Sumant Sinha, chairman and CEO of ReNew Power, says investors continue to be bullish on India’s solar sector. According to him, import restrictions on modules won’t pose any serious threat to solar project developers if the domestic module manufacturing capacity is developed quickly. Sinha, who is also the president of industry body Assocham, says there are structural reasons for the power outages occurring in many parts of the country at present. “We need more investments in the power sector, especially in green infrastructure — wind-solar hybrid and storage systems — to be in line with demand growth. Otherwise, we may see these shortages persisting for a longer period,” he tells FE’s Vikas Srivastava during an interview. Edited excerpts:

The domestic industry is currently reeling under high cost of coal and power shortage. Do you think this is temporary, or would the crisis last long?
I think it is a structural issue. There is a rapid increase in power demand due to a pick-up in the economy. At the same time, there are supply chain pressures. All these factors have combined to create a power crisis. We need more investments in the power sector, especially in green infrastructure — wind-solar hybrid and storage systems — to be in line with demand growth. Otherwise, we may see these shortages persisting for a longer period.

Do you think we are on the cusp of an investment cycle finally?
By and large, the economy is fairly well-positioned domestically. The demand growth after two years of the pandemic and efforts by the government to increase exports have helped the economy. The improved health of the financial sector and deleveraged balance sheets of corporates have allowed them to capitalise on demand growth and they are now in a position to invest.
However, higher commodity prices and supply chain disruptions have stoked inflation globally and lately in India too. Higher inflation will lead to hike in interest rates by the central banks, which will have an adverse impact on liquidity, cost of financing and consumer demand. These are the concerns in the near term and if India addresses them well, there will be several years of sustained GDP growth.

The ministry of new and renewable energy (MNRE) has not approved any Chinese manufacturer for supplies to Indian solar projects and levied 40% import duty on panels from April 1. Won’t this affect the country’s solar capacity targets for 2030?
There won’t be any serious problem if the domestic module manufacturing capacity is developed on time and quickly. The shortage in absence of Chinese module imports can be resolved between the government and domestic manufacturers.  

What are your views on the government’s decision to terminate the bucket list for solar production linked incentive (PLI) scheme under the first tender where you also participated? The government is planning to come out with fresh tenders…
Ideally, the  government should have cleared the bucket list first. However, there is no confirmation on the fresh tenders yet. We would definitely like to participate in the second tender as and when it happens.

What kind of support is needed for MSMEs and SMEs in the renewable sector, given the current supply constraints?
Credit supplies to MSMEs and SMEs are critical. As they scale up, their requirement for funding and working capital goes up. Also, we will have to prioritise development of clusters — such as MSMEs under renewable energy can be located under one cluster. The government is already thinking on these lines, it just needs to execute the plans properly. There is also a need to increase MSMEs’ institutional capabilities as they, by definition, are smaller entities and do not have significant capability needed for (developing) governance, R&D and management, which needs to be increased. We need to have better database for them so that service providers can reach out to them.

What are your plans in terms of fresh investments in the renewable sector?
Since we are listed in the US, we cannot talk about investments, but we plan to increase our operational renewable capacity to our aspirational goal of 18 gigawatt (GW) by FY25 from around 7.3 GW at present.

What is your outlook for the industry and panel prices?
The long-term outlook is positive, but there may be short-term supply constraints. The high panel prices due to import duties are also expected to stabilise in the coming quarters as domestic supplies would pick up.