Behind Avaada Energy's rapid expansion across India
The company has clinched repeat investments from institutions such as ADB, DEG, FMO and Proparco.
Established just in 2017, Avaada Energy has grown to be amongst the fastest growing renewable energy companies in India, with already 1GW of capacity under operation and another 3GW under different stages of implementation. They are also implementing 1GW capacity solar plants under open access in various states across the country.
Asian Power spoke with Avaada Group’s chairperson Vineet Mittal about his experiences in establishing the business, the strategies that drove its rapid growth, and some opportunities they are looking to grab in the future. He entered the clean energy sector as Welspun Energy’s co-founder, where he worked to build a solar portfolio of 1GW which was monetised by sale of the entire portfolio to Tata Power.
“An inherent risk-taker, I started out with a dot com company then ventured into the BPO sector. It was during my time at the IT sector that I started exploring avenues which were aligned to my core value system. In my opinion, we have an inherent responsibility towards nature and the communities that have given us the environment to grow,” Mittal said.
Following the mantra of “World with us and World without us”, he sought to work towards creating and building up “newer” things. “After all we as human beings must always examine our actions and goals in life through the prism of impact that it will have on society and nation,” he added.
What strategies have you employed to drive Avaada Energy to become amongst the biggest suppliers of solar energy in India?
We are one of the fastest-growing renewable energy companies in India. At Avaada, we believe in working in tandem with nature whether it is our renewable energy projects or our community development initiatives. Our philosophy is inspired by the 3 Ps – Promise, Progress and Partnership. The projects we commission, the initiatives we undertake and the results we produce are all aligned to this philosophy, something that defines who we are. We live our dream.
Our unique strategy interweaves business goals with environmental sustainability and social responsibility, producing mutually beneficial results. By contributing to community’s socio-economic development in the short-term, we foresee delivery of continual value to our shareholders. Through our community engagement initiatives, we are contributing to uplift the lifestyle of communities we work with.
At Avaada, we know that a company is only as strong as the people who make it. We believe in nurturing a family culture in the organisation – thus every member of the organisation believes in a shared ethos and value system which is being practiced earnestly. This has been one of the basic reasons that a highly competent and experienced team has been working together for the last 10 years. There has been negligible attrition over so many years. We strongly believe in 3 principles: what gets measured, gets managed, gets delivered, inspect what you expect and what gets rewarded gets repeated.
We are adept at leveraging people, process, and technology framework for ensuring continuous improvement. With a strong foundation of family culture, strict adherence to governance principles, and dynamic framework for evaluation for performance improvement we have managed to build a strong organisation which has exceptional expertise in engineering, procurement, construction and O&M.
After winning the 320MW solar project in the state-owned NHPC’s auction last April, what are you working on for the rest of 2020 and 2021?
At Avaada we believe that if you think big, bigger things will happen to you and your organization. Avaada Energy has scaled up rapidly and within two years of establishment, it has 1000MW of capacity under operation. The firm has created a solid pipeline of another 3,000+MW which shall be implemented over next few years. We plan to have installed base of 5GW by 2022 and 11GW by 2025.
We are also in the process of implementing 1GW capacity solar plants under open access in Maharashtra, Tamil Nadu, Haryana, Karnataka, Uttar Pradesh and Odisha. We are working with some of the leading MNCs who have committed to switch to 100% renewables.
Since 2017, Avaada has crossed quite a few milestones. Which achievements are you particularly proud of?
We have always strived to do something innovative, something that has never been done before, and could be a path-breaking thing for my country and for the clean energy industry. We have been one of the largest suppliers of green energy to several government agencies like NTPC, SECI and DISCOMS, which constitute 60-70% of the total business.
At Avaada Energy we endeavour to optimise costs and increase efficiency with the help of our inherent ability to innovate. Aided by technology upgrading and decline in prices of components, we have managed to reduce capital costs from Rs. 15 crores / MW to Rs. 4 crores / MW in the last 7-8 years.
Furthermore, because of our strong project execution capabilities, impeccable debt servicing record, and professional leadership team, Avaada has managed to bag repeat investments from reputed institutional investors like ADB, DEG, FMO & Proparco. The company has marquee clientele which includes office complexes, global IT companies, hotels etc.
What are the biggest challenges and risks regarding supplying power to India?
As a relatively new industry, the renewable energy sector in India has already emerged as the fastest growing sector. However, there are some issues that have to be addressed to further cement Avaada’s position as an important player of clean energy on the global front.
There is an urgent need for a stable policy regime wherein once a policy has been framed, it remains in place for at least five years without any change. Any modification / amendment must be brought in under extreme circumstances and it should be ensured that its implementation is prospective. Retrospective implementation must be done away with completely. Another issue is dispute resolution between contracting parties. Risk associated with land acquisition, financing, transmission evacuation infrastructure etc. end up hurting us as developers. This can be eased through an appropriate redressal mechanism within the contract itself.
What valuable lessons have you learned whilst operating in a market as huge and diverse as India? What opportunities do you see for the renewable energy sector?
From the beginning of time, Indian culture has respected and worshipped wind, water, earth, fire and sky. One of the most important lessons I have learned is to always look at the renewable energy business as an opportunity to live this great Indian legacy. With clean energy in constant state of innovation and with our nation’s green energy revolution led by Hon’ble PM Shri Narendra Modi, India will continue its exponential growth in the renewable energy sector. With the government committed to its environment sustainability and clean energy targets, these are exciting times for adoption and implementation of clean energy innovations.
Additionally, India is continuously exploring power projects coupled with storage capabilities. There is also a rising demand from large industrial and manufacturing facilities for sourcing solar energy to meet their energy needs. Further, industrial heating solutions powered by solar energy have made a small advent in the Indian market but over time that should grow as well.