Renewables Hotline: Vikas Bansal
We sat down with one of the most relevant individuals in the industry: Vikas Bansal, Head International Business Development at Sterling and Wilson Solar. Join us in this conversion where we discuss the solar industry, his journey in taking a small company in India to become the largest solar EPC, and future opportunities in the renewables market
6 years is all it took for Sterling and Wilson to go from a small company in India to become the the largest solar EPC, working in most markets across the globe. Today we are talking with Vikas Bansal, one of the architects and leaders of this very fundamental and rapid change. Vikas, tell us about the journey you´ve been in over the past 6 years with Sterling and Wilson and the solar industry.
Sterling and Wilson started doing solar projects in India in 2010/2011. And for about three to four years, we were only focusing on India, and we became the largest solar EPC in India by 2013/2014. At this time we decided to go international. And we started taking baby steps.
We got our first break rather early, a 90 MW project in South Africa – which is a story in itself – because we hadn´t even travelled to South Africa, we met our contact in Saudi Arabia. It took us a year to kick-start the project and understand a complicated market like South Africa. After that we got opportunities in Philippines.
The main turning point for the company was Egypt, where we got six or seven projects in 2017. That´s when we realized that we were a bankable company with track-record that could make it big in the industry. And with this vision, we really started expanding our wings, not only in the Middle East and Africa but everywhere. Today we are present in more than 20 countries, and we have built plant plants in almost 19 countries right now.
We are one of the largest solar players in Australia, in Chile, we are expanding rapidly in the US as well as Europe. So it has been a long journey. In the next 10 years, we aim to still be one of the largest companies around and we will be doing a lot of interesting things in the in the solar space.
And how about you? What attracted you to this to this specific industry?
After my management course, I joined ABB, which gave me the opportunity to learn a lot about the energy sector generally. And while I was doing my evaluation on other things, I stumbled upon solar on a conference in 2010. I told my boss that I wanted to work in solar and I persuaded him. I worked there for a year, but soon I realized that if I really want to do something in this field, I needed to work with a team that was more bullish about renewables. I joined Sterling and Wilson which was a small firm of $10 to ·15m in revenue, but already taking steps in the solar industry with small plants. I was one of the first people hired in this team. I worked in India for three years, and then we went international.
How have you seen the renewable energy industry change since the time you have started? What are the major milestones that you have seen?
Let´s break this in two parts, first from 2011 to 2016; when everything depending depended on the government subsidies and programs. Solar at the time was expensive and everybody used to talk about grid parity, thinking that would be the holy grail for expansion of the sector. Luckily the learning curve was steep and for every doubling of the capacity, the solar cost came down by 18 to 20%.
On the second part, from 2016/2017 we started getting to the ‘grid parity’ in some places, leading to more and more through the next years. From 2020 solar photovoltaic became one of the cheapest if not the cheapest sources of energy in almost every part of the world; so the debate moved on from commercial viability and subsidies and it shifted towards dispatchability.
For the next 5 to 10 years the question is about making this power more dispatchable, and how fast can we scale it up.
So where are you building right now?
We are building more than 600MW in Australia, more than 300MW in Chile. We also have a plant in Jordan, another we are finishing in Oman. We have 200MW in the US. Our projects are spread worldwide. We are expanding but we are being careful about the timing and the markets that we select to make sure that we can be successful. Sometimes we wish we would have started earlier in some markets, like it is the case of the US, but by and large we are making the right choices.
Right now we are focused in expanding in Europe. We have opened a new office in Seville (Spain), that will be our headquarters for our European region. It is a very exciting time for everybody to be in Europe, and we are lucky that we have been able to assemble a very nice, competitive team. In the near future I’m sure we will hear a lot about Sterling & Wilson´s activities in Europe.
This last year has not been all that easy, considering what’s going on with COVID. So how have you guys dealt with COVID challenges, and has it been very different in different places?
Since we are there in the market for a long time, in terms of business development, even without meeting a lot of people face to face, we were able to sign new deals almost all over the world.
When it comes to the plant construction, obviously we saw we saw some delays, the supply chains were constrained. The good part is now after having gone through all of that, we know that the supply chains have to become more robust moving forward. Everything cannot be done from one country, there has to be some amount of diversification. And the good news is our customers they have also they have also understood this point. In all the new discussions, we discuss resilience of the supply chain and how to manage such situations going forward. I think from that perspective, it has been a year of a lot of learning.
When it comes to operations and maintenance, Sterling and Wilson is a third third largest operator. We are maintaining more than 7 GW of assets all over the world. And I feel so proud of our teams, who were in the plants braving through the tough conditions of lockdown and covid precautions. We were able to maintain all the plants properly and we saw no disruption on that side of the business at all. People in the plants had to really step up and do a lot of innovative things to ensure that they stay safe at the same time they run the plants safely.
Thinking about the future, I imagine in one year we could run our business with probably 50% of the travel we had previously, without impacting on anything; just doing over the internet. And from the carbon emissions perspective this is a good thing, overall this change is positive for the planet.
What is your strategy for Sterling and Wilson in the next 2-3 years? Where do you see the opportunities for growth and where are you investing your resources?
On the technology side, there is a shift happening in the market towards automation, more data analysis, artificial intelligence or machine learning. Essentially, we are collecting and analyzing data more to optimize and for the plants to perform better. As a company we have always been very intuitive moving towards new technologies when constructing and operating our projects.
In terms of markets we are focusing in Europe, because we are going to see an explosive growth there. We are building capabilities, we want to maintain our plants for 20 years, 25 years, build a substation there. We are even developing projects to RTB, which is not being traditionally part of our business model since we were purely EPC, but now we are also going to sell projects to our end customers.
In the US there are a lot of opportunities with the new government and the extension of the ITC. And in Australia and India we have pole positions which we would like to maintain.
What are the challenges your customers usually face and how to do help them solve them?
Our job is to always ensure that we design the plants which helps our customers to achieve the lowest cost of electricity (LCOE), and this is what we strive towards.
We don´t control cost of capital, which is one of the drivers of LCOE. But we do control the rest and therefore our job impacts LCOE directly. We design and build the plants, and operate them and maintain them for up to 25 years. And we ensure each asset produces the maximum amount of energy that it can generate.
Building solar plants is risky, having a different regulatory environment in each country, working on a large parcel of land, next to local communities and so on. When we come in a lot of the risk of these projects is transferred to us. This is a big way in which we bring value to our clients. Wordwide plants have delays, they sometimes don´t perform as expected, some projects even get abandoned… We ensue that projects when build on time on budget looking after all the details.
And we work everywhere. We are specialists in developing projects in new, challenging environments. Because of our track record, we offer clients wanting to work in different markets the added value of just dealing with one EPC. Their cost of diligence and transaction also goes down significantly.
How is the regulatory framework supporting the necessary growth for solar deployment to support climate change goals?
Solar has been growing at a rate of around 20% over the last five years. Oh, is that enough? I’ll just add some numbers to it. Right now, the total annual emissions are around 32 billion tons. In oil equivalents that is around 14,000 million tons of oil equivalent. We now need to offset all these emissions entirely by 2050 to reach the 1.5 degree objective. That´s what everybody is aspiring for.
To offset these 32 bn of CO2 emissions with renewables, we need to build approximately 3,600 GW of renewable energy each year. IAt the moment we are building 150GW of solar and another 150GW of
And obviously, there are other things happening there. There are nuclear plants, there is hydro. All of that is there. Everybody knows how much solar we are building every year: 150 GW, if we add wind: maybe 150 GW more. So, we are building around 300 GW approximately every year, how much do we need? More than 3000 GW. Although we are going in the right direction, we won´t have enough time if we scale later. It is very important that we scale deployment significantly and immediately and that regulatory frameworks support this rapid growth and scale up. Now policies have the right intention and are going in the right direction, but they are very slow.
Have we arrived at the time now where we can start to say that we are going to see like an exponential amount of solar plus storage and winter storage projects? What is your prediction for, for this technology? Is it going to grow and reduce costs as it was expected?
Even though we were expecting breakthroughs a couple of years earlier, the storage cycle is different in different markets. For example, more than 50% development in US armed with storage now and we expect this to continue going forward.
In other markets, developers are often future proofing their projects so that storage can be added at a later date. Mainly this is driven by the fact that even though there isn’t necessarily a business case for storage right now, as more renewables enter the grid, it is fully expected that the business case will appear, and the project would be ready to add a battery easily with the system ready.
There are new technology agnostic bids happening, for example in South Africa whose results are expected this month. They did not care what technology or combination of technologies, they just need power and were open to gas or solar, wind or combinations.
I see the winds changes happening in almost every country. Australia is one more country where you have standalone storage coming in. The costs have been dropping but not as much as we were expecting.
What are the three most important trends in solar energy in the next 5 years?
The biggest trend is dispatchability. Up until now solar was a small percentage of the grid power and you could pretty much just ‘dump’ your energy. But as more variable renewable enters the system, the grid is going to become a precious resource. To ensure that we are using the grid efficiently we are going to have to make our power dispatchable.
The second trend is automation and data. The plants will be mainly operated through a fleet of robots and have very few people on site. All the equipment will have sensors and we will get data from them, allowing us to analyze this data and run the plan efficiently.
The third trend is localization: more countries will insist in having a local footprint for renewable energy projects.
Is renewable / Green hydrogen as a new technology underrated or overrated? What are the opportunities and challenges that you see in this technology for the next few years?
Renewable hydrogen is a great opportunity for renewables. But are we there yet?
From the commercial perspective the cost of compressed natural gas is around $8 and renewable hydrogen is more like $30, so it has a lot of ground to cover. But it will be covered, seeing the focus that is going into the industry over the past years. I would say that it would take from 7 to 10 years to get to be cost competitive.
Renewable hydrogen is taking all the right steps industry is taking all the right steps. Electrolizer technology is being developed. Projects are gaining scales. The value chain is being inspected to gain efficiency and cost-competitiveness, new vendors are appearing. Green hydrogen is an important key technology in decarbonization and we need to all work together to make it happen.