Solar Rooftop
Real Time Story
Including CapEx Model
Our journey (From 21-09-2006 to 01-03-2020): Emergence, Evolution, Endeavours, Outcomes and Achievements, Challenges, Future Plans, and more.
The Emergence
We started our journey back in 2006 when the solar industry was in its nascent stage in India and lagged far behind the rapid developments taking place in the USA and Canada during that time. The solar energy market in India was limited to solar water heaters in the initial days and, therefore, we ventured into the same with a Bengaluru-based partner. As the Indian government turned its attention towards the scope of solar energy in India, a subsidy of 1500 crore was announced for the development of the solar industry. This came as a respite to the upcoming entrepreneurs in the field of Solar Energy. During that time, the MNRE (Ministry of New and Renewable Energy) was led by Mr Tarun Kapoor. With assistance from Mr Farooq Abdulla and Mr Piyush Goel, we got 18 crore rupees as a subsidy from the MNRE. This was of immense help as it nudged us in the direction of solar photovoltaic powerplants.
All of these developments have resulted in a rapid expansion of India’s solar sector. The huge potential of solar power as a clean, renewable, and eco-friendly source of energy has been realised. It also came as a response to the country coming to terms with the unfathomable challenges that come with conventional power that relies on non-renewable sources. These challenges, which include but are not limited to uncertainty surrounding energy sources, poor conditions of grid supply, and unremarkable connectivity, could be overcome by switching to more advantageous solar PV. Moreover, India’s geographical location puts it in an advantageous position with regard to the availability of direct sunlight in most parts of the country. All that was now required was favourable economic and legal policies. This came in the form of government subsidies and positive policy changes. As a result, in April 2012, Gujarat saw the establishment of the world’s second-largest solar plant.
As a part of the process of research and development before venturing into solar PV energy, we visited various REI expos and studied the present market. Back then, some of the key players such as Indosolar, Moser Baer Solar, and BHEL, were in the market. As a part of our strategy, we divided our solar PV products into four models for investors/businesses/SMEs/public sector/corporates, addressing different requirements. This enabled us to customize and cater to almost all the possible issues. Not only did this help us serve our customers better, but also allowed us to turn our business into a viable, profitable venture by shifting the focus to customer-specific demands. All in all, we focused on customizing the products and technologies as per customers’ demands and requirements.
We planned our products in accordance with the prevalent market environment in order to ensure growth and profitability. We still follow the same principle of changing our strategies and modifying our products to suit the constantly changing market. By constantly coming up with innovative solutions and incorporating newer technology, we are able to cater to a large variety of consumers with different requirements. To thrive in these volatile times, businesses need to assess the possible impact of market conditions on investments. Since situations and circumstances can change drastically, there is a strong need for businesses to stay abreast.
In our journey, we found that, for India, grid-tied rooftop Solar Photovoltaic systems are a feasible solution, especially for building rooftops and vacant land/areas, both as a replacement as well as an add-on to ensure uninterrupted power supply. For a long time, we focused solely on choosing rooftop PV systems for MSMEs and set a goal to achieve 100 MW in the coming 10 years, starting from 2012.
Efforts to achieve the goal of 100 MW of solar rooftop PV sales and installations in targeted MSMEs/industries over 14 years.
In order to meet our goal of generating maximum power and providing excellent after-sales service and troubleshooting to our customers within a period of 2 to 24 hours, we have decided to follow a minimum capacity of 100 kWp for rooftop installations.
In the given map, E SNAD marks the states where we are working for MSME/industrial customers with a minimum of a 150 kWp connected load.
Efforts to achieve the goal of 100 MW of solar rooftop PV sales and installations in targeted MSMEs/industries over 14 years.
In order to meet our goal of generating maximum power and providing excellent after-sales service and troubleshooting to our customers within a period of 2 to 24 hours, we have decided to follow a minimum capacity of 100 kWp for rooftop installations.
Our achievements over the last 10 years:
- It encompasses a total of twelve states in the north, south, east, and west.
- recently expanded into tahe states of the north-eastern states.
- It includes 153 cities (Grade A, B, and C) and 127 villages with industries.
- In the cities and villages mentioned, we visited over 16000 MSME/industrial customers.
- After a steady start in the initial 3 years, we adopted a more proactive strategy for the following 7 years and converted more than 1550 MSMEs/industries into satisfied customers.
- Generated 750 MW+ power for approximately 275 of the targeted MSMEs/ industrial customers.
Our Growth through the Years: Achievements in the CapEx model for rooftops in the MSME/industrial segment throughout the years.
- 2006 to 2009 – Sold 45 kWp as a sample plant.
- 2010 to 2013 – Sold 100 kWp as the price of approximately 11 crores per MW was unaffordable for a large section of MSMEs/industrial customers. In addition, it sold a 57 kWp off-grid system (with a battery) during the same period.
- 2013 to 2015 – Sold approximately 9.8 MW (solar rooftop) to MSMEs/industrial customers (with a capacity of a minimum of 100 KWp to 1 MW) at an average price of 6.40 crore per MW to 32 customers, spread over 11 cities in 5 states. This was possible due to MNRE’s policy of 30% subsidy, due to which we got a subsidy of 7.20 MW for our 26 MSME/industrial customers from SNA. However, the subsidy policy of the government failed initially due to blatant red-tapism, and later due to the termination of the same policy by the succeeding government. In the end, most customers adopted the CapEx model.
- 2016 to 2017 – Sold approximately 12.4 MW (solar rooftop) to MSMEs/industrial customers (with a capacity of a minimum of 100 KWp to 1 MW) at an average price of 5.40 crore per MW to 36 customers, spread over 14 cities in 7 states.
- 2017 to mid-2019 – Sold approximately 9.7 MW (solar rooftop) to MSMEs/industrial customers (with a capacity of a minimum of 100 KWp to 1 MW) at an average price of 4.20 crore per MW to 32 customers, spread over 22 cities in 12 states.
- 2019 (second half) to 01-03-2020 (pre-COVID) – Sold approximately 2.4 MW (solar rooftop) to MSMEs/industrial customers (with a capacity of a minimum of 100 KWp to 1 MW) at an average price of 3.60 crores per MW to 8 customers, in 5 cities in 2 states.
- POST COVID TILL JUNE 2021 – Sanchay New Age Developers Private Limited is a fastest growing company today in solar roof top segment C&1 sector in India. Company evaluated INR 100 crores by a renewable investor fund of Australia and Singapore this fund is committed investments by a investment agreement with SNAD till SNAD will grow its value of INR 1000 cr. with in next three year. We already start investment of rooftop in C&I segment. As our upcoming 30 MW solar roof-top projects we are completing in the next 2 years. Out of that we are closing on 3 business models among others, namely:
- Current CAPEX model
- OPEX/LEASE model
- DEFERRED PAYMENT model wherein off-taker will pay for the cost of equipment in form of EMIs in 5 – 7 years. EMI calculations need to be done to arrive at monthly EMI which is commercially viable for both SNAD, our partner Investor and off-taker.
The assessment of our journey:
We expanded our reach over the years as we gradually went from serving our native state to a total of 12 states. In this process, we were faced with a great many difficulties. Despite this, we continue to expand.
We have only been able to achieve a mere 35% of our decided target of meeting 100 MW sale and installation of solar rooftop for the targeted MSMEs/industrial customers throughout 2012-mid 2019. This was a result of the various obstacles we had to overcome.
Table for the outcome in CAPEX Model rooftop in 12 states in the segment of MSME/ Industries customer:
The obstacles we faced:
- High price of solar panels and equipment.
- Setback due to demonetization of ₹500 and ₹1,000 currency notes on 9 November 2016.
- Certain unfavourable clauses in Goods and Services Tax Bill, 2017 after GST reforms.
Particularly, the introduction of demonetization and GST reform had a significantly negative impact on the overall liquidity in the market, causing an immense setback to the MSME sector. Consequently, the investments in solar energy decreased, leading the solar industry to suffer.
The Way Forward: Future Plans and Targets
Since we were able to achieve a mere 35% of our decided target of meeting 100 MW sale in 10 years (starting from 2012) for the targeted MSMEs/industrial customers, it leaves us with 2.5 years to achieve the remaining 65% target. Although this aspiration may seem unrealistic, it can be achieved due to the following reasons:
- Due to the fall in price by nearly 50% over the last 7 years, the time of payback in solar investment has reduced from 7 years to 3 years.
- Increased affordability of Solar power for MSMEs/ industrial customers.
- Increased feasibility of solar power in comparison to conventional sources of power makes it a necessary tool for MSMEs/ industrial customers, especially after the COVID pandemic as businesses are forced to cut costs.
- Earlier, we were selling the CapEx model only with TATA Power Solar due to the TATA brand value. We have now decided to focus more on the CapEx model as we aim to achieve 50% of our target solely from CapEx.
- Our newly introduced Money Back Guarantee offer the Operation and Maintenance (O&M) services, chargeable as per Operation and Maintenance (O&M) agreement with the customers.
- Our proactive efforts to achieve targets by strategic decision-making and staying at par with the latest global trends in the Solar PV climate.
- Our new venture, SANCHAY NEW AGE DEVELOPERS PRIVATE LIMITED (SNAD), with which we seek to offer innovative and customized Solar Photovoltaic Power Solutions that are both economical as well as reliable. The Solar Photovoltaic Power Solutions will be on the BOOT (Build, Own, Operate, Transfer) model, with several choices of A-grade, time tested, trusted, tried, affordable and sustainable Solar PV products from all over the world with all necessary and standard quality certifications.
- To make our BOOT model a staggering success, we seek support from investors for nearly 50 MSMEs/industrial projects, with each project bearing the capacity of 500 kWp, and costing approximately INR 1.75 crore (total INR 90 crore) in 11 states in India. We expect to achieve 50% of our target from this BOOT model.
- By enhancing our in-house Installation, Erection, Testing & Commissioning (I&C), and Operation and Maintenance (O&M) capacities with help from our highly skilled staff.
- By maintaining our after-sale service and troubleshooting time between 2 to 24 hours in all areas spread over the 12 states in which we are already present.
Benefits of BOOT Model for MSMEs/Industrial Customers:
- Reduction of electricity bill by almost 50%.
- Utilization of roof or land which is not already in use.
- No unnecessary or expensive investments.
- Free ownership of Plant at zero cost after the end of PPA tenure.
- An opportunity for being a part of Green Energy.
Benefits of BOOT Model for Investors:
- Safe and secure investment in prioritized Green Power Solar Project.
- IRR as high as 16 to 17 per cent.
- Short payback period of 5 years.