Bangalore: Inderpreet S Wadhwa has mostly been associated with start-ups and Fortune 500 companies. He also co-founded and sold a software education company in Silicon Valley a few years back. And though he's still associated with the word 'silicon,' it does not relate to information technology. Instead, he's now the Founder and CEO of Azure Power, a solar photovoltaic company that he founded two years ago in India.
On December 1, Azure commissioned the first phase (one Mw) of its two Mw solar PV plant in Awan, Amritsar, and has begun to sell solar power to the Punjab State Electricity Board. That makes him the first entrepreneur to sell solar power commercially in India, reports Rediff.
"I returned to India after 15 years to make a difference, besides making money," says Wadhwa. "Many small and big companies have entered the fray but none of them have commissioned any projects yet."
Commercial and sentimental reasons dictated his choice of Punjab. "I was born in Amritsar, so I wanted to give something back to this place," he said. Besides, the Punjab government is offering a peak rate (peak hours are billed at higher rates) for sale of power from solar projects at Rs. 8.93 per Kwh (kilowatt-hour) from 2011-12, higher than the Rs. 3 to 4 per kwH it pays for conventional energy.
This doesn't quite cover costs (Rs. 12-20 per kwh) but because the power purchase agreement with Punjab is valid for 25 years, Wadhwa reckons he'll make money at some point, since the costs of solar power generation are expected to decline at seven to nine percent per year by 2020. Hence, Azure Power gets the benefit of reduced costs over time and it also does not have to look out for buyers during this period.
After planning to generate 18 Mw power through solar PV power plants, the state government has started to allocate other such projects. Being environment-friendly and pollution-free, the Punjab government has stated that these projects should be eligible for carbon credits under the Clean Development Mechanism.
Wadhwa claims that his power plant is cost-effective - the 1 Mw plant costs Rs. 17-19 crore (Rs. 170-190 million). Compared to this, public sector Bharat Petroleum Corporation is building a one Mw PV power plant in Mohali for Rs. 25 crore (Rs. 250 million).
Wadhwa argues that his costs will fall further once the prices of silicon and PV modules fall. Azure Power received initial venture capital funding from Helion Ventures and Foundation Capital. Wadhwa is also talking to other state governments like Haryana, Gujarat, Maharashtra, West Bengal and Karnataka to set up solar plants.
All these states offer different peaking rates and assure purchase of solar power for a given period of time in a bid to encourage renewable energy projects and reduce carbon emissions. By September 2010, Wadhwa plans to set up another plant in Punjab to take the capacity to four Mw. He also plans to set up an eight Mw plant in Gujarat by the end of financial year 2009-10. To finance these plants, he has two more investors lined up.
Azure Power's uniqueness lies in the fact that the company designs, finances, owns and operates solar power plants. The solar PV modules are imported from countries like China and Wadhwa's team assembles the important modules as "completely knocked down kits." "Had the quality been better and cost of modules manufactured in India been lower, we would have considered buying the solar PV modules from India itself," rues Wadhwa.
He explains that the solar PV modules imported from China and the U.S. can generate more power per cell and hence occupy less land. "This helps us reduce the cost of setting up plants," says Wadhwa. The favourable policy of the MNRE and the government's National Solar Mission, he hopes, will only further his cause.
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