Sumant Sinha is the Chairman, CEO and founder of ReNew Power, India’s largest renewable energy company. Sumant built ReNew Power to help mitigate India’s carbon emission problem and accelerate the transformation of India’s energy market. He shares his insights on the renewable energy market in India and the importance it has to our climate.
What inspired you to get into renewable energy and start ReNew Power?
I began my career as an investment banker in the U.S. and London. Then in 2002, I moved back to India because I thought that India would continue to grow in terms of opportunities and be a good place for me to spend the rest of my career. I first joined the Aditya Birla Group as their CFO and subsequently headed their retail venture. Post this I joined Suzlon as the Chief Operating Officer. At the time it was the third largest wind turbine manufacturing company in the world. I joined to learn more about the renewable energy sector as I had a strong belief that climate change would become very important going forward. I ended up leaving Suzlon in 2010, after the financial crisis when the whole sector was going through some difficult times. This is when I saw the opportunity to set up an independent power producer (IPP). Up to that point, the Indian government had only been encouraging renewable energy adoption through a tax incentive mechanism. But then, in 2009, the government introduced a generation based incentive which really made it viable for IPPs. That’s when I decided to raise capital and set up a new wind IPP. In 2011 we raised funding from Goldman Sachs, and that is what got us started.
Right now, India is the third largest market in the world for new capacity additions, after China and the U.S. At this rate, I believe that we will probably surpass the U.S. and become the second largest shortly.
We now have more than 100 wind and solar sites across India, with a commissioned capacity of close to 5,000MW, and we are constructing an additional 3,000MW. With that combined number, we are by far the largest renewable energy company in India in terms of total energy generation capacity. We have grown very rapidly and we are right now generating approximately 1% of India’s total electricity or 10% of all renewable capacity, and helping to mitigate 0.5% of India’s carbon emissions. I saw an opportunity to help mitigate India’s carbon emissions. India is the third largest carbon emitter in the world. At this point, our carbon emissions are much lower on a per capita basis than any developed country, and only about a quarter of China’s. But, if we grow like every other country in the world has grown in terms of carbon emissions, it will be very harmful for the global environment. In India we now have about 80GW of installed capacity between wind and solar, and we are adding about 10-15GW of wind and solar every year. So right now, India is the third largest market in the world for new capacity additions, after China and the U.S. At this rate, I believe that we will probably surpass the U.S. and become the second largest shortly.
In one of your op-eds, you speak about the impact that the Indian government and economy have had on the renewables sector. How do you see these dynamics shaping the future of renewables in India?
The government definitely has had a very big impact on the renewable industry in India. When this current government came in, they set a specific target of getting to 175GW of wind and solar energy by 2022. They have been working seriously to make sure that target is achieved, providing incentives for IPPs and launching the National Solar Mission, and it looks like it will be met. Solar and wind power are now cheaper than thermal energy. Secondly, they introduced a new government entity between IPPs and the distribution companies (also state-owned), opening up the potential for long-term PPAs and reducing the cost of financing. By these initiatives, the government is naturally helping to solve some of the bigger problems that the industry faces. I should also point out that before the Paris Agreement, India had maintained the view that our climate change problems hadn’t been caused by us. This current government came in and took a very different view. They believe that climate change is a global problem, and we absolutely have to do our part to help. They have been very supportive and proactive. The government that we have had for the last five years was just re-elected for another five years, which to my mind is very healthy and a step in the right direction. Our Prime Minister is very forward thinking, and he actually won the UN’s Champions of the Earth Award in recognition of the efforts he is putting in to safeguard the environment. When this government first came in, ReNew Power had just about 400MW of renewable capacity, and we now have close to 5,000MW. As a company, ReNew Power has had 10x growth over the last five years, which is somewhat reflective of the growth in the industry as a whole. The industry hasn’t grown as rapidly of course, but has still grown at about 4-5x, which is quite significant and much of this is due to the government.
What drove your decision to diversify into solar?
When I started the company, wind had already matured as a renewable energy technology. It had been there for 10 to 15 years. Solar was much more expensive back in 2010 and 2011 though. In response, the Indian government introduced the National Solar Mission to build more solar into the grid. It started off fairly small, but our view was that solar would become large with the cost reductions we could foresee happening, so we decided to diversify. Now, eight to nine years later, we have gotten to a point where wind and solar are at roughly the same level of capacity in India, but solar is growing faster, and we believe this will continue into the future. We entered into the utility-scale solar business in 2013, and then in 2015 we started our distributed solar business. We expect this area to grow very rapidly too, with the increased demand for residential and corporate rooftop solar solutions.
In terms of other sustainable technologies beyond renewables, where are you seeing growth in India?
Energy storage and electric vehicles are interesting technologies; however, they are still in very nascent stages of adoption in India. India has not historically been a good developer of technologies. Rather, we are in some ways good appliers of technologies. So at this point, energy storage and electric vehicles are still very expensive and we are a highly price sensitive country. We need to have costs for both technologies come down before we can start to see larger scale adoption. Energy storage is of course very critical in the context of renewable energy, so that is something that I think we will absolutely see more of. Both pumped hydro and battery storage should continue to grow, but it will be more of a gradual rollout. I also see micro-grids and energy access in rural areas as big growth areas. There are a few companies focused entirely on this. We, as a company, have done a few micro-grid projects, more from a CSR standpoint than as a commercial venture, because they are very small. You have to keep in mind that a large part of India did not have access to energy or electricity for the longest time. The government has now connected every single village in India to the grid. That still does not mean that every household in India has power. I think that is really what will continue to drive growth in energy and electricity demand in India. Electricity demand is growing at about 6% per year, and so you will probably see a doubling of India’s total electricity market in the next 10 years or so. This would provide a huge demand opportunity for renewable energy and micro-grid solutions.
Can we solve the world climate crisis? 10 years from now what will we look back on and be surprised by?
No, I don’t think we can solve it in a 10-year window. I agree with Greta Thunberg that we are moving further away from doing what we need to do; we are falling behind. More voices are being raised about climate change issues, but less is being done about it. There are also large parts of the world that aren’t even thinking about climate change as a problem, including the U.S. government. Similarly, Australia has just voted a conservative government into power which doesn’t accord top priority to the climate issue. So my concern is that while there is more noise being made about climate change, there is less being done. And, it appears to me that just given the way the political situation is evolving globally, it looks like even less will get done in the future. That is quite worrisome. Therefore, if this continues, if we look back not 10 years but 30 years from now, we will have totally missed the bus. We are doing our best, but we are going to fall short by quite a long way, at this rate.
What advice do you have for aspiring entrepreneurs like yourself?
At this point we need more entrepreneurs to enter the clean energy space – this space has to really become a mass movement.
My advice to all entrepreneurs is to just do it. Just jump into it and try your best. If you are sincere in your efforts, you probably will be successful. At this point we need more entrepreneurs to enter the clean energy space – this space has to really become a mass movement. We need entrepreneurs at the large utility-scale level, in technology research, and in developing and testing new technologies (like rural micro-grids and EVs). I think this sector offers huge and tremendous opportunities, and anyone who chooses to enter it now will be very happy with their decision 20-30 years down the road.
What’s next for ReNew Power?
Our intention is to be one of the leading clean energy companies in the world. The way we want to get there, apart from just growing, is by building a strong organization that is highly efficient as an operator of clean energy assets, and that is able to gather every inch of data from our assets. We have to consolidate our leadership position in India, which is going to be one of the top markets in the world. We also want to make sure that we diversify and start looking at markets outside of India, in particular Southeast Asia and the U.S. We are also looking at some new sectors inside of India, such as transmission. The idea is really to just keep growing our business. As I said, we will be adding 1,000+ MW in the coming year, and will look to add similar to more amounts in the future. We have about 1,000 employees now, out of which we have about 600 based at our various sites across India. We have an internal execution model, meaning we manage in house our own development, EPC work, O&M, and so on, so we don’t outsource anything.
Who is your sustainable hero and why?
I have two. The first would be Al Gore. He has done a tremendous amount of work to raise awareness around climate change. The second person would be the current Indian Prime Minister, Narendra Modi, for the amount of work he has put in to promote the renewable energy sector, in particular setting the ambitious target of 175GW of renewable energy capacity by 2022. This target galvanized the entire sector. There was no pressure on him to do that – it was entirely his own target. He came in and said that this is something that we have to do, because it’s not just good for the world, but it’s also good for India. He has taken a very different view on climate change issues and is trying to make sure that we as a country take on this challenge head-on and contribute to its mitigation.
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