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Wind is the cheaptest form of power in India on a sustainable basis: Sumant Sinha, ReNew Wind

ReNew Wind Power, a company founded by Mr Sumant Sinha, a former Chief Operating Officer of Suzlon Energy, aims to have set up 200 MW worth of wind power capacity by the end of calendar year 2012.

ReNew Wind Power was in news last month when it announced that it had raised $ 200 million (Rs 1,000 crore) from Goldman Sachs group.

 ReNew Wind had placed orders on Suzlon and the Chennai-based ReGen Powertech for wind power turbines and had at that time said it intends to put intends to put 25 MW under the REC scheme.

Excerpts from an interview with Sumant Sinha today on  CNBC-TV18

Q: The wind power projects have always been viewed as social responsibility. Has this trend changed? Has wind power generation become a main stream demand?

A: The power sector is really suffering. It’s kind of a reason for all the things that have gone wrong in the Indian economy.

We have problems on the fuel side with both gas as well as coal linkages to the extent that there is imported coal that’s exposed to the global risks of other countries.

State electricity boards’ (SEBs) health has deteriorated substantially over several years because prices to the end customers are not being increased and there are half constructed power plants that got stuck. Banks have a huge amount of exposure to the power sector right now and they are grappling with the sector as a whole without any easy solution.

Renewable is in a different situation because earlier the government policies were tax-driven. You had a lot of non-core, non-committed investors getting into the space. But now government has done something positive in this sector, changes have happened and that’s making it more attractive for financial investors like us to get into the sector.

Wind power is close to great parity right now and it doesn’t cost the SEBs to encourage the development of wind power. Once you set the capex, there is no fuel cost, it’s a very stable business. The government needs to press all the triggers it has for power sector enhancement, whether it is nuclear, wind, solar or coal, gas as there is a strong shortage of power right now.

Wind serves a multiple set of purposes. It’s not linked to fear cost; it has a big impact on carbon credits.

Q: You say companies that are deleveraging are not worried. Suzlon, which comes at the opposite end of the spectrum, what did you make of the big crunch down that the business has seen? How long do you think it would take for Suzlon to get back on track?

A: It would not be fair on my part to comment on Suzlon at this point since I have left the company almost two years ago.

Q: The per unit cost of solar and wind is not still comparable with the conventional fuels. How does it look since technology would have improved and is there anything specific you are looking at apart from policy?

A: Solar costs have been going down but the solar cost of power production is still high. Its still about Rs 9-10 per unit, whereas wind is actually closer to Rs 4-4.50 per unit. Some of the power plants that are coming up, are in the Rs 3.50-4 range. Wind is actually very close to where the conventional pricing is right now.

Whenever we look at the cost of coal based or conventional power we never factor-in the cost of the environmental damage that it does. So if you are actually fully cost the fossil fuel or the environmental impact of it, is higher than where wind is right now.

In fact, I would argue that on a sustainable basis wind is probably the cheapest form of power at this point. The government has come out with the issue of Renewable portfolio standards (RPS) that will get enforced That will put a price on carbon and once that happens, wind will become a more attractive and viable. Solar also begins to come into the fringes of viability. But it still needs some degree of government support.

In the ground level there are so many issues that you face in doing business because ultimately lot of it is at a state level that has to be done. One of the fundamental things that government can enforce are – RPS obligations and the second thing is lending to renewable perhaps should be kept separately rather than being kept with the power sector.

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