Gurugram-based renewable energy company Datta Power Infra is emerging as a key player in India’s clean energy scenario. It manages a 3.5 GW portfolio in renewable energy assets and has an 8 GW pipeline under development.

In this exclusive interview with Mercom India, Varchasvi Gagal, Chief Executive Officer and Managing Director at Datta Power Infra, shares his views on a range of topics related to India’s renewable energy sector, including opportunities and challenges, policy-related issues, and his company’s expansion plans.

What are some unique challenges faced by renewable energy projects, and how does Datta Infra navigate these obstacles?

Renewable energy projects face significant challenges, including regulatory and land acquisition hurdles. Varying state regulations, complex approval processes, and concerns about investment viability make land acquisition particularly challenging. To address this, Datta Infra has streamlined its land acquisition processes and built strong relationships with local communities, ensuring smoother negotiations and faster approvals. These efforts have enabled the successful development of over 3,000 MW of renewable energy projects, with plans underway to add another 8,000 MW of capacity.

Infrastructure and operational challenges further complicate renewable energy development. Transmission line projects, for instance, often encounter Right of Way (ROW) issues and terrain-specific obstacles, such as soil conditions that affect engineering decisions. Datta Infra tackles these challenges by engaging with local stakeholders, leveraging regulatory expertise, and employing customized engineering solutions tailored to each project’s unique needs.

Additionally, operational issues like securing environmental and forest clearances, managing water for solar park maintenance, and preventing theft of components require proactive strategies. Datta Infra addresses these through advocacy for streamlined approval processes, investment in security measures, and implementation of effective resource management systems to ensure uninterrupted operations.

Datta Power Infra recently committed significant investments in Rajasthan for renewable energy projects and signed a financing agreement with REC. Can you share more details about these developments?

Datta Power Infra has committed to investing ₹50 billion (~578 million) in Rajasthan’s renewable energy sector. The company signed an MoU with the state government to establish 1,000 MW of renewable energy capacity in the districts of Bikaner, Jaisalmer, Barmer, Nagaur, Pratapgarh, and Jodhpur. The projects will include solar, wind, and hybrid power and will connect to the central transmission utility.

The company has also signed a financing agreement with REC for ₹15 billion (~$173 million), which will be invested in clean energy projects in Rajasthan, Madhya Pradesh, Andhra Pradesh, etc. Such projects are expected to generate 800-900 million units of clean energy annually, offering reliable and clean power through a mix of solar and wind resources. The projects are expected to be completed within 18 to 24 months from the date of signing the power purchase agreement.

Between 2020 and 2024, the company has witnessed remarkable growth, completing projects totaling 5,600 MW and culminating in a 6 GW Ultra Mega Park in 2024.

Despite the aggressive issuance of tenders by renewable energy implementing agencies (REIAs), the pace of power purchase agreement (PPA) signings has lagged, leaving large capacities stranded. What are the reasons for this, and would you recommend securing off-taker agreements before issuing tenders?

The delays in signing PPAs are a critical challenge, with 40-45 GW of capacity currently stalled despite an ambitious pipeline of 80-90 GW. These delays arise from a mix of regulatory uncertainties, financial difficulties faced by discoms, misalignment between state and central policies, grid infrastructure limitations, and tariff-related disputes. Together, these factors lead to extended project timelines, cost escalations, diminished investor confidence, and a heightened perception of risk.

I strongly recommend securing offtaker agreements before issuing tenders. This approach would provide greater clarity and assurance to developers, reduce the risk of stranded capacity, and ensure smoother project execution. Establishing a structured framework for pre-tender agreements would streamline the process and enhance investor confidence and optimize resource allocation.

Additionally, addressing the root causes of delays—such as improving regulatory alignment between state and central policies, enhancing grid infrastructure, and resolving tariff-related disputes—would bolster the efficiency and attractiveness of India’s renewable energy sector.

Renewable energy is constantly evolving, with frequent policy and regulatory changes. For instance, the government recently imposed anti-dumping duties on solar glass imports. How will this impact the industry overall and Datta Infra’s projects in particular?

While the policy aims to protect domestic manufacturers and strengthen Indian solar glass production, it introduces challenges for developers, including increased solar panel prices, potential supply shortages, and project delays.

Currently, domestic production meets only about 84% of the demand for solar glass, creating concerns about shortages that could hinder the timely execution of projects. For developers like us, these challenges are particularly relevant, as delays in procurement and increased costs directly impact financial viability and project timelines. This could, in turn, affect the achievement of India’s renewable energy targets.

To navigate this situation, many Independent Power Producers (IPPs) are advocating for a deferral of duty until domestic production can scale up to meet demand. Additionally, developers are exploring the invocation of the ‘Change in Law’ clause to address cost escalations. However, the lack of clarity around regulatory approvals for such claims adds another layer of complexity.

In the short term, policies like these need to strike a balance between protecting domestic industries and supporting developers in meeting renewable energy goals. As the sector evolves, greater clarity on regulatory frameworks and collaborative efforts among stakeholders will be essential to mitigate disruptions and ensure steady progress towards India’s clean energy transition.

Initiatives like ‘Make in India’ aim to build domestic manufacturing capacities, but concerns about component shortages due to tariff and non-tariff barriers such as ALMM persist. How can the government strike a balance to support both manufacturing and project development?

The ‘Make in India’ initiative and associated policies, such as the production-linked incentive (PLI) scheme, basic customs duties (BCD), and the Approved List of Models and Manufacturers (ALMM), have been instrumental in promoting domestic manufacturing in India’s renewable energy sector. However, these measures also present challenges, including component shortages and increased costs due to tariff and non-tariff barriers.

One of the key concerns lies with the ALMM policy, which limits the range of approved components, creating supply bottlenecks and increasing project costs. While the intent is to promote domestic manufacturers and ensure quality, these objectives can be achieved through alternative mechanisms, such as enhanced quality assurance standards and certifications, without placing excessive restrictions on industry stakeholders. The temporary exemption of the ALMM requirement for projects commissioned by March 31, 2024, was a step in the right direction, but a long-term solution is needed.

Similarly, while the BCD aims to encourage domestic manufacturing, it inadvertently raises costs for developers, as many components like wafers, glass, and cells still need to be imported due to insufficient domestic production capacity. To address this, the government could consider reducing duties on imported components essential for domestic manufacturing until local production scales up sufficiently. This would provide a smoother transition for the industry while protecting the intent of the BCD policy.

Many companies have announced plans to venture into solar cell and module manufacturing. Does Datta Infra have any similar plans?

Yes, we do have similar plans to enter in the solar cell and module manufacturing in the future.

Land availability remains a major challenge for renewable energy developers. Should the government establish more plug-and-play renewable energy parks to address this issue?

Land availability is undeniably one of the most critical challenges faced by renewable energy developers. Large-scale solar and wind projects require vast tracts of land, and the complexities of land aggregation often delay project timelines and inflate costs. Plug-and-play renewable energy parks, where pre-aggregated land with necessary infrastructure is made available to developers, present a highly effective solution to this issue.

Such parks eliminate several bottlenecks, including land acquisition, regulatory approvals, and initial infrastructure development, enabling developers to focus on project execution. This approach not only reduces project timelines but also improves investor confidence and mitigates risks associated with land disputes or delays.

At Datta Infra, we recognize the importance of such initiatives. Our experience in successfully executing over 3,000 MW of land acquisition and laying the groundwork for an additional 8,000 MW of renewable energy parks underscores the potential of a plug-and-play model. By incorporating advanced technologies in fencing, ramming, and transmission infrastructure, we aim to further streamline project development and strengthen our position as a leading IPP.

Solar open access is gaining traction in the commercial and industrial (C&I) sector as corporates increasingly seek renewable energy solutions. What are Datta Infra’s plans for this segment?

The commercial and industrial (C&I) sector’s growing demand for renewable energy presents an opportunity for developers, and Datta Infra is fully committed to capitalizing on this trend.

We are actively exploring partnerships with C&I players to provide customized renewable energy solutions. Our strategy includes leveraging our expertise in developing IPP projects and our strong presence across states like Odisha, Tamil Nadu, Karnataka, Maharashtra, and Rajasthan to cater to the diverse energy needs of the sector.

Our focus on round-the-clock green power channels aligns perfectly with the requirements of the C&I sector, which demands reliable and cost-effective energy solutions. By developing innovative round-the-clock IPP projects and expanding into green hydrogen and hydropower, we aim to offer a diversified portfolio that addresses the evolving needs of corporate clients.

The government is considering mandating energy storage components in all renewable energy tenders. What do you think about this approach?

Initially, such a mandate would require storage capacity corresponding to 10% of the plant’s capacity, with plans to surge this percentage over time as battery costs decrease. This initiative aims to address the intermittent nature of renewable energy sources and ensure a more stable, round-the-clock power supply.

In July 2022, the Ministry of Power introduced energy storage obligations (ESO) as a mandatory component of renewable purchase obligations (RPO). The policy specifies a year-on-year increase in ESO for all obligated entities, starting from 1% in FY2023-24 and reaching 4% by FY2029-30. To meet these obligations, at least 85% of the energy stored in energy storage systems must be procured from renewable sources. We feel that these measures are a part of India’s broader strategy to enhance grid stability and promote the integration of renewable energy into the national power supply.

Several clean energy companies have raised capital through IPOs this year. Is Datta Infra considering going public?

We have been actively investing in renewable energy projects and the aim is to widen our footprint by investing in marquee projects that give us coverage for the whole of India. We will announce our plans to go public at an opportune time.