“REC mechanism is one of the best drafted, conceived ideas,” says Vikalp Mundra, Joint Managing Director, Ujaas Energy Ltd.
Ujaas Energy Ltd., established in Indore in 1979, is one of the first companies to install a solar power plant under Renewable Energy Certificate (REC) mechanism. The company has started setting up an innovative offering called as ‘UJAAS Park’ that provides complete plug-and-play solution to the investor for putting up a solar power plant at an affordable cost in time. In an exclusive email interview, Vikalp Mundra shares how REC is going to shape the future of solar power.
Ujaas has pioneered solar REC mechanism. How do you look at the solar REC mechanism in India?REC mechanism is one of the best drafted, conceived ideas. It makes a good business sense which give a much better return which is tax free and linked with power price which will only go northwards in coming years.
The most important part is proper implementation of RPO regime, which can only create a liquid market for REC sale. In India any new concept took time, and the same is with REC. Further, power being a state subject, it moves with the political will power of the state.
How do you select a partner to execute an REC project?We commission REC projects in our park for our investors which are broadly of two categories:
Large Tax Payers: As a tax-planning initiative to claim benefit of accelerated depreciation at 100 per cent.
HNI segment: They invest in power as an asset class in their portfolio of investments.
What are the tweaks required to make this concept more attractive?We propose following to make REC concept more attractive:
Periodicity of compliance: mandatory quarterly compliance of the RPO in place of annually.
Secondary trading: As REC is a market-linked mechanism, RECs must be made re-tradable, and this will pave way forward toward derivates and forward market.
REC floor price: Visibility to cover at least debt service period is desirable.
Re-packaging of floor price of solar RECs: With the decreasing solar tariffs since the present REC prices looks high there is a need to redefine the price of Solar RECs duly considering the protection of financial interest of plants installed previously which can be through the concept of vintage-based multiplier.
How much beneficial is your Ujaas Park concept?Ujaas Park gives two most significant unmatched advantages:
It gives economies of scale like big plants even to the owner of 0.5 MW plant.
Park is the only way by which a common man can fulfill his dream of owning a solar power plant. There is no other way to bring solar revolution to masses in this space.
JERC has announced strict compliance RPO for obligated entities in Goa and UTs. How do you view this initiative?I wish to share with your readers that Ujaas being a leader in solar REC space, took onus to make RPO enforcement a reality. We are presenting the case to various regulators. This JERC order is also a result of our efforts. We all will see many such orders in coming time. What sort of support can you extend to obligated entities in the UTs to meet their RPO targets?All the obligated entities are welcome to participate in REC trading in IEX and PXIL. We are willing to support in all ways as required and asked by OEs. How big is your solar business now?In India by March ’14, total installations will be 2,000 MW. Out of this, 350 MW is in REC space. Thus Ujaas is having about 5 per cent share in national market and nearly one-third share in REC space. It makes Ujaas as the largest umbrella in REC space.
In FY14, you have targeted an ambitious 300 per cent growth from FY13 in terms of installations. How did you perform?FY 2013-14 was a sluggish year for solar and all infra companies. Our results will be out very soon. I can share with you that Ujaas has performed very well in top line as well as bottom line in solar industry along with our peers in infra as a whole. Can you brief on your long- and short-term objectives?Ujaas wishes to remain a leader, primarily in solar REC space with its park business. Ujaas is poised to take its mysite business very aggressively and would be looking to install at least 10 MW on rooftops in coming year.