With the pressing need to ramp up the installed capacity by about 60,000 mw, from 1,25,000 mw to 1,85,000 mw, at a cost of around $100 billion(Rs 4,50,000 crore) between 2007-2012 to meet the country’s burgeoning power demand, the gestation period of projects coming on stream provides a huge business opportunity for power backup equipment companies, says Gaurav Burman, director, transaction business, $6.3-billion APC (American Power Conversion India Pvt Ltd) by Schneider Electricin, in a chat with S Saroj Kumar of FE. Indeed, there is a 100% growth opportunity for backup storage companies when India kick-starts the growth of solar power to balance the energy basket portfolio in addition to its committment to embark upon clean and green energy. Excerpts:
Could you explain how the advent of solar power could open big business opportunities for power backup companies ?
As mentioned, the gestation period of power projects coming on stream is the opportunity time to get well entrenched for the power back-up companies in the area of solar energy that is getting increasing impetus from the government and industry. Power backup companies that produce digital inverters and UPS (uninterrupted power supply) boxes have an indispensible role as the digital inverters are the ones that are going to store the generated solar power from the panels to be apparently pumped in to the common grid. Besides the clean energy advantage, India needs solar power due to three major factors?ageing national power grid, unquenchable appetite for power for upcoming major industries and widening gap between peak demand and peak supply currently pegged at 13.6%. Furthermore the factor of transmission and distribution losses mounting to a whopping 27%.
Isn?t that too ambitious to expect a 100% growth?
Keeping in mind the current imbalances in the energy security portofolio excerbated by the increasing clamour to cut carbon emissiones in the country, the renewable energy source like solar would be an able replacement. Expectation of an exponential growth is no euphoric statement, as we have a fab city being set up in Hyderabad, China committing humongous amount of investments in exploring ways to reach economies of scale in solar panel production and Karnataka initiating discussions with IPPs (independent power producers) on fixing up of the per kw (kilo watt) charges for each unit of generated power.
Have things moved beyond drawing board in India?
Undeniably no, as the tipping point currently could not reached as the cost to be incurred is not concrete on the anvil. The deterring factor for a power generating entrepreneur is the Cost Benefit Analysis(CBA) that disfavours the investing community on the current business model envisaged by the government. In the long chain of business, the current model does not tie the links like certain amount say X investments would lead to Y returns with the certain years of plant life within which the investor needs to recoup his investment. We want the government spell out unambiguous policy guidelines encouraging greater investor participation in the solar power production.
You mentioned about the 13.6% gap between peak demand and peak supply. Is that a seeming opportunity?
Very much so, as the harrowing power outage persists despite the economic slow down, the economy would keep UPS and inverter industry, busy and buoyant. But, I would candidly admit the fact industry witnessed negative growth in first-half of 2009 due to belt-tightening measures in sectors especially like IT/TES and BFSI where we have a major presence. I would call it a curate’s egg year due to the uptrend in the second-half with the pangs of revival visible in IT/ITES sectors.
How green compliant is APC in UPS manufacturing?
Though BEE(Bureau of Energy Efficiency) is yet to bring UPS industry under its scanner, but APC being a global company has 100 per cent ROHS(Restriction of Hazardous Substance) compliance with the voluntary adoption of Real Standard Harmonics to improvise rectifiers and filters in UPS and inverters to enhance greater output efficiency and lesser wastage making products with greater energy efficiency.
What is your forecast of growth for 2010-11?
We expect a solid 10 to 15 per cent growth in going forward, especially in our present portfolio of IT/ITES, BFSI and government. The government spending looks intact as the government is keen to invest in various e-governance projects including the setting up of SWAN(State Wide Area Network) and data centres that need the power backup solutions. The expansion of banking industry with the spread of e-banking is also a good augur unleashing new array of opportunities for APC.
What are your plans for the SOHO(small office and home office) and SMB segments?
We are very much focussing on the Rs 1,300 crore SOHO and Rs 800 crore SMB IT spend market in India. We have a channel centeric approach through our 6,700 resellers to reach this market segment.