L&T has demonstrated its intention to get big in the ‘Clean and Alternative Energy’ space by appointing an official exclusively to drive that business. The $ 11.7 billion-engineering conglomerate recently announced the transfer R. Srinivasan as Vice President and Head of Clean and Alternate Energy with effect from December 1, 2012. In an internal circular, accessed by Panchabuta, the company has said that this has been done “in order to provide a greater impetus and gain a significant share in these domains”.
Under Srinivasan, Shaji John-Head Solar, Harshitha Kumar-Head Solar Rooftop, Natarajan-Head Wind and Shankaran-Head security solutions(including SCADA and smartgrid), will lead the respective initiatives.
In April this year, Larsen & Toubro had said that it was looking at grabbing sizeable orders for solar power projects driven by opportunity it sees in the sector and the company then had an order backlog of Rs 350 crore.
“We see a lot of potential in solar power sector and have deep rooted long term plans for this business. Developers are taking up projects and achieving financial closure fast. So orders for engineering, procurement and construction work would also start coming in fast,” S.N. Subrahmanyan, senior executive vice president and board member of L&T had then said.
The company, since announced in May that it had secured orders worth Rs. 2.65 billion in water and solar business.
In June this year, the solar business had won Rs 125 crore order for turnkey EPC works of Solar PV systems of 10 MW capacity.
The sector in the meantime has become extremely competitive with a number of new entrants national and international. A number of large developers are doing in house EPC’s or are contracting packages instead of LSTK contracts to keep costs under control in an extremely competitive bidding environment. This has lead to leaders like L&T secure only one 20 MW order from a single developer under the Batch II , Phase I of the Jawaharlal Nehru National Solar Mission where 340MW of capacity had been allocated.
The company was also very hopeful of demand for engineering, procurement and construction (EPC) services for solar power-based electricity projects with increasing capacity coming on stream. Solar power projects are going to be in demand in coming years with technological advancement bringing down the cost of solar power generation, feel experts.
“I think price parity with conventional power projects can be achieved in the next five to six years. We would be well prepared to take the EPC job as the demand increases. However, we will not go into generation business to avoid conflict with our customers,” AM. Naik, Chairman L&T, said in August this year. The company also does not plan to venture into manufacture of solar thin films for solar photovoltaic generation.
Given the limited success in Batch II, Phase I and the upcoming bidding of more than 2 GW over the next six to nine months, these changes should augur well for L&T to regain its leadership position as a Solar EPC player in India.