Gompa Tsering has never known electricity. No power company has yet been able to penetrate deep inside Ladakh, where she lives. At over 11,500 feet above sea level, the winters are freezing and the land inhospitable. At times, her village is cut off from the outside world for weeks. Fossil fuels and wood are expensive and not easily available.
Such was the situation until Tata BP Solar entered the picture and changed Ms Tsering’s world completely. Today, solar lanterns have replaced the traditional smoky kerosene lamps in her home and village.
Over the years, the Rs260-crore company has illuminated homes in the mountainous regions of Leh and Jammu and Kashmir (J&K), powered systems for offshore oil platforms, heated water for hotels, corporates and hospitals, and pumped water in remote farmlands. This joint venture between the second largest solar company in the world, BP Solar, and the Tata group has emerged as the largest company in the renewable energy business in India. Besides having over 30 per cent share of the domestic solar market, it also has the satisfaction of making a substantial difference to the lives of people like Ms Tsering.
Currently, the company enjoys nearly 4 per cent of the worldwide solar pie. Its presence spans America, Europe, Australia, Africa and Asia. Says managing director Arun K Vora, "We are the leading manufacturers and exporters of solar cells and modules. Over 52 per cent (Rs136 crore in 2002) of total sales comes from exports, mainly to America and Europe, and we expect our exports to grow to Rs300 crore by 2005."
The confidence is unmistakable, the enthusiasm palpable. "The company is becoming the world’s leading player in solar products," remarks Harry Shimp, CEO, BP Solar, who recently inaugurated Tata BP Solar’s new 38 megawatt (MW) solar module manufacturing facility. The Rs30 crore investment is one of the largest single-location plants in the world.
The company designs and manufactures solar cells and modules, and solar power generating systems. It has developed and marketed a wide range of products and systems, covering lighting, water pumping, telecommunications, railway signalling and navigational aids.
More than 30 offshore ONGC oil platforms in the Arabian Sea use Tata BP Solar's solar electric systems for radio, telemetry and gas detection. Several oil pipelines of Indian Oil Corporation employ Tata BP Solar systems for corrosion protection. The company has also launched solar powered accident/trauma care centres, Internet kiosks and solar domestic water-heating systems.
The company started in 1985 as a dream conceived by chairman Syamal Gupta, Nani Palkhivala and Sumant Moolgaokar. "I had seen rural women walk miles in the hot sun with heavy pieces of wood on their head. That image was imprinted on my mind for a long time. Rising prices keep electricity and gas out of reach of our rural population. As India enjoys more than 300 days of sunshine a year, solar energy seemed to be the best bet," says Mr Gupta, an advocate of renewable energy. Coincidentally, BP Solar was looking for a partner in order to enter the Indian market.
Despite the formidable parentage, the early days were not painless. Recalls Mr Vora, "It took us over three years to get a licence. Our first office was a room in the Diners Business Centre, where we also started our development workshop. Later we shifted into a slightly bigger industrial shed. Since then the company has upgraded product specifications, rewritten market standards and widened its product profile.
Describing the steady growth pattern, K Subramanya, executive vice president (commercial operations), says, "From our first two-acre plant, we have expanded to a 10-acre, Rs30 crore global-sized solar module assembly plant. Two years ago our plant capacity to make solar-powered equipment was 12 MW, which has been increased to 38 MW. Even our headcount will increase from the current 400 to 700 before long."
Initially the company was dedicated to the Indian market. BP Solar’s commitment was investment and intellectual. The whole technology was to be imported from its US-based plants for manufacturing purposes.
"Today our technology is being developed here and exported to our other establishments worldwide. Indian engineers work at our global system engineering department in Bangalore. India is becoming a core piece of what BP Solar is doing globally," states Mr Shimp, whose company controls 18 per cent of global market. "We are talking of taking this joint venture to other regions of the globe. Maybe, in the near future, we might enter other untapped potential areas like China and Africa."
Changing the rural landscape
Renewable energy is a fledgling industry. But with high energy prices and increasing environmental damage, this industry is growing. Internationally, renewable energies are a $15-20 billion market. The Indian renewable energy market is presently estimated to be around Rs350-400 crore.
Solar energy, which is growing at 30 per cent worldwide, is most compatible with Indian conditions. The country receives about 300 clear, sunny days in a year. This equals over 5,000 trillion kilowatts (KW) per year, far more than the total energy consumption of the country in a year. In places like J&K and Leh, the daylight hours are shorter but the sun’s intensity is higher and direct. Moreover, solar modules can be easily installed anywhere, have no moving parts, and are relatively maintenance-free.
It is estimated that there are 3.85 lakh solar lanterns in use across India. Each lantern can save an average of 100 litres of kerosene each year. And there are no fumes from solar lanterns. This reduces the risk of respiratory damage from inhaling kerosene fumes. This is an ideal solution for villages and small towns, which are either untouched or semi-connected by the power grid.
Tata BP Solar’s most prestigious project was to supply 8,700 home-lighting systems in Leh and Kargil in four months. The order was accomplished amid difficult conditions. The company also installed nearly 9,000 home-lighting systems worth Rs110 million in J&K. In West Bengal, three solar plants with a combined capacity of 75 KW provide electricity to more than 1,000 homes. The company has also done similar projects in Orissa, Karnataka, Uttar Pradesh and Rajasthan.
"Electrification is a boon to rural life. It allows families to extend workdays beyond sundown, which translates into more money. It encourages literacy by allowing children to study effortlessly late into the night. With the advent of television and radio, people who were previously cut off from electronic information, education and entertainment can become part of the modern world without leaving home. Solar energy aids this transformation," explains Mr Subramanya.
With the supply of solar water pumps, farmers in Bihar and Punjab have been able to grow two or more crops. This is because the energy conservation technique that they now employ conserves costly conventional power for urban areas, town market centres, and industrial and commercial uses.
Solar energy consumption in India has gone up from 1 MW in the early 1980s to 12 MW today. Enlarging this market has not been easy for the company. The marketplace was practically non-existent when Tata BP Solar entered the fray, despite the presence of large government-owned solar manufacturers like Rajasthan Electronics and Instruments, Bharat Heavy Electricals Limited and Central Electronics Limited.
These companies sold their modules to individuals and government agencies. Equipment like batteries and electronics had to be bought from other vendors. Such piecemeal installations, completed by a third party, resulted in compatibility problems. After sales service was another hurdle.
"From the start, we knew that our jobs would not be easy, but we were prepared. Our strategy was simple — focus on the consumer. That was the need of the hour," says Mr Vora.
The approach was to be a complete and integrated solar energy solutions company. This meant supplying batteries, electronics, installation and maintenance. The company provided the entire gamut of products and services through a single outlet. Every project, regardless of size, was studied and solutions were offered.
States Mr Subramanya, "We have global meteorological data for the past 25 years. Consumers just need to provide us the latitude and longitude of the place. We can design systems which, after considering sun, wind and rain patterns, will deliver 100 per cent reliability." Local technicians were trained to install and maintain solar modules. Apart from promoting employment opportunities, it helped make inroads into rural areas. The locals spread awareness, collected credit payments and operated service centres.
The strategy has worked. The company has grown by 30 per cent annually, while the Indian market is clocking a 20 per cent growth. "We will continue with the same growth rate, while marginally increasing our market share to 40 per cent. Our markets include USA, Latin America, Australia, Germany, Spain, Britain, Egypt, Ethiopia, Kenya, Mauritius, South Africa, Tanzania, Uganda, Zambia, Zimbabwe, Indonesia, Malaysia, Singapore, Bhutan, Bangladesh, Nepal and Sri Lanka," says Mr Vora.
Going to town
In an attempt to take its products to customers, the company has opened a network of solar shops in second- and third-level towns. These shops will provide access and visibility to solar products, thereby improving sales. The company is also beefing up its dealership network. The company’s solar shops will grow from the current 69 to 100 by the end of 2003, and to 300 by 2005.
Price was another issue that needed to be tackled. The initial cost of buying solar-powered products or installing panels was high. In a power grid, the capital cost of setting up the power plant and maintaining it is borne by the government. People only pay the monthly usage bill. The government also subsidises the cost of conventional electricity for consumers.
This is not true for solar power. Imported raw material — silicon wafers — makes up 60 per cent of the costs. "Technology helps us reduce the costs. In the early 1980s modules were priced $100 a watt; today they cost only $3. In two years the price may be down to $2. The average decline in costs over the last seven years has been seven per cent annually," observes Mr Vora.
Earlier people used automobile batteries to power their solar products. These had a short lifespan and created maintenance problems. The company developed batteries, which needed minimum maintenance and lasted for five to ten years. "In markets abroad, the governments provide fiscal incentives towards the initial capital costs. For example, in Germany, Japan and the US, the government picks up part of the solar tab. This provides a major fillip," says Mr Vora.
In India subsidies are not enough. With most of Tata BP Solar consumers living in rural areas or small towns, the company had to create alternative avenues. The non-government organisation (NGO) route is one such example. The company works with well-known and committed NGOs, who arrange for the funding of the project. Over the years it has partnered agencies like Ramakrishna Mission in West Bengal, Auroville in Pondicherry, the Dalai Lama Trust in Tibet, etc to provide electrification to rural villages.
The company is also working with banks and credit societies to advance loans to consumers. These loans can then be paid back in easy instalments. "Once the 30,000 rural Indian branches have been tapped for solar credit financing, the market will just explode," observes Mr Subramanya.
An action plan has been formed to achieve the Rs500 crore target. More than 62 cross-functional groups have been created to ensure its implementation. Tata BP Solar has been investing in product development. "Our aim is to create newer businesses, not only to grab market share," says Mr Vora.
The plan is to hit the markets with innovative products every year. The company recently launched three products: an international model of solar water heating systems (with a capacity of 300 litres per day), integrated photovoltaic modules (BIPV), and high efficiency solar cells (to increase current and voltage in solar cells).
As a first commercial BIPV order, the company bagged a Rs2.25 crore order from Indian Oil Corporation (IOC) for its office building near Delhi. BIPV laminates, which generate power to reduce loads, can replace or be combined with normal glass, which is used in most big buildings in India for outer walls, roofs and atriums, among other things.
"BIPV laminates are 2 to 2.5 times more expensive than normal glass, but ultimately they provide you consistent electricity for more than 25 years," says Mr Vora. "They are cost effective compared with the same products in Europe and the US due to the unique manufacturing process developed by us. We have applied for a process and design patent for the special lamination process and design construction of the BIPV laminates," he adds. The company plans to introduce wind-PV hybrid devices to ensure road safety and for disaster management.
The targets that Tata BP Solar has set for itself appear formidable. But the company is immensely confident about its ability to make profits while the sun shines.