Manoj Kohli, the current head of SoftBank India and the former CEO of SoftBank Energy (SBE), was instrumental in enabling SBE to develop 5.5 GW of solar capacity in the Indian market. In this conversation Mr. Kohli shares the story behind what propelled SoftBank to invest in this market in 2015, and how the risks have evolved over the years. This conversation concludes with great guidance to the younger generation — developed from years of experience as a business leader and mentor for countless entrepreneurs.
Topics covered in this podcast:
[2:07] How will renewable energy shape India’s global leadership position in the next decade?
[3:55] When will energy storage become an affordable possible solution?
[6:35] How did the risks in the Indian renewable energy sector evolve from 2015 onwards?
[9:00] What role have foreign direct investments played in the development of RE industry in India?
[10:35] Which will be more difficult to attract, long-term debt, equity or short-term debt?
[11:53] What ultimately led SoftBank to invest in the solar sector in India in 2015? [13:30] What are the focus areas of possible collaboration between India and the US?
[15:12] Guidance from Mr. Kohli to the younger generation
00:06 Karan Takhar
Hello everyone. This is Karan Takhar, and welcome to the Zenergy podcast. Over the past decade, India has done an impressive job of integrating renewable energy into its energy mix. For this Fulbright podcast series, I sought to investigate the enabling factors and potential of India's global leadership in renewable energy, with the focus on solar. This Fulbright series is broken down into Four Seasons.
In this season, through conversations with leaders who have been instrumental in developing the Indian renewable energy sector, we will highlight how India has managed to integrate 35 gigawatts of solar in just a span of 10 years. We will also explore what these leaders believe the key challenge is to be as this sector further develops. In this episode, I will be speaking with Manoj Kohli, the current head of SoftBank India and former CEO of SoftBank Energy as of January 2020. Mr. Kohli was responsible for helping SoftBank build 5.5 gigawatts of solar capacity in the Indian renewable energy market. Hope you enjoy this conversation with Manoj Kohli.
Thank you so much, Mr. Kohli, for joining us. I was watching a talk you delivered at CW in 2018 with respect to the global energy transition, and in this talk, you stated that you believe the next decade will be the golden Decade for India. I would really appreciate hearing more about this, and specifically how you believe renewable energy can help shape India's global leadership position in the decade to come.
02:07 Manoj Kohli
Thank you, Karan. When I delivered that talk, what I meant was that India has taken a very important own position on climate change globally, and I think Prime Minister Modi has really been a primary source of inspiration not only for India but also for many parts of the world, many institutions in the world for solar energy, wind energy, electric vehicles, and overall climate change issues. So that world can turn around and bring back better-quality environment. So that is what I meant, I think the next ten years, India will be India mission will be tested. India has already taken away mission of 450 GW renewable energy by 2030 and 175 by 22, and I think we are progressing well in the last few months, and there's a bit of a slowdown because of COVID-19. Now I think it'll pick up again, but overall solar wind is picking up very well. The next step of storage battery affordability will also happen. It will take 3-4 years, but that will also happen and benefit India a lot. So that is what I meant when I said.
03:23 Karan Takhar
I see, and yeah, just going on this topic of storage, you might as well just touch upon it now that you mentioned it. So, I also know that you were the chair of the CII task force for electric vehicles and also batteries, and I heard you mentioned that for solar, wind, and other renewable sources to provide a comprehensive solution. Energy storage which must be available, and for that to be the case, it must come down below $100 per kW, and I would love to hear like your take on this. I think this also was maybe two years back when you said this, so do you still believe this?
04:06 Manoj Kohli
Yeah, I feel that today's solar and wind energy intermittent sources and not baseload, not round the clock. So daily, till solar and wind become RTC, that till that time I think renewable energy has not arrived, and my own belief is that storage battery is the only way either it has to be pumped-storage which is through idle, or it has to be storage battery either Lithium-ion or many other. The chemistries which are being tested, but the key issue for India is affordability. India will always want less than ₹3, maybe less than 2.50 now per kWh, and it's very important that because India masses are comparatively not as well off as many other parts of OECD world. So, therefore, affordability is crucial. So luckily, solar and wind affordability has been established already both of them are under ₹3, but if you combine them into a hybrid project which is solar plus wind, then you have an energy source for maybe anywhere between 12 to 15 hours a day, but still, you have a gap of 7-8 hours which can only be fulfilled by storage battery. So, if storage battery, let's say anywhere between 3 -4, maximum, 5 years. Yes, definitely before 2025 comes down below ₹3 as operating costs, then I think, by and large, India will adopt it, and if India adopted then, you have a RTC renewable energy which is RTC, and that is where the real mission will start because once renewable energy is RTC on affordable level, then I think the replacement of fossil will start in a big way.
06:06 Karan Takhar
Thank you for expanding on that. And during your tenure as the Executive chairman of SoftBank Energy, which you helped grow from zero solar plants in India to 5.5 gigawatts of capacity. So I'm curious as to like how the risks evolved over time from the time SoftBank Energy started in 2015 onto the present day. Like how did the risks in the Indian renewable energy sector evolved during that period?
06:40 Manoj Kohli
No, I think risks definitely declined over a period of last five years, and they were declining. They were getting mitigated in a very orderly fashion by the industry as well as by the Government of India. There are three major risks. Let me say one is the risk of PPA, which, luckily Government of India has been very proactive. They have introduced many important clauses in the PPA so that PPA is strong and very close to international standards like payment guarantees like a dim generation like termination compensation, etc. So that is one big risk that has got mitigated very significantly. I'll say not a full 100%, but significantly. Second is the land where government initiated very innovative way of solar parks across the country. Are there more than ten solar parks? Maybe 15 so, very high-quality parts, which are some are one Gigawatt, some are even more, and this is in an innovation which no other country in the world has initiated, and that's very good because it mitigates the land risk.
07:54 Karan Takhar
07:55 Manoj Kohli
So, and that is again, so 3rd is the transmission. So, the transmission infrastructure build-up for renewable energy has also picked up very well with Karnataka MP, etc. So, that actually kills, and other private companies have taken up the challenge, and they're picking up the pace of transmission expansion. So, I'll say all these three major risks, EPA land and transmission, have declined systematically in the last five years, and I'm sure if the focus remains in the next five years, they'll come down drastically.
08:33 Karan Takhar
What was foreign direct investments played in helping to develop the renewable energy industry in India? Of course, SoftBank is a foreign entity and has been called a major role in the sector, but also beyond SoftBank. Are you seeing a lot of foreign investments in this space?
08:55 Manoj Kohli
Yes, you know, this being an infrastructure sector, a very large investment is required, and it's a long-term patient cap, so India cannot, and the domestic financial market cannot cater to the full needs of this Ari sector. So, therefore, international investment is definitely required, both capital equity as well as debt. So, I am very happy that international institutions, financial institutions, and banks have been very positive on India, and a lot of foreign capital and debt has come in and by 2030, if the goals have to be achieved, if the PM mission has to be achieved then over 300 billion dollars is required for this only one sector which includes solar wind transmission also. So, I believe that if the government continues to mitigate the risks, as I mentioned, risks of a PPA, risks of land transmission, and other policies which should remain consistent. If that happens, then I am confident that India will be able to attract international capital and debt in the next ten years to because, without that International Investments, India will find it difficult to achieve the mission.
10:18 Karan Takhar
I see which of those is. Do you think will be more?
10:21 Karan Takhar
Difficult to attract like.
10:23 Manoj Kohli
Now the world is full of surplus liquidity now. So, I don't think there's any particular either debt or equity, which will be more difficult than the other. Overall. The investors expect the government because this is the one Russian government has taken PM personally has encouraged this mission. So, from all these, investors expect the government to really safeguard the key policies pertaining to this sector, the key regulations pertaining to this sector, so that this sector has consistent returns and so that it doesn't get a shock don't get any surprise this for the investor. Do investors, you know, like stable in mind, consistent policies, stable investment environment? That's what they're asking. They're not asking for any abnormal returns, which are more than any other country. So, they're asking for regular returns but consistent policies and so that they can predict there is the predictability of long term.
11:27 Karan Takhar
What ultimately, LED, like SoftBank, to invest in the solar sector in India in 2015 because I was just curious as to like how that ended up coming to fruition.
11:40 Manoj Kohli
No, it is quite well known that Massa has a very soft corner for climate change. He is very committed to safeguarding the environment. He initiated the solar business in Japan after the tsunami, and we are leaders in Japan on solar. I see. And then he emailed the PM, our PM at Tokyo, and we committed that we will also invest in India. That is where it started in 15, and so overall is Softbank's support to climate change, which is coming, which is coming into real life through this project.
12:22 Karan Takhar
So with the geopolitical changes, we are seeing in the world today, and as a Fulbright Scholar, which is sponsored by the US State Department, I personally am a very strong believer in the US-India Partnership and see renewable energy as a great channel for strengthening this relationship, but because SP energy is uniquely positioned between both countries and of course as the head of SP India now, I know a lot of the investments or a lot of the companies also operate in both geographies. So, I thought you'd be a really great person to ask what the key focus areas where you believe more collaboration. They can occur between the two countries.
13:05 Manoj Kohli
India and U S are great partners not only now but for many years, and I believe that partnership is only improving day by day, and in context of SB Energy, I think it's very clear that US solar module manufacturers like the first solar, Sun, Power, and others should do more in India now. I'm sure you will see them doing better than past in the coming years. Also, the plans to build storage battery for EVs as well As for renewable energy. The between USA and India will also be taken out government. I expect government policies on manufacturing of storage batteries to be released soon. So, if that happens, then I'm sure US-India collaborations will take place because storage battery is something which is so crucial for the EV sector as well as crucial for the RE sector, so this will be another area. But overall, as SoftBank, I think the digital partnerships are very in the past. There are American portfolio companies. Which are in India, and I'm sure more portfolio companies from the US will enter India to do more, get more customers, revenues, etc. So digital portfolio companies of the group, which are now in the US, will also participate in India's growth.
14:35 Karan Takhar
I almost started the interview with this question out of fear that we'd run out of time and I wouldn't get to it, but I'm glad we have gotten to it, and so, as I was doing research on you, I was very impressed by just your whole professional journey. How disciplined you appear to be and also just how much great success you've achieved across multiple spaces. As a young professional, someone who is also quite motivated to do good work and make an impact in the world, I'd love to hear, like you, what guidance you provide to the younger generation. I know you work with a lot of younger entrepreneurs, and just reflecting on your experience, what guidance would you provide to the younger generation today?
15:25 Manoj Kohli
I think young generation is very smart, very passionate, very tech-oriented, and have great ideas. So, my guidance is something that I did when I started at 20, and now I've done 41 years of my professional experience. I started with three Hs honesty, hard work, and humility. And these three foundation stones were good for me, and I'm sure they're good for many others. In addition, constant learning is something which has to be adopted as a mantra by every young professional and young entrepreneur because the world is changing every day, and you have to change along with the world, or maybe proactively, so constant learning constant understanding new thing is understanding new technology, especially technology, is creating so much disruption across the world, and finally, how to convert learning into real life, how to convert and apply the learning into scaling up the business, for example, growing the business, building a new business model, scaling up from 2X to 5X to 10X to 20X, that is where you're learning has to be applied very carefully into day-to-day applications. So that is what I think is important, and that can only happen when you work hands-on, and I've seen many youngsters who really are hands-on and therefore plastic, but I'm seeing some youngsters who are still hesitating to get hands-on, which actually is very important. I feel that if you don't get fully hands-on and hold the problem tightly, you will not find a solution. So, my request to all youngsters is that before you are 30, so between 20 and 30. This ten years is a period of massive learning and becoming hands-on so that you are able to personally hold the problem and find a solution.
17:28 Karan Takhar
Thank you so much for your time, Mr. Kohli.
17:30 Manoj Kohli
Thank you. And good luck.
17:44 Karan Takhar
I hope you enjoyed that episode, and do check out the show notes for more information on my guest. See you next time.