Racold Thermo: mandatory usage policy required to promote solar heaters

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Photo: V. Ramnath, managing director, Racold Thermo

Here’s the excerpt of the interaction with V. Ramnath, managing director, Racold Thermo, on the latest happenings in solar industry in India.

How do you evaluate the state of solar industry in India now compared to a few years back? Has anything changed significantly?

The industry size is approximately Rs. 500 Cr per annum and it is expected to grow at 10 percent CAGR over next 3-5 years period. The growth will be fueled through accelerated penetration of solar water heating solutions in wider geographies as well as in wider set of applications in domestic and commercial applications like realty, hospitality, hospitals, dairy and process heating in industries.

There is high level of confidence among Indian consumers about solar products as ‘proof of the concept’ for many solar energy powered devices or solutions has been appropriately established. The solar water heating solutions have established their  relevance for Indian consumers because of the possibility of usage across the country owing to abundant sunlight available throughout the large part of the year. Coupled with this, solar water heaters have proven to have very favorable pay back periods ranging from 18 – 30 months for various domestic and commercial applications. These factors definitely make a very compelling situation for consumers to adopt solar water heating solutions in accelerated manner. The positive impact of solar water heater usage on reduction in carbon footprint is also helping to generate a lot of positive word-of-mouth about it.

How is Racold Thermo positioned to sustain this growth?

Racold Thermo is India’s largest manufacturer and provider of water heating solutions across all water heating technologies in domestic and commercial space.

Our innovative products are durable and have a low pay back period. The new product launches this year will help us reach out to our consumer base across industries.

What are your customer acquisition strategies in India? 

Racold continues to focus on expanding our sales and service network across India in order to enhance our reach and improve overall consumer experience through our innovative products and services. For solar water heaters, key focus markets are western and southern part of India. We aim to augment our range with new product launches in solar water heaters as well as heat pump water heaters that will enable us to improve consumer experience. These new product launches are also aimed at catering to various application segments like domestic end users to commercial ones like hospitality, hospitals and industrial process heating applications.

What is the impact of the 2016 budget on the industry?

Budget 2016 although is a well thought out budget which promises to keep the fiscal deficit at 3.5 percent. The focus on Infrastructure, boosting Rural economy, thrust on agriculture, renewed efforts on kicking growth of affordable housing both to drive employment and consumption is welcoming.

However with respect to the industry, it was surprising to see the Budget making Industrial Solar water heater expensive at a time when the Government is focused and committed around promotion of Renewable energy. One would have also expected the budget to be bit aggressive on increasing import duty of raw materials to boost Make in India efforts.

What are the challenges faced by the industry?

The challenges for solar water heaters usage in India can be classified on 3 dimensions: technical, commercial and government policy fronts.

Technical:

  • Space and building designs: solar water heaters require sufficient shadow-free space for installing the collectors / absorbers (plates or tubes) which absorb sun energy. These requirements need to be planned at the design stages of the new buildings in order to be solar energy dependent.
  • Cheaper and poor quality products: These can prove not only a loss making proposition because of poor performance and low life expectancy but also unsafe and life threatening at times.This may reduce consumer confidence about the technology.
  • Unavailability of Sun on cloudy days: Though it is for a limited period of the year, it can be addressed by providing sufficient electrical heating back up in the solar water heating system itself. This enables consumers to have uninterrupted hot water even if solar energy is insufficient. This electrical back up in solar water heaters proves to be a better than standalone electrical heating option because even on cloudy days, most of the time, water still gets lukewarm because of some solar radiation absorption.
  • Water quality: Water quality has a lot of impact on the performance as well as the life expectancy of a solar water heater. A water with high level TDS (salts) or impurities can prove to be a damaging for the product performance. Leading companies like us have developed products which can last in such kind of poor water quality areas.

Commercial:

  • Consumer awareness: Even though awareness has significantly increased over the years, it needs to dramatically go up from the current stage wherein every consumer willingly opts for the solar water heater usage instead of adoption on account of mandatory clauses. The Ministry of New Renewable Energy has to play crucial role in further driving it through high visibility media initiatives.
  • Accessibility or Availability: Making solar water heaters available in semi urban and rural areas will be crucial to faster growth of the industry. The costs of reaching however are prohibitive at time.
  • Ecosystem of solar water heaters installers: There is a limited skillful resource that can do solar water heaters installations. With growth in solar water heaters market, the ecosystem of solar water heaters installers (designers, plumbers, system integrators) need to rapidly go up. This is also an area of opportunity of job creation.

Government policies:

  • Enforcement of mandatory usage: Even though the central government has mandated the use of solar water heaters in new buildings, the enforcement depends upon the state governments and is done through local municipal governing bodies and in most of the cases it is at a level where it can be significantly improved. The penetration of solar water heaters has significantly improved in areas where the enforcement of mandatory usage is done in the right spirit of the policy.

Do you have any recommendations to policymakers?

The government needs to create a policy framework which really encourages the development of innovation in the renewable water heating space in terms of products and solutions. The joint activities to promote solar water heaters across wider sets of consumers are the need of the hour.

There is an urgent need to ensure optimum entry barriers in the industry in order to ensure that the solar water heater products sold in India are meeting the basis level of safety and performance norms. The cheaper – poor quality imports or even Indian solar water heater products will spoil the overall industry by adversely affecting consumer confidence.

The industry players need to play a significant role in improving awareness and addressing affordability quotient of solar water heaters which help in penetrating the solar water heaters usage even further.

The affordability of solar water heaters for Indian consumers has significantly improved in recent times because of the technological advancements led cost reductions.

In addition to this, government should invest in creating large scale drive for awareness generation initiatives in high visibility media to encourage people to go for solar water heater solutions wherever they have hot water requirement.

The key role of government agencies in ensuring the effective enforcement for usage of solar water heaters in new buildings (or heavy electricity / fuel users in commercial segments like factories) will give a strong impetus of growth to solar water heaters industry. It will also help the distribution companies (DISCOMs) in bringing the peak load electricity demands down significantly. Possibly, solar penetration could also help improving the electrification penetration in India by allowing DISCOMs to create and use surplus of electricity to untapped areas so far. Thus, accelerated solar penetration could be a way of social improvement and empowerment for the India at large. This needs to be attempted through a joint and shared agenda of industry stakeholders as well as the cross / multi ministry task force of Indian government.

Rajani Baburajan

[email protected]

 

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