Tatas & Birlas into SOLAR

The Tatas and the Birlas are synonymous with industry in India being the oldest and biggest industrial groups. While the Tata Group is a single monolithic industrial group, the Birla group is divided into a number of different sub groups headed by different Birla family members. The Aditya Birla is the biggest such offshoot of the erstwhile Birla group. This has attracted almost all the big Indian conglomerates like Mahindras, Tatas, Reliance etc. Solar Companies in India are growing each day as more and more organizations look to capture the rapidly growing Solar Pie. Solar Energy in India is one of the biggest energy opportunities in the 21^st century due to the following reasons.

Reasons for Investing in Solar in India

India has very high insolation (solar radiation in layman language) which makes solar energy much cheaper to produce solar power in India  compared to  countries like Germany, Denmark etc. Germany despite receiving only 50% of India’s Solar radiation has more than 9 GW of solar energy capacity already installed and is going to probably hit 14 GW by 2010.

India has a huge electricity demand supply gap – Large parts of India regularly face blackouts for lack of electricity supply leading to huge monetary losses. It has been estimated that India suffers from more than 15-20% supply shortage in times of peak power. Major cities like Gurgaon regularly face 8-10 hours of power cuts in summer months.

Lack of power grid availability – Solar Energy is ideally suited for providing power to those areas which do not have power lines connecting it. Large parts of India do not have electricity grid connectivity and it is cheaper to power them through solar energy rather than extending power lines.

Increasing expensive and unreliable electricity supply – The rates of electricity prices are going up rapidly each year due to a combination of factors like higher costs of fossil fuels, increasing capital expenditure by utilities and privatization of power. Not only is the power expensive, the quality and reliability of the supplied electricity is very poor. A study has found that poor farmers who  receive “free electricity” in India  are willing to pay for quality electricity supply rather than do with the “unreliable free power”.

Solar Energy approaching Grid Parity – The costs of Solar Energy has been decreasing rapidly over the last 2 years. Despite solar energy prices being higher  than other forms of electricity, it is expected that solar energy will equal that of grid prices in the next 5 years in most parts of the globe. Solar Energy is the only form of Energy whose cost trend has been declining over the long term while all other major forms of energy have seen their costs increasing .

Strong Support from the Government – Solar Energy needs a push from the Government in terms of regulation and incentives as it is a costliest form of power currently. The Indian Government through the Jawaharlal Nehru National Solar Mission has provided strong support to the growth of this industry. The Government has set a  target of 20 GW by 2022 with 1000 MW of solar power to be set up through private investment by 2013. CERC guidelines aims at providing  20% + returns to private investors through a higher guaranteed rate to electricity generate from solar power ( FIT).

Solar Energy is a Non-Polluting Green Form of Energy – The biggest advantage for solar energy is that it is a non-Carbon Dioxide emitting form of power. While other fossil fuel forms of Energy have large unaccounted costs in terms of pollution, health hazards, global warming and environmental destruction (BP Oil Spill), Solar along with other forms of Renewable Energy have none of these harmful effects.

Solar Energy is virtually Unlimited – While Coal, Gas, Oil are eventually going to be depleted over the next 20-100 years, Solar Energy is a virtually unlimited source of energy. The amount of Solar Energy striking the earth is much more than humans will ever need.

Aditya Birla to invest more than $1 billion in India’s Solar Energy

The Birla Group was missing the Solar Growth Story and now the AB group has rectified this by unveiling an aggressive expansion plan into India’s solar industry. The company has acquired a stake in a solar power plant in Gujarat and is setting up a solar farm in adjoining Rajasthan as well. AB Group will invest $1 billion in the next 5-6 years with plans of setting up 100 MW of solar plants in the next one and half years. It has already hired top management from European solar companies and the investment will flow through Essel Mining which is privately owned by the Aditya Birla himself.

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The $40-billion retail-to-telecom conglomerate has acquired a minority stake in a solar power venture promoted by Electrotherm in Gujarat’s solar park and struck a long-term leasing agreement with Refex Energy in Rajasthan to operate a solar plant at Bithuja in Rajasthan. These units have a capacity to produce 1.55 million units of electricity per mw annually.

“We have set a target of $1 billion over the next 5-6 years,” he added. Essel Mining, the unlisted firm owned by Aditya Birla group chairman Kumar Mangalam Birla, is in the process of setting up an independent company as it seeks to develop a capacity of 100 mw over the next 18 months. The group has so far invested a little more than Rs 200 crore to develop 20 mw capacities in solar power.