Interview – Damian Miller, Co-Founder and CEO – ORB Energy
Power Insight: How do you view the Indian solar market? How do you perceive India’s 100 GW solar objective of 2022?
Damian Miller: We believe that rooftop solar has a key role to play in helping the country reach its target of 100GW of installed solar capacity by 2022. As a company we focus on serving residential and commercial rooftop solar users. Among the commercial and industrial community, we specifically target small to medium size businesses, which contribute about 40% to India’s industrial output. Commercial and industrial SME’s struggle with rising power tariffs, as well as dependence on expensive and polluting diesel generators. SME’s are getting comfortable with the idea that solar is now cheaper than grid electricity, and we are also providing them with a collateral free solar loan to be able to afford it.
Please see our reference article below.
Power Insight: Could you throw some light on the impact of imposed safeguard duty on your business as well as the overall solar segment? Under prevailing scenario, how can domestic manufacturing be promoted?
Damian Miller: Indian solar market is 9-10 GWp solar power per year in FY 17-18 and the numbers in FY 18-19 (this year) could be hit due to the duty. We feel that the duty should be imposed on solar panels (modules) not manufactured in India instead of an additional tax on solar cells not manufactured in India. Right now, we are not geared to meet the huge demand for solar power with the indigenous production of solar cells. And focusing on manufacturing solar modules in India will create more jobs than focusing on protecting solar cells.
Further over, the government can support the rooftop solar market and thereby domestic manufacturing, by ensuring that commercial and industrial customers do not face adverse charges or approval processes from their local distribution companies when they decide to invest in a rooftop solar system. Here the government can consider transfer of funds to incentivize distribution companies to encourage commercial and industrial customers to go for solar.
Also, the government should continue the positive benefit of accelerated depreciation that commercial and industrial buyers receive when they invest in a rooftop solar system. This is extremely beneficial. Moreover, the government can consider how to extend a similar tax benefit to residential customers as well.
Power Insight: How do you see the equipment price movements from here – over the next few years?
Damian Miller: The solar space has seen significant developments in the recent past, with the most significant being the decline in the cost of solar panels from a wholesale cost of $4 USD per watt in 2007 when Orb was first operational, to less than 25 cents per watt today. This drop in solar costs opened out new segments in the Indian solar industry, notably rooftop solar for commercial and industrial customers. It is very hard to predict where solar prices will go from here. Given many of the largest manufacturers now face significantly reduced profits (if not losses) at current prices, we think the bottom is closer.
Power Insight: What are some of the biggest challenges faced by the solar power segment in India? Also, could you pin point to the policy and regulatory gaps that need urgent attention in the solar power segment?
Damian Miller: The main challenge with solar for commercial and industrial SMEs is affordability: how to afford the up-front costs of solar. After all, buying solar is like buying more than 25 years of power up-front, on day one. To help commercial and industrial SME’s overcome this hurdle, Orb offers in-house finance. With a 25% down payment, an SME can purchase a rooftop solar system from Orb. The remaining 75% is then paid over 3-4 years. Orb tries to align the tenor of the finance with the payback period to the SME.
From a policy standpoint, as I have mentioned earlier, incentivizing power distribution companies to encourage commercial and industrial customers to go for solar and extending tax benefit to residential customers will do a world of good for the solar industry.
Power Insight: What are your views on the current solar tariff levels under prevailing scenario of newly imposed safeguard duties, falling rupee value and uncertainty over GST? Do you feel the falling tariffs will have an impact on the quality of solar projects?
Damian Miller: There is a strong possibility that the cost pressure can start impacting the quality of solar projects. Fortunately, Orb is different to a lot of other players in the rooftop solar space. We generally do not participate in tenders. We like to go direct to the customer and convince the customer to adopt a rooftop solar system on the merits of the technology, our service, and our ability to bring finance to the table. It means that we are not as affected by the competitive bidding you see in the tender markets in India. That said, even when selling directly B2B we see considerable price competition in the open market. As mentioned, we differentiate in several ways (in-house manufacturing, strong channel to reach customers, in-house finance, own in-house installation) that serves to give customers the confidence to work with us at a price that is right for them, and us as well.
Power Insight: What kind of growth and capacity additions do you see in solar power sector in India, over the next few years?
Damian Miller: The last four years have been particularly remarkable for us at Orb. Our sales of rooftop solar systems has grown more than 100% year on year for the last four years. Two years ago, we launched our own in-house financing facility to cater to Small and Medium size Enterprises (SMEs) with a collateral free loan scheme. And in 2017 we also launched our own in-house production of solar panels – the plant has a capacity of 60MW and Orb expects to be at full capacity by the end of FY 18-19.
When you look at the growth of the solar sector across India, we are particularly excited by the potential of rooftop solar. Rooftop solar has turned the corner and is now significantly cheaper than grid electricity for commercial and industrial users. It is so competitive that the payback is now just 3-4 years. This is an unheard-of return on investment for an unsubsidized solar power system (PV).
It is no secret that commercial and industrial customers struggle with rising power tariffs, as well as depend on expensive and polluting diesel generators for uninterrupted power supply. They are warming up to the fact that solar is now cheaper than the grid, and we are providing them with a collateral-free solar loan to be able to afford it.
