The Vacant Space of Turnkey Consulting in Renewable Sector

By Balram Mehta, Executive Vice President and Head Wind, ReNew Power


Balram Mehta, Executive Vice President and Head Wind, ReNew Power

Renewable energy is the flavour of the year and talk of the country. NDA led Government of India has taken an ambitious target of 175 GWs of renewable power till the year 2022 which seems to be a herculean task. Although not much was done in the first year of the target but the stage has been set and ball is in motion for the bigger outcome by the year 2022. It is very important to dream and the new government has dared to dream for energy security of the country.

The country has 25,000 MWs of non-conventional assets in operation today, the sector has to take a jump of 150 GWs of addition in the next 6 years that means an addition of 25,000 MWs per annum in Solar and Wind sectors across the country. And in financial terms it translates into an investment of 900,000 crores of INR or 140,000 Million USD worth of investment. The quantum is huge and very difficult to even count the zeroes involved in it.

Investors and Consulting
Most of the investment in this sector is happening through FDI route. The investors are foreign investment banks, PEs, VCs, foreign pension funds and HNIs along with few domestic investors. These investors have their coffers full with commitment to be part of the renewable revolution in India. They look for stable and reliable partners who can associate with them in their endeavour to invest in India and reap the benefits. Investment in renewable is not the financial decision only but has to be supplemented by technical and local knowledge. Now here comes the role of consultant and that’s nothing better than the Turnkey Consultancy. This decision of choosing the right turnkey consultant depends on the in house capability and risk appetite of the individual investors.

If we divide the complete investment activity in this sector in smaller set of activities then following are the major areas -  

  • Regulatory guidance, analysis and continuous monitoring of regulatory environment
  • State and Utility / off taker diligence and feedback
  • Finding the right partner
  • Finding the right manpower
  • Finalising the sites
  • Project diligence
  • ESIA (Environment and Social Impact Assessment) studies
  • Resource (wind and solar radiation) assessment for that particular site
  • Selection of technology / product (technical due diligence)
  • OEM selection / OEM diligence
  • Contract negotiation
  • Project management
  • Vendor selection
  • Project management and project monitoring
  • Statutory compliances
  • Quality inspections at various stages
  • Project milestone verification
  • Contract administration
  • Project finance
  • Land diligence
  • Completion certification
  • Performance guarantee testing and verification
  • Closing O&M partners
  • Training of manpower
  • Spare parts management
  • Performance monitoring

And still the list is not exhaustive. A lot can be further added to this list. Moreover the activities are not in sequence.

Current Scenario
In the current scenario especially in the renewable space, the consulting is on piece meal basis. There are no turnkey consultants available in the market who can offer all the services and expertise under single roof. In wind sector, definition is limited to OEM providing the turnkey projects to the investors. That definition includes providing the wind site with wind measurements, required project approvals, supply of equipments, supply of balance of plant equipments, project erection, commissioning and finally providing the comprehensive operation and maintenance. But there is inherent limitation to this turnkey project model. It is more skewed towards the OEM’s requirements and investor has a limited say and options to choose the best product for that particular site and has to satisfy himself with the product being offered by the OEM. If we look at the complete list of activities involved as said in para 3, then we can say that 90 % of the scope is left uncovered and this is the slot which can be filled in by Turnkey Consultants.

The turnkey consultant can pitch in and complete the portion of the activities or scope left out by Turnkey project supplier. The life cycle of a 50 MW project from concept to commissioning is generally around 12 months (with an assumption that required wind measurement is already there). Looking into the pace at which investment is happening and sector is growing, it is very difficult and mammoth task for individual investor to develop those capabilities and required expertise. A turnkey consultant can bring in the required expertise within no time and without any long-term engagement commitment. These consultants can bring in the kind of systems to the new set up. Investor is relieved of the job of inventing the wheel. This field has evolved over a period of time and is growing along with the growth of the sector. If we go 15 years back in time, it was a difficult task to find even one good agency for basic bankable wind resource energy yield assessment report. Now we have world renowned agencies in this field. Same is true for third party inspection services. Renewable market is changing and picking up very fast but as said earlier, the slot for single turnkey consulting is vacant in the renewable space.

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