Stating that shared mobility is the future, the founder of Reva and current Vice-chairman of Sun Mobility says the way ahead lies in harnessing the power of the sun.
Much before Elon Musk, there was Chetan Maini.
The founder of Reva and current Vice Chairman of Sun Mobility is India’s unsung hero who pioneered how to scale up an electric car business. Chetan, 47 now, built a sustainable business with just $50 million in VC funding, while Musk had private equity money worth $800 million and more.
That begs the question: are VCs short-sighted in the Indian context and thereby killing innovation?
Chetan founded Reva, now Mahindra Reva, in 2001 and sold it to the Mahindra & Mahindra Group for an undisclosed amount a decade later.
The timing is just right because the Indian government is betting on solar energy and has ambitious targets of reaching 100GigaWatt by 2022. India has, in fact, reached an installed capacity of 62 GW, so far.
Chetan tells us about what the new Budget could do for this industry and what should be the way forward for India to run on clean energy:
YS: Why solar, Chetan, and how did the Indian government achieve 62 GW of solar capacity?
Chetan Maini: I was racing solar cars in the late eighties and early nineties. When I started thinking about starting up again, I was looking at how to monetise business around storage of solar energy and connecting the dots to an all-electric vehicle fleet in India. There is no better energy than harnessing the power of the sun. That idea led me to start up again.
As for the 62 GW of solar power capacity goes, India has achieved it in less than five years because of bold policy initiatives.
Earlier, everything was done by government bodies. For the first time, they went for open bidding and open tender, which allowed the industry to innovate on technology and volume. The industry began to find new ways to find solutions to harness solar and this has led to a drop in prices, now at Rs 2.44 per unit. For the first time, we have grid parity. Everyone talked about solar being subsidised and you no longer have to subsidise solar - this is what grid parity means.
We are able to achieve cost structures for renewable energy, which are equivalent and better than other energy sources. The good thing is you don’t have to depend on changing raw material price, like coal energy, once you have invested. Now, for the next 15 years you have a locked-in purchase of power at a fixed cost. This is very important in the Indian context to create a sustainable green economy.
YS: How do you scale up this business? Is it through tax sops for solar components and aggregates, or should it be tax sops for business for implementing solar?
Chetan Maini: India has achieved viability of solar at the utility level with several concessions. Now it is the distribution side that one must observe.
Why aren’t IT parks, homes, and other industries using solar power? This is where we need policies that allow people to freely invest in solar. What we need is to figure out the feed-in tariff and how net metering works; this should be countrywide. Today, some states have it, some don’t. The other thing is you cannot have a changing regulatory environment.
If we have achieved it at the utility, then there must be a reason why we can’t have full transformation towards solar energy. Today, there is a lot of cross-subsidisation and wheeling charges, making it expensive for businesses to use solar. What governments should realise is that if something is low cost and sustainable, there is no reason why we cannot use it. So, clearly, the government must make solar energy viable for everyone to use. The last part of the grid should become plug and play; large-scale utility should be linked to the consumer, where he should be able to choose solar energy.
YS: How do you link renewable energy to your favourite subject, the electric vehicle?
Chetan Maini: Renewable energy and electric vehicles are interlinked. I am part of the EV policy in India and I believe the future of the country is in these two elements. The good thing today is that there is open access; a company can set up a solar plant outside the city and any company can buy energy from them. There are checks; for example, they can buy 500 kilowatt or 1 MW. I feel energy should be about open access. The connection between renewable energy and mobility is huge.
India is looking at 100 GW by 2022 and is well prepared to grow three times that. We will have 30 million vehicles being sold per year by 2022 and 25 percent of that capacity can run on solar energy. India has plans to go all-electric by 2030 and by then we will have 350 million electric vehicles. For this, we need at least 260 GW of solar energy. Since we have a target of 300 GW we actually have an opportunity to use the sun to power urban mobility. If we can achieve this we have pollution dropping; if industries can use solar, we have a clean nation.
YS: Why are there no business models around Solar?
Chetan Maini: We need to understand net metering. Say, I have surplus energy and I want to sell it back to the grid. So there has to be price transparency for buyback. Then I may want to bank this energy where I may want to take it back later.
Unfortunately, the wheeling and distribution charges still sell solar at Rs 6 per unit although it is available at Rs2.44 per unit at the grid level. Today, infrastructure does not exist for people to bank or sell solar energy easily. The current distribution infrastructure makes it difficult to charge less. The government should strengthen the grid and have policies that understand net metering and feed-in charges.
YS: Is energy storage expensive?
Chetan Maini: To allow innovation, from utility to energy distribution, there must be a distributed energy policy. Storage (battery packs) plays a big role in this area. From 11 am to 2 pm, you will be generating solar energy; peak consumption will be in the evening. The question is how do you transform this energy and use it later?
The problem is that today storing of energy is very expensive and is charged at 28 percent. If components like cells have GST of 5 percent then storage infrastructure (battery pack output) shouldn’t be charged so high. If electric mobility has to grow, storage costs should drop. A policy needs to be made for this.
The industry does not need subsidies to make it commercially viable. Say if you manufacture 100,000 cars in a factory you can use solar of 10MW to keep the plant running. Renewable energy has its ups and downs; it needs a baseline load and a balancing load, which means drawing energy from different sources.
YS: What do you want from the budget?
Chetan Maini: I would say we need to bring the GST and customs duty down on storage of energy; it is 28 percent presently. We need to bring it down to 12 percent to 5 percent. The base cost is already high, so this should be taxed low. We need to think of net metering, wheeling charges and banking of energy. I see positive things this budget. But unfortunately, some aspects are a state subject, like wheeling charges. I expect guidelines for solar energy in innovative states. Shared mobility is the future; EV charging will be faster and cheaper.
We will make India sustainable if we go all electric by 2030. Today China has electric buses; they went from a 1,000 to 16,000 overnight. Five years ago there was none. For India, solar is about an opportunity; only a framework policy can transform India into a sustainable country in terms of clean energy.