Suzlons Wind Solar Storage Plan For Indias Energy Future

TITLE: rt-xV2qHDcQ CHANNEL: Unknown DATE: ---TRANSCRIPT--- If you look globally, the electricity demand across the world by 2050 will grow to almost two to 2.5 x of where we are today. India during the same period will grow 5 x.

Who are your classic customers at this point of time? So, effectively, if you see, you know, there are three large customer base. One is the industrial customer [music] base that you have. Other is the PSU segment. And then you have the utility segment. Okay. The data center growth has started in the northern hemisphere in a much faster way. India is just kick-starting that. What we are seeing is some of the energy which was built out earlier for green hydrogen, some of that capacity is going to get used immediately for data centers. There are fundamentally five things that we are doing as part of Suzlon 2.0, which is taking us from a pure wind company to a wind first full stack renewable energy company. [music] [music] Hi, and welcome to this special edition of The Core Report. I’m joined by Girish Tanti of Suzlon. Mr. Tanti, thank you so much for joining me. Thank you. So, you embarked on this new I mean, there were full page ads everywhere about Suzlon 2.0. And I’ll come to what Suzlon is doing. But tell us a little bit about the demand side. What’s happening in the electricity sector right now, 3 months after the war started? Energy is a new and different definition than what it was even at the beginning of the year. Yeah, thank you for having me. I think uh we are seeing for the first time globally across the world, world is entering into a new era of electricity. And it’s a super cycle which has just begun for the electricity demand across the world. Uh first time we are seeing that almost all nations across the world, their forecast for next 10 years or even longer are all on positive trajectory and we’ve never seen such situations before where entire world is working to the same symphony on that ground. This is primarily driven by two three things and if I were to kind of just highlight two critical elements, I think first is the pace up to the electrification that is happening with adoption of EVs and also general industries that is moving fast on their green transition. And the more important one which has hit the world very hard lately is the energy security part of it and I think almost all nations across the world are now seeing how they can get their energy system resilient and you know, be more self-sufficient in what they do. If you look at home India too, you know, the kind of growth that we’re seeing and we are further fueled by a you know, 6% plus you know, growth rate that we have. So if you look globally, the electricity demand across the world by 2050 will grow to almost two to 2.5 x of where we are today. India during the same period will grow 5 x. So we are at almost double pace to rest of the world in terms of electricity demand fueled by all these elements. Also India, the industrial load is something which is moving very fast. The cooling and heating systems are moving significantly fast. Of course we have the EV adoption which is growing significantly fast also. So all of these is kind of adding to that and you know, the and if you look at our conventional energy, almost 75% plus of the fuel dependency is all on imports. So that is another challenge that India has and I think you know, the visual you mean coal? I mean in general coal, yes. Yeah, coal, yes. In general if you see the non-fossil fuels, if you put all of them together, effectively that’s where we are and that brings in both the sensitivity, one on the availability. Now, that has become a question mark, and then there’s forex issues also. And inflation due to that. I think effectively, what’s happening is that uh the situation could have been even worst had we not started on this journey early, you know. I think uh our Prime Minister set out a very strong bold goal 15 years back to, you know, decarbonize the economy by 2070 completely. And I think the work that has been done till now in renewable energy, in a way, supported us in this current crisis situation uh that we have a good amount of almost 50% of our capacity, which is already coming from wind and solar, is supporting. And if we see our targets uh also near term for 2030, uh you know, we are largely on track to get there. Right. So, you said that this is unusual in the sense all countries are now uh you know, you know, kind of seeing this kind of demand surge, and driven maybe by both internal and external. So, how does that reflect for your order book today? So, if we see here uh effectively, because of this overall uh super cycle and the pace at which the RE adoption is kind of going up, if you see purely on renewables, then uh largely, if you see for say, if you were to look at uh wind energy, then in wind energy, we we see uh almost globally uh we will grow to about 4 to 7x uh in the by 2050. India, we will again grow at double the pace. Same is the case for solar. It will grow at about 8x plus uh during that. India, we will even grow double pace. Uh battery storage, we are having at a lower base, so we will be largely aligned to the world the way we are growing at about 10x on that. So, effectively, for all renewables, the growth uh from here on is very sharp. If you look at our own order book today, I think at uh 5.5 gigawatts of order book which we have uh largely comes from three, four key segments. The first and foremost is of course the uh the industrial segment. I think the way the India Inc has set out on the decarbonization, their ESG goals, and you know, and also the tougher industries where whether it is uh mining, uh cements, all all of them, steel. I think we are seeing a much faster adoption of um renewable energy purely because it makes sense. It makes commercial sense beyond the climate uh sense that it makes. And we are seeing a quick pick up from the that segment. We are also seeing the PSU segment now moving very fast. So, large energy guzzler companies are also moving very fast from that. Also, at small medium enterprises, I think they too are moving at a good pace from that. And the utilities, of course, are also decarbonizing uh from that. So, if you see today, our order book almost 75% of our order book comes from these segments. And then you have a smaller segment which is uh now which used to be the largest segment is the pure bidding segment uh which you had from the central bids. So, change that is happening there also is that until now, the growth has been largely with central bids. Going ahead, we will see a combination of central and state bids. So, now states themselves because now the CTU connected grid development and growth will be much faster. All states are have charted out their own path of how they want to decarbonize, how they want to build their economies. And so, I think uh a good portion of that we are seeing across states green corridors being built primarily to help um the green transition and more so the new economies of data centers and you know, the green hydrogen and other elements that are getting built out. And I’ll come to data centers in a bit, but uh are you seeing more interest or uh inquiries after 28th of February,

See, I think there, uh, I mean, it’s not specific to that, but I think, uh, in general, the pace up has just, uh, you know, today, like there was a time when we were talking, uh, say, uh, 2 3 years out. Uh, now we are talking 5 years, 6 years out. So, people have started planning for the future that looking much beyond, and I think they’re getting more certainty to the green transition thought process with solidity that this has to get done. It’s not a question of, uh, should we or shouldn’t we? Now it’s just that how quickly can I get it done? Okay. So, what you’re saying is that the the war in West Asia has, uh, reinforced the belief that we need to We need to move fast. Which was not so maybe urgent earlier. Yeah, you could see that. Okay. So, uh, tell me about, uh, your, uh, rebranding, so to speak, and you call it Suzlon 2.0. So, what’s fundamentally different from, uh, what it was? So, you know, this is it’s kind of built on the foundation that our founder kind of, you know, put in place. Tulsibhai being a visionary, you know, he had kind of And we had the benefit of, uh, being along with him in that journey. And, uh, it’s just that now we are putting, uh, the next, uh, layers of growth, uh, aligned to that vision. So, he had a vision to make Suzlon, you know, one of the leading, uh, global renewable energy company from that. Uh, until now, so, there are, uh, fundamentally five things that we’re doing uh, as part of Suzlon 2.0, which is taking us from a pure wind company to a wind first full stack renewable energy company. So, the first element that we’re doing is on the, uh, RE tech, which is primarily building our technology capabilities, not just for wind, uh, but for solar and storage also. So, that’s the first bit of it. And then, can you, uh, elaborate on that a little more? Yeah, so, there basically today if you see, you know, the market has moved. See, until now wind solar was a kind of it was seen as an alternate energy source. Now when you are hitting 50% and growing beyond that, you are becoming the primary source. And what it means is that now you need to be firm and dispatchable to the core, meaning you need to be available on demand anytime you need it. And today with wind solar and storage the price points where we are and the technology solutions that we have, we are getting closer to that situation and we are able to provide those kind of design on a standalone basis and in a grid connected system also. So effectively what we’re doing is that we have that strong expertise in wind. We’re trying to now expand that to be able to align to the market shift that has happened from a single source to a multi-source that can you guys put everything together for us and you know, you be our technology partner to implement our new technology. So that’s the first shift that we’re doing. The second shift which we are doing is that the problem is that now we need scale and we we need it yesterday, you know, it’s almost like that. And that’s the answer to our second pillar that is there is the project development. So in project development basically we are decoupling the project execution from project development. Project development is basically preparing the field ready for construction. Uh in the earlier model what was happening is people were getting secured PPAs and then they were trying to go and build out. What we are now talking to our large customers is while that cycle can continue, we need to prepare for tomorrow. Otherwise there is a clog up that is happening on project execution and project delays and then transmission delays and then things don’t happen. So unless we do not think ahead of the curve, we will never be able to kind of make that bridge. So the DevCo that we are doing now, which we are expanding from a pure wind wind energy development, which we have been doing for last 25 years, how do we convert it into an FDRE development? Fortunately, almost all wind sites you can add solar and storage. Conversely, it’s not true that if you have FDRE. So, it’s a firm dispatchable renewable energy source. It’s almost 24/7 green kind of power. So, luckily for us that the wind sites that we have today, we have about 20 gigawatts of project development that we are at any point in time working on, of which about 8 gigawatts is matured project development, meaning you can enter into contracts with customers for a firm commitment to get it to commissioning by a next date. So, we are now converting that to wherever customer needs solar and storage, we are converting that development. And we are now we would be offering customers that let us get into co-development, where I lock in the project for you. We use the next 24 months to get it to a level that we’ve got all the field things tied off and ticked off. It’s ready for construction. And then we start the actual construction, so you have a sure shot commissioning on that. So, that’s the Devco piece. Devco piece will largely allow customers to bring in certainty, to bring predictability, bring in scale, and shorten the time to market. So, this is the Devco piece. If you were to give me the example of one such installation, let’s say in Rajasthan, where you have abundance of both wind and solar. So, how would it work? So, effectively, what will happen is you will have a site, you will have the wind farm over there. Along with it, you will also have the solar installation, you will have the battery installations also. So, earlier if you were doing say just solar, your uptime or availability of power would be about 26 27% of the time during the year. Because it’s only when the sun is shining. If you do only wind, then you get about 40 45%. Because wind blows throughout the year, but effectively it’s 45% of the time that you get wind. If you put at the same location wind and solar, that grows to almost 55% to 60%. So, you are able to get power during when you need it for 50 to 65% of the time. You put a battery pack, depending upon the sizing of the battery, you could go to 100 also if you need. So, effectively then you are able to now have firm dispatchable green energy on demand when you need it, uh 100% green on that ground. So, that is the model that we are shifting from a pure solar to a pure wind to a a a 24/7 green energy solution. That’s the piece that we are working on. Right. And and suppose if I were to ask you to break it down by unit. So, let’s say you have one windmill. I mean, only I I know that in any place you’ll have more than one. Suppose you had one uh windmill of, let’s say, 4 or 5 MW. Okay. Uh you would add what? Uh how much would you add to balance a very good question. So, effectively, depending upon what level of firmness you need, means what certainty of power you need, say, it Do you need it for 85% of the time or 90% of the time? Even the thermal power projects, they work with about 85% or so, you know? So, even if you were to benchmark to that level, that, “Okay, I need 85.” Then, typically with today’s technology and uh you know, the price points that are existing, you will go with a combination of about 40 to 50% of uh wind. Mhm. You will go with similar 40 to 50% of solar. Again, why I am giving that range is because location-wise, either the wind radiation, I mean, the wind potential could be higher and therefore the solar can be lesser or otherwise, a different location. Uh but in the range of 40 to 50% of each one of them is what you will put in that. And uh then you would have about 10% to 15% of battery pack to make sure that you are able to deliver that. Also, what happens is the way you design it, and this is a very important area which you’ll be working closely with our customers is say you take an example of an industry and you have a plant and now you you have a fixed load profile that I need power like this. So, then we design the project to meet that power load conditions. That will define whether you will take a 60% wind, a 40% solar, and a 10% battery, or you will have a 40% wind and 60% solar and maybe 20% battery. Which way you want to combine? So, that optimum design to meet your load specific requirement, be it an industry, be it a larger group cluster of companies or a utility, or be it the larger grid of a state utility. So, you can design it at all levels. You can almost design it for the state load conditions also and do it from that area. And and your customers at this point, I mean, two two questions. I think one is who are your classic customers at this point of time? Secondly, if you’re retrofitting at existing sites as you said, uh who’s the or rather who’s the buyer for it or who’s bearing the capex? So, effectively, if you see, you know, there are three large customer base. One is the industrial customer base that you have. Other is the PSU segment that you have on that ground. And then you have the utility segment. Okay? And all of these today already have in their portfolio wind, solar, storage, and they’re adding storage on that. So, today they too are doing this balancing. Where we are coming in is we are saying that, you know, while you’ve been doing it at a system level, can we bring that same capability at a project level? So, that you optimize it at there. For example, today if you have a grid line you’re putting a 25 km grid line in Rajasthan to put up a 100 gigawatts of solar 100 megawatts of solar project, the utilization of that grid is only 26% of the time. Otherwise, no electrons are moving there. You put wind along with it, it will grow up to 55-60% of the time. Your payback almost of the grid becomes half. You put battery, then it’s even higher. Your payback goes further significantly. So your asset utilization of all the grid infrastructure that you’re building, the more balanced system you have of wind solar storage will ensure that your payback is faster and the efficiency and more importantly your grid stability, the quality of grid itself is enhanced. Right. And battery is, I guess, the latest entrance and and technology is evolving there. But the other two components existed for some time. It is strong already. Uh so what’s the fundamental difference in the way you are approaching versus as you said How it was historically. So I think the fundamental change that we want to work on is first of all, you have one-stop shop. You have an expertise which can do everything for you. So that’s first. Now, whether you want to do it collectively at one site or do it at multiple sites, I can do the same. So historically it is being done at multiple sites. What we are saying is that while you are I mean each I mean a wind a wind farm would have to give you an example, if I am an utility, uh I am putting a wind project where a wind resource is there, then I’m putting a a solar project at some other locations. So I have done it depending upon the demand or the bids and geographies what is happening. What I’m now what now we will be offering to customers is that, you know what, let’s plan out your next 5-7 years plan. Let us plan out that for each site that you build, we optimize the site also. And not at a system level alone. So, the moment you start optimizing each location that if you have a wind park, can we add solar to it? Can we add battery? Can I solve the problem at source rather than trying to solve it at a system level? That way then your entire system becomes very strong. So, that’s the major difference which will come through this design. Right. And so battery is the new element. Now, one of the big issues or concerns with India obviously is the daytime to evening time switch. So, to what extent does this approach help improve? I know winds are wind farms are also running at night, but the combination of these three to what extent I think the biggest challenge that renewables have is they’re not being a continuous source of energy. Yeah, and that is the challenge. I think with the current battery solutions that we have, we are resolving that problem. So, effectively, you know, when you have wind solar storage system coming together, you are able to form the power and dispatch it the way you want. So, in an ideal scenario today you could have a battery, say you are generating energy during the day, you want to use it for your morning peak, evening peak, you could put suitable battery storage during the day to discharge it and use it during the evenings and the morning. So, that technically is possible. From a price point point of view today if you see, then from a CAPEX point of view, because battery is not a generating source, so we’ll compare only wind and solar. So, solar is the cheaper source from a CAPEX point of view. Wind is slightly higher than that, but still it’s not very out from that point of view. But when you look from a consumer point of view, then wind becomes the cheapest source. Because if you see time of the day kind of pricing and you compare that am I able to generate when I need power without the need for battery, then wind is able to give you more. Because it can generate during your morning peaks and evening peaks both. So, you will need lesser batteries to form a wind power than more batteries for a solar power. In other way to put it on that ground. So, effectively, what will happen is that depending upon your particular load requirement, you will do a combination of all three. And with that today, in if you see the new bids that have come out, they are mostly all FDRE bids. They are all integrated bids that we are seeing. Although you see still a good amount of wind bids, pure wind bids. This is primarily because the solar growth has happened a bit faster than wind. And it’s important that wind catches up to solar because you need to balance the grid with combination of wind and solar. Because all said and done, battery is just a extra system cost. It’s not going to generate anything. So, you have to use wind and solar to its peak. And then what you cannot meet with wind and solar, that much only you should go to battery. Right. And data centers are obviously the next big or really the next big source of demand both, I mean, in India and globally. How are you seeing that area from your advantage? So, I think as I was talking earlier, I think there is a such a good correlation between the data center demand. And for that matter, even data center green hydrogen or the large industrial growth. But specific to data centers, I think three fundamental characteristics which correlate with the data centers. I think first and foremost, the data centers are energy guzzlers and they need power in a in a distributed manner. They are coming up here and there, everywhere. And again, with renewable energy, you could build renewable energy plants anywhere on that. Other is the data centers need the power almost yesterday. And so, the speed to market probably with wind and solar is the quickest way you can build that capacity. And you can build it locally wherever those data centers are getting built closer to that location avoid too much of transmission and other related you know issues also in that whole place. And the third point is that it is scalable. It’s modular in nature. You can start with 500 megawatts grow it to a gigawatt grow it to a 5 gigawatts over the next 5 years. So with whatever is your pace of growth of your data center expansions you can grow this. And all said and done it’s a cost efficient And are you seeing commercial are you seeing queries for data center linked Yeah so what’s happening is that the the data center growth has started in the northern hemisphere in a much faster way. India is just kick-starting that. What we are seeing is some of the energy which was built out earlier for green hydrogen since grid green hydrogen has gotten a slightly delayed some of that capacity is going to get used immediately for data centers. And new capacities at newer locations of where data centers are coming government is building green corridors. Almost all states now have a focused area of building data centers for their states. And they are all very close to the energy being one of the important design element when they are thinking where to put the data center. Can I get the power that I need to run a a data center. So we are seeing that it’s just started and it’s the early days for that yeah. Right. So as as Suzlon you’ve been let’s say building wind farms or windmills all these years. The the new version you you’ve talked about solar plus battery and the integration of it and the technology that sits over it. So what’s the org structure change if so in this? Yeah so effectively you know we have we are now organized where we have the manufacturing piece of the business. Then we have the you know the project development piece of the business then we have the project execution, and we have the service. And we’ve had this previously also. So, I think now the change that is happening is that each one of them were doing purely on wind. Now, they will increase their capabilities on solar and bass also. And expand their bandwidth on putting a technology layer on top of that. So, not a fundamental change in things that we are going to do. I think we are just increasing the the the scope of what we do in each of our businesses. At the same time, on the pure technology play, of course, we will have to build independent capabilities, say, in the solar space, in the bass space also. Solar we are going with an asset-light model. We have We believe that there is more than enough capacity globally and locally. So, we’ll be working with a partnership asset-light model. Primarily, play a role of an integration and technology value add on top of whatever is currently being done. In bass, we are in that early cycle of technology adoption and growth. And there is also a challenge of localization in that case. So, we will focus and there is also intelligent play that needs to happen. Because bass is the one On top of that, we are adding a energy management layer of technology and hardware. Which effectively will allow my customers to manage their choose you know, scheduling and forecasting as it’s called in technical language for power sector. Where effectively they can decide which source they want to use when. And schedule it. And also, depending upon the forecasting that they get of generation of wind and solar, they can time the market correctly at the least cost option. Right. Last question, I think. The availability of materials for both wind, let’s say, turbine blades, turbine blades, and solar. What is that looking like right now? What has changed in, let’s say, this year in terms of costs, sourcing? So, I think the story is slightly different for both. Yeah, if you look at wind, fortunate for wind is that we’ve started the Atmanirbhar cycle long on, you know, it’s almost now 20 years plus. And while industry average is at about 65% local content, Suzlon is at about 85% local content. So, we we are kind of in a way shielded and also for that balance 15%. If we already have alternate supply, so if required, we could very quickly manage it. So, wind supply chain is very robust and almost more than double of what India can consume itself. So, we are 20 gigawatts as an industry of supply chain, whereas India this year will be doing close to eight eight nine gigawatts. So, it’s a strong robust local supply chain which we have. So, it’s not going to get largely disturbed due to global any kind of changes that we may have. The story is slightly different for solar. While there is a strong push for backward integration and all that, the value chain still is heavily import dependent. We would have I think my estimate would be we are about 20% local content in that. So, we have still a huge import dependency. So, any kind of global flux in that space, be it on case of availability, be it on case of geopolitics, or forex and other things, the dollar, everything, those I think solar industry will face that a little stronger and quicker. And the things get even worse for the battery storage because there you are almost like just starting and almost dependent on imports with almost just 10% maybe local work that you do. So, I think from that that is kind of the the difference between the three, but effectively I think the way things are currently worked out, overall industry is reasonably in safe situation to manage the the global supply chain challenges that are there. So, I don’t see it hitting the renewable energy in a bigger way, but you may see some blips here and there which we have to factor into our designing of businesses. And and if I can go back to a question that I asked in the beginning which which followed on from what you said about that how all countries are now growing almost the same pace. Have you seen One is of course what’s the current split between domestic and international? And secondly, have you seen like an inquiry coming from a place that you would not not have expected otherwise? Or a kind of industry that you would have not I think we just published the global wind energy report you know, a month back at Madrid last just last month. And we are seeing that you know, almost uh 15% increase in number of countries that have now adopted wind just in last 1 year. So, which otherwise were not thinking on that ground. Same way now we are seeing the India model which we have this Suzlon 2.0 model when we have discussed a little bit also with our global customers, they find it interesting globally also that that firm and dispatchable nature of renewables is going to be the future globally also. And I think there too industries are moving to become self-resilient on their own also. So, I think we are seeing that trend globally where adoption is moving much faster and also hard to abate industries are moving much fast on the green side because it’s affecting for the first time we are seeing that uh you know, business plans can be curtailed due to non-availability of electricity. And I think we’ve never seen that. I mean it was a past thing. But that can be a future limitations also for countries and you know, companies. So, I think uh people are looking ahead of the curve to make sure that whatever is their growth plan, the electricity required for that happens. And also another thing, how much of it I can move from, you know, molecules to electrons. So, that’s the other uh because there is that risk which gets in with the molecules. So, that’s the other factor which has come in most of the companies now. Right. Mr. Thadani, thank you so much for you joining me today. Thank you. Pleasure. Thank you. Thank you.