— Navratan Katariya, Associate Vice President - Solar,
Sterling and Wilson Ltd,
Associates of Shapoorji & Pallonji Co Ltd
Sterling and Wilson Ltd, India's leading MEP (mechanical, electrical
and plumbing) services company with an eight-decade standing,
entered the solar power business in 2010. In just one year, the solar
vertical is on the verge of completing 17 EPC projects aggregating
75 mw.
Navratan Katariya takes us through this newly-founded
business and gives valuable insights into critical issues in the solar
power EPC contracting space. Katariya explains how solar EPC
contracting can be made more efficient, resulting in a far more
mature Indian business model.
Tell us about the different services that Sterling and Wilson offers
in the field of solar power generation plants.
We currently offer turnkey EPC services for solar photovoltaic
projects, starting at 1 mw. Except for one off-grid village
electrification project aggregating 1.2 mw, all others are gridconnected
systems, feeding power into the utility. We are also now
ready for taking up power evacuation (electrical part) of solar
thermal power plants.
India is relatively new to the culture of grid-connected mega wattsized
plants. What are the typical challenges that one encounters
during the setting up of such plants?
There are several challenges out of which, time constraint is
prominent. Usually the decisions are made at a very late stage,
leaving limited time for a thorough engineering and procurement of
the major areas of EPC. Custom-made equipment especially high
voltage multi-winding transformers and switchgear, and other
components like modules, inverters, string monitoring combiner
boxes and clamps, have long lead times. The decision making
sometimes get delayed due to financial closure issues or owners
directly shopping for the high priced items, even as they are going
through the learning process.
The absence of data in the pre-bid stage can also prove
debilitating. The data in question is that on soil conditions of project
areas and also long-term time series of meteorological conditions.
Besides, engineering design considerations are yet to mature in
the Indian solar industry. And of course, there is heavy pressure on
the pricing front. While these projects demand a high reliability and
system operation for 25 years, competition in price may drive down
the quality or engineering considerations.
There is also the issue of performances-related liabilities
coming in the form of Performance Bank Guarantees (PBG) asked
by owners/bankers. They do not have much experience with solar
plants as of now so their expectations may be considered valid in
spite of the fact that solar PV projects have been in operation
worldwide for many years now.
How does this affect solar EPC companies?
With unmeasured met data and component quality beaten by
project price pressure, EPC companies are pushed against the
corner, and unfortunately not backed by the equipment vendors
for these PBGs. EPC companies thus take high level of risks due
to products that they do not manufacture and their balance
sheets will limit a high level of market penetration. This is feared
to hinder growth but we hope the business model will mature as
it has in Europe.
From the construction perspective, are there major differences
between the two major variants of solar plants — photovoltaic
and thermal?
Yes, the two are quite different. PV projects primarily have DC & AC
systems, and light foundations and structures that are generally
fixed. The experience in Indian electrical EPC companies for AC
system has been good enough to ramp up capabilities for 1000V DC
systems. Generally these are easy to design and construct and we
have ample worldwide experience. Absence of moving parts,
unless there are trackers for the module structures, is another
major difference.
On the other hand, solar thermal projects are larger plants,
have complex moving trackers, plumbing and rotating turbines
and alternators. The good news here is that India has vast
thermal plant experience!
India's National Solar Mission envisages a huge 1 GW of gridconnected
solar power installations by 2013. How do you see
this driving Sterling and Wilson's solar power EPC business?
Solar power generation is an extension of our business and
which utilizes the skills and experience built in various
disciplines over the years. We consider bringing clean power
technologies to the country and abroad (through our Middle
East office) as part of our corporate commitment to the society
beyond the general business considerations.
We expect to be a major player in this industry. Sterling and
Wilson is currently executing its 17th project-and that too in a
short span of just one and a half years. Sterling and Wilson is
committed to its customers in terms of quality and timely
completion of projects.
We understand that a large number of European solar
equipment and contracting companies are entering India. Do
you therefore see the solar power EPC business getting more
competitive in the years ahead?
On the contrary, we feel this market requires expertise
available from anywhere on the planet and there is a room for
long term committed players. I must say that we have many
miles to go towards innovation in the physics part of solar cells, and
to some extent in power electronics engineering, to bring the right
efficiency-cost solutions.
We also need large scale, vertically integrated equipment
technologies and manufacturing bases for both thin film modules
and inverters. The happy news here is that the National Mission
targets have prompted industries—slowly but cautiously—to
invest in the supply side.
In the business of contracting, local EPC companies have a major
role to play. Needless to mention that a good-quality and reliable
system requires multifarious skills and project management skills
built over years of on-ground experience. This is precisely why
customers prefer to turn to companies like Sterling and Wilson for
their requirements.
Tell us about solar projects commissioned by Sterling and Wilson
so far. We hear of a large project in Gujarat.
Our journey started with the commissioning of a 1-mw project in
New Delhi in November last year. We started with a rather limited
scope-that of module installation on a two-storied high, multi-acre
steel platform. Subsequently, we built our capacity and added
larger scope of work to our contracts. Every project that we took
after that was good learning and helped build robust
engineering/construction skills and experience. Four projects
aggregating to 6 mw spanning across the country have already
been commissioned and connected to the grid.
We are now working on 13 live solar projects with crystalline to
thin film, various brands of inverters, across the country Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh, Maharashtra,
Uttar Pradesh, Madhya Pradesh, Haryana, Punjab, etc. With
varied site conditions like soil, we have been using different
types of foundation methods, including the ramming metal type.
Ramming, incidentally, gives faster execution output, and is
often done in Europe.
Yes, we have a 25-mw plant under execution at Surel, some
130km west of Ahmedabad in Gujarat. This project has a
combination of two types of foundations, modules etc.
Tell us about skilled manpower at Sterling and Wilson Solar.
Sterling and Wilson does have a large skilled employee base, highlevel
engineering skills and resource mobilization capabilities. We
also have a countrywide network. All this ensures we deliver only
the best to our customers. Our customer profile is diverse,
comprising leading financial service providers, traditional power
companies, automobile manufacturers, IT services companies, oil
& gas exploration players, telecom companies, infrastructure
players, etc.
We observe that the capacity of proposed grid-connected solar
plants in India is progressively getting bigger. What challenges do
you generally foresee from the EPC point of view?
Increasing capacities do bring in advantages from the
engineering and cost perspective. However, the policy decision in
giving wider and equal opportunities of investment, which is
currently capped to a total of few hundred megawatts, needs to be
looked at. A solar park or a consortium approach that provides
access to common infrastructure and O&M will definitely help in
the course of time.
We believe that committed EPC players would invest in
engineering, machinery and methods; and that should be
beneficial to the owners in terms of reliability of the system,
speed of execution, and cost. As capacities increase, checks and
counter-checks shall be called for to ensure all players enjoy a
level-playing field.
Prices of solar power equipment have been on a decline over the
recent past, bringing down the capital costs of solar PV plants. Do
you think that there is scope to even reduce construction costs
through better techniques and practices?
Indeed one benefits from economies of scale in terms of
construction cost with higher mechanization, for instance, and
common infrastructural requirements. Also it would be good
to see the per-mw cost in engineering and procurement
coming down. We believe good system engineering and
planning is as important as buying the right quality of
equipment- both capital and construction. New techniques of
construction will need to be tried and experienced in local
conditions and that would require time and effort before it is
brought to practice.
We need to watch for the supply-demand influenced prices
versus sustainable and healthy prices of major equipment like
modules, inverters etc. There is a definite role of local
manufacturing of equipment in terms of price and better
serviceability; and availability of trained manpower. We welcome
local technology and manufacturing, and vertical integrations,
just like the Chinese industry did.
How do you rate the prospects of the O&M business for solar
plants in the years ahead? How can India shape up its solar
O&M industry?
O&M is crucial but India has currently has limited experience for
such mw-sized plants. To give you an example, even apparently
simple tasks like cleaning the modules may need intensive studies
and experience. The harsh-free sand rubbing against glass would
affect the glass texture and so the reflectivity. Similarly, water
cleaning in extended sandstorm periods actually may have the
sand sticking back on the wet surface!
An important area of learning will be the inverters, string
combiner boxes, and SCADA. Such training should be part of the
mandatory requirements for O&M operations. This will ensure
maturity of the O&M sector.
We have engineers who have been trained abroad by some
inverter companies and we now need only supervision during
inverter commissioning. (Warranty clauses require vendor
representatives to sign off.) We need to also look at an expected
high level of manpower attrition for a remotely-located solar
plant. So, a continuous training program will need to be run by
O&M companies. O&M companies will need to build expertise
across different types of module and inverter brands. O&M
personnel skill could come at a good price to the owner.
Tell us how Sterling and Wilson's solar business benefits from the
tremendous collective expertise and experience of other divisions
of the group. What key milestones do you see solar business
attaining in the medium term?
We have been in the business of electricals for over eight decades.
The learning of DC electrics has been relatively easy and quick. Inhouse
capabilities of design & manufacture/integration of various
balance of system (BoS) components, like GI mounting structures,
LT/HT Panels, SCADA, HVAC, CCTV, fire system and electrical
O&M have been of direct help to solar projects. Furthermore, the
over eight-decade long expertise of our parent company Shapoorji
Pallonji is indeed helpful.
Apart from ground-mounted mw-level plants, we foresee the
roof top program to substantially add to the Indian solar PV
portfolio. Our electrical services in buildings: be it large industrial
or commercial complexes, will be of immediate assistance to such
solar programs.
We shall be closing 2011 at 75 mw with 17 projects completed
to our clients' full satisfaction, and we hope to have successfully
executed 500 mw in the next three years. Sterling and Wilson will
also be adding solar thermal and a host of other services and
offerings to its product portfolio, in the days ahead.