00:27:26,840 --> 00:27:29,680 Speaker 2: I don't think it's as much about land use yet 512 00:27:30,000 --> 00:27:32,800 Speaker 2: as it is about getting the land on time. So 513 00:27:32,840 --> 00:27:36,280 Speaker 2: the issue in India is that land acquisition laws vary 514 00:27:36,359 --> 00:27:39,240 Speaker 2: by each state and a lot of the land records 515 00:27:39,400 --> 00:27:43,120 Speaker 2: may be fuzzy or not digitized. So typically land as 516 00:27:43,160 --> 00:27:45,880 Speaker 2: a cost component is only three percent of a project, 517 00:27:45,880 --> 00:27:48,639 Speaker 2: but when we speak to developers, to them it is 518 00:27:48,760 --> 00:27:52,600 Speaker 2: the biggest headache in the project development stage. So certainly 519 00:27:52,960 --> 00:27:56,320 Speaker 2: getting land approvals on time or the government helping in 520 00:27:56,359 --> 00:28:00,520 Speaker 2: some way will help accelerate the pace of renewables build out. 521 00:28:00,760 --> 00:28:03,560 Speaker 2: And the other challenge, which is common to what is 522 00:28:03,600 --> 00:28:07,160 Speaker 2: perhaps based in Europe, is also the transmission grid. Now 523 00:28:07,320 --> 00:28:10,520 Speaker 2: the government has been far more proactive on that front. 524 00:28:10,640 --> 00:28:13,000 Speaker 2: It has come out with career plans on where the 525 00:28:13,040 --> 00:28:15,920 Speaker 2: grid will be expanded in order to get the five 526 00:28:16,000 --> 00:28:18,719 Speaker 2: hundred gigawards of green power that we mentioned, So that 527 00:28:18,880 --> 00:28:21,840 Speaker 2: plan is already underway. But the challenge is once you 528 00:28:21,920 --> 00:28:25,280 Speaker 2: have the grid, you also need the project development. You 529 00:28:25,320 --> 00:28:28,280 Speaker 2: also need the land acquisition, all happening at the same time, 530 00:28:28,440 --> 00:28:31,400 Speaker 2: so you need this sort of coordination between a lot 531 00:28:31,440 --> 00:28:35,680 Speaker 2: of federal and local bodies in order to get this underway. 532 00:28:35,760 --> 00:28:37,960 Speaker 2: There is an additional challenge in idea, which is that 533 00:28:38,560 --> 00:28:40,600 Speaker 2: we spoke of the auctions and the buyers of these 534 00:28:40,640 --> 00:28:44,040 Speaker 2: auctions have been the power distribution companies, so they are 535 00:28:44,040 --> 00:28:46,800 Speaker 2: the ones who off take the power, and many of 536 00:28:46,840 --> 00:28:50,400 Speaker 2: these off takers are financially distressed, and so the distribution 537 00:28:50,520 --> 00:28:53,520 Speaker 2: sector is also an area that needs reform to make 538 00:28:53,560 --> 00:28:56,960 Speaker 2: it financially sustainable in the long run, which also helps 539 00:28:57,000 --> 00:29:00,680 Speaker 2: improve energy access for the end users. So that's again 540 00:29:00,720 --> 00:29:03,320 Speaker 2: an area where the government has started to pay more 541 00:29:03,320 --> 00:29:06,400 Speaker 2: attention and it's also an area where we expect to 542 00:29:06,400 --> 00:29:08,080 Speaker 2: see more propertis being made and. 543 00:29:08,080 --> 00:29:10,960 Speaker 1: The legal system, which can have a lot of red tape, 544 00:29:11,000 --> 00:29:14,240 Speaker 1: because what you're referencing here regarding getting the land actually 545 00:29:14,320 --> 00:29:17,120 Speaker 1: is filing the paperwork to get the land. Do you 546 00:29:17,160 --> 00:29:20,479 Speaker 1: think that the legal system is reflecting the objectives stated 547 00:29:20,520 --> 00:29:24,040 Speaker 1: by the government and is basically is the entire system 548 00:29:24,080 --> 00:29:27,000 Speaker 1: actually wired to get these projects done on time or 549 00:29:27,080 --> 00:29:28,280 Speaker 1: is it going to get slowed down? 550 00:29:28,640 --> 00:29:32,040 Speaker 2: So that's a tough one because if you go to quote, 551 00:29:32,560 --> 00:29:35,720 Speaker 2: it's notorious for long delays. And then the government obviously 552 00:29:35,760 --> 00:29:37,960 Speaker 2: has to be cognizant of the rights of the local 553 00:29:38,000 --> 00:29:40,840 Speaker 2: communities of people who may not have the right paperwork 554 00:29:40,880 --> 00:29:43,440 Speaker 2: in place, but who have been occupants of the land 555 00:29:43,480 --> 00:29:46,520 Speaker 2: for a while. So those are issues that are broader 556 00:29:46,560 --> 00:29:50,320 Speaker 2: than just renewables. It's a socio political matter in that sense. 557 00:29:50,800 --> 00:29:54,280 Speaker 2: But what is helping is a policy that India has 558 00:29:54,280 --> 00:29:57,720 Speaker 2: had of having solar parks. So these are projects where 559 00:29:57,720 --> 00:30:02,000 Speaker 2: the government acquires the land of creates a minimum framework 560 00:30:02,160 --> 00:30:05,200 Speaker 2: of getting the plots ready, having it laid out flat, 561 00:30:05,400 --> 00:30:08,760 Speaker 2: getting some water access, building some roads, and then auctioning 562 00:30:08,800 --> 00:30:11,360 Speaker 2: it off in the hope that once this land has 563 00:30:11,400 --> 00:30:15,160 Speaker 2: been acquired and prepared, the risk of project development is 564 00:30:15,240 --> 00:30:18,040 Speaker 2: much lower for the IPPs, and therefore the projects will 565 00:30:18,040 --> 00:30:20,640 Speaker 2: not get delayed, and therefore the projects will be made 566 00:30:20,920 --> 00:30:23,120 Speaker 2: in a manner that is more cost competitive. So the 567 00:30:23,160 --> 00:30:25,920 Speaker 2: solar parks is one policy that has worked well, and 568 00:30:25,960 --> 00:30:29,200 Speaker 2: now they're trying to expand it to create renewable energy parks, 569 00:30:29,480 --> 00:30:32,160 Speaker 2: mixing solar and wind together. So that's another way in 570 00:30:32,200 --> 00:30:34,840 Speaker 2: which the government is trying to work around this broader 571 00:30:34,960 --> 00:30:37,000 Speaker 2: land issue in order to speed up renewables. 572 00:30:37,440 --> 00:30:40,640 Speaker 1: Well, so thank you for explaining that final question. Actually, 573 00:30:40,680 --> 00:30:42,640 Speaker 1: and so Rohit, you live and breed this, and you 574 00:30:42,680 --> 00:30:44,720 Speaker 1: look at this market, and you look at these targets 575 00:30:44,720 --> 00:30:48,000 Speaker 1: and the feasibility of actually reaching them, and let's think 576 00:30:48,040 --> 00:30:50,240 Speaker 1: about the near term, because I'm not going to lie. 577 00:30:50,240 --> 00:30:52,560 Speaker 1: I think twenty seventy feels a little bit far out 578 00:30:52,600 --> 00:30:55,200 Speaker 1: to actually have a real stance on it, one way 579 00:30:55,240 --> 00:30:57,160 Speaker 1: or another, I will be a very old woman by 580 00:30:57,200 --> 00:31:00,400 Speaker 1: that point. So if we're thinking between now and middle 581 00:31:00,440 --> 00:31:03,400 Speaker 1: aged version of me in twenty thirty. Do you think 582 00:31:03,440 --> 00:31:06,320 Speaker 1: that India is going to reach the targets that they 583 00:31:06,360 --> 00:31:08,760 Speaker 1: have stated? And I guess it's to put it in a 584 00:31:08,760 --> 00:31:13,120 Speaker 1: different way. Are the targets ambitious or the targets very attainable? 585 00:31:13,400 --> 00:31:15,680 Speaker 2: I think you're very right in that twenty seventy is 586 00:31:15,760 --> 00:31:18,240 Speaker 2: way too far away to say anything. Twenty thirty is 587 00:31:18,280 --> 00:31:22,280 Speaker 2: a very ambitious target because currently the non fossil fuel 588 00:31:22,320 --> 00:31:26,040 Speaker 2: capacity is about one seventy one eighty awards, and you 589 00:31:26,080 --> 00:31:28,560 Speaker 2: want to get to five hundred, which is a near 590 00:31:28,640 --> 00:31:31,840 Speaker 2: tripling in a matter of seven or eight years. Given 591 00:31:31,880 --> 00:31:34,720 Speaker 2: that it is such a big task, why am I 592 00:31:34,760 --> 00:31:38,000 Speaker 2: still optimistic is a couple of reasons. First, I think 593 00:31:38,040 --> 00:31:42,560 Speaker 2: the government has demonstrated repeatedly its willingness to come out 594 00:31:42,600 --> 00:31:46,640 Speaker 2: with new supportive policies, being flexible and innovative at the 595 00:31:46,680 --> 00:31:48,920 Speaker 2: same time, in order to see how it can remove 596 00:31:49,000 --> 00:31:52,000 Speaker 2: roadblocks for the development of finials. The second reason is 597 00:31:52,200 --> 00:31:55,560 Speaker 2: there are a lot of announcements from companies, whether it's 598 00:31:55,600 --> 00:31:59,120 Speaker 2: Indian companies like you mentioned Adani, but also Reliance, which 599 00:31:59,120 --> 00:32:02,400 Speaker 2: is the biggest STUDIENTI in company. You have government owned 600 00:32:02,480 --> 00:32:05,760 Speaker 2: companies who have very big plans for the green transition 601 00:32:06,120 --> 00:32:09,880 Speaker 2: and put that together with the investor focus on ESG 602 00:32:10,040 --> 00:32:12,600 Speaker 2: and on decarbonization, so you have a sort of coming 603 00:32:12,640 --> 00:32:16,400 Speaker 2: together of developers and of the financial world towards a 604 00:32:16,400 --> 00:32:19,080 Speaker 2: certain target. And I also think that having a very 605 00:32:19,080 --> 00:32:23,800 Speaker 2: big goal helps push all the stakeholders towards the few 606 00:32:23,800 --> 00:32:26,280 Speaker 2: small steps that need to be taken in frequently in 607 00:32:26,360 --> 00:32:28,239 Speaker 2: order to get there. And that's where I think that 608 00:32:28,560 --> 00:32:31,720 Speaker 2: one seventy five gigabout goal for twenty twenty two. Although 609 00:32:31,720 --> 00:32:33,880 Speaker 2: one might say that you didn't get there if you 610 00:32:34,000 --> 00:32:36,640 Speaker 2: dive a little deeper, it's only the rooftop PV that 611 00:32:36,680 --> 00:32:39,480 Speaker 2: didn't get there. If you look at utility scale solar, 612 00:32:39,680 --> 00:32:43,480 Speaker 2: utility scale wind, you are quite nearly there. And so 613 00:32:43,520 --> 00:32:46,200 Speaker 2: I think it isn't a matter of whether we will 614 00:32:46,240 --> 00:32:48,720 Speaker 2: get five hundred or four eighty. It's a matter of 615 00:32:48,800 --> 00:32:52,080 Speaker 2: what direction you're going in and whether you're going fast 616 00:32:52,200 --> 00:32:54,520 Speaker 2: enough for attias, faster than what you would have without 617 00:32:54,560 --> 00:32:57,680 Speaker 2: the targets. And that's why I'm quite happy that there 618 00:32:57,760 --> 00:33:01,600 Speaker 2: is a big number that's been an It sets a 619 00:33:01,640 --> 00:33:04,800 Speaker 2: marker for where you want to go and therefore remain 620 00:33:04,840 --> 00:33:06,000 Speaker 2: optimistic and excited. 621 00:33:06,560 --> 00:33:09,360 Speaker 1: Well, if you're optimistic, then I will be optimistic. Roll Hit. 622 00:33:09,400 --> 00:33:11,480 Speaker 1: First of all, thank you for joining us today, and secondly, 623 00:33:11,520 --> 00:33:14,000 Speaker 1: I look forward to seeing you in person in August. 624 00:33:14,120 --> 00:33:16,560 Speaker 1: It being a summit in New Delhi excellent. 625 00:33:16,600 --> 00:33:17,840 Speaker 2: It was great talking to you d Enough. 626 00:33:26,880 --> 00:33:30,240 Speaker 1: Bloomberg NEF is a service provided by Bloomberg Finance LP 627 00:33:30,400 --> 00:33:33,800 Speaker 1: in its affiliates. This recording does not constitute, nor should 628 00:33:33,800 --> 00:33:37,840 Speaker 1: it be construed, as investment advice, investment recommendations, or a 629 00:33:37,880 --> 00:33:41,440 Speaker 1: recommendation as to an investment or other strategy. Bloomberg n 630 00:33:41,480 --> 00:33:44,960 Speaker 1: EF should not be considered as information sufficient upon which 631 00:33:45,000 --> 00:33:48,680 Speaker 1: to base an investment decision. Neither Bloomberg Finance LP nor 632 00:33:48,720 --> 00:33:52,200 Speaker 1: any of its affiliates makes any representation or warranty as 633 00:33:52,200 --> 00:33:55,080 Speaker 1: to the accuracy or completeness of the information contained in 634 00:33:55,120 --> 00:33:58,239 Speaker 1: this recording, and any liability as a result of this 635 00:33:58,280 --> 00:34:00,000 Speaker 1: recording is expressly disclaimed.