Let’s Harness The Suns Energy For Better India

When God decided to create days and nights, and blessed the earth with sunlight, he must have assumed that humans could easily figure out how to use that light to meet all their energy needs. Although the Homo sapiens claim to be the most intelligent ‘species’ on Planet Earth, it seems their intelligence has evolved more slowly than most. Look around and be humbled as plants and shrubs have already sorted it. They thrive on solar energy and less water, harness both and grow without a murmur! As for humans, they have simply taken thousands of years to realise that solar energy could be their ultimate answer to energy needs.

But jokes apart, India is among those countries which have caught the fancy of the world. With its futuristic use of technology (like wind turbines that power Tirupati Complex and low cost mission to Mars), this tropical country, blessed with ample sunlight, is capable to fend for itself and its ever-growing population.

Due to its rapid economic expansion and futuristic policies, a traditional country like India has to meet its energy requirements by leveraging fossil fuels such as coal. Nearly 70% of the energy consumed is generated from coal, followed by crude oil (24%) and natural gas (accounting for a mere 6%). It is, therefore, not difficult to comprehend that India is largely dependent on fossil fuel imports – so much as that by 2030, more than half the country’s energy needs will have to be met with large energy imports. Our own limited fossil reserves have long threatened the country’s stability as far as energy needs are concerned.

With a vast population of 1.1 billion and the urban areas housing the majority of industries and labour forces, India is moving dangerously close to the greenhouse effects with every passing year. While carbon emissions are getting high, the agricultural land is also getting increasingly barren and arid due to the indiscriminate use of pesticides and chemical fertilisers. The effects of global warming in this highly populated country are for everyone to see. From Tsunami in the past to the Uttarakhand floods in the recent years, from progressively botched up summers to extreme winters, the calamities are too many and India is bound to emerge as one of the foremost nations being affected by global warming.

India’s energy experts have been warning against the high use of exhaustible energy resources bought from other countries, which is causing a serious dent in the country’s exchequer.

Almost 400 million Indians (nearly a third of the country’s population) have no access to electricity. And this power deficit compels more than 100,000 villages to live in the dark ages, quite literally. Lack of energy sources has also left India in a rather vulnerable condition as far as growing basic infrastructure is concerned. Its per capita energy consumption stands at just 639 KWh (Kilo Watt per hour), which is among the lowest.

This apart, what compounds India’s energy problem is the fact that three quarters of the electricity is produced by burning coal and natural gas. India may well boast a steadily growing GDP, but what has also been dangerously steady, and progressively high, is its carbon emissions. During the last decade, India turned out to be one of the biggest carbon-emitting countries, touching 1.6 million kilotonnes in 2007 alone.

Plagued by crippling energy crises that cannot be dealt with if the same pattern of energy generation, import and consumption continues in the near future, India has started experimenting with alternative energy sources. Being blessed with a tropical climate and intense summers, the country is naturally predisposed to receiving abundant solar power for the major part of the year.

The country has already entered a solar partnership programme with the US, under the US-India Energy Partnership Programme called SERIIUS. This initiative will also enable India to take the fullest advantage of its deserts and arid lands, and reap energy benefits without harming Mother Nature. India can even supply this energy to other countries, thus encouraging bilateral trades and adding to the country’s robust economic growth. However, India will require at least $13 billion in the next three years to fund this second phase of the solar energy generation unit.

Solar projects are already generating a lot of energy for some states in India. Most of these plants are located in Gujarat, with some spread across Orissa, Rajasthan, Andhra Pradesh and Tamil Nadu, among others. While Gujarat has been the bellwether in the solar projects space in India, Rajasthan will be home to the world’s largest solar plant very soon. That solar photovoltaic power plant will have an estimated life of 25 years and is expected to generate 6.4 billion kilowatt-hours per year, as per official figures.

Gujarat has been clocking about 823.9 MW, with its biggest success being the Jawaharlal Nehru National Solar Mission. What has boosted the power scenario here is the state’s pro-solar policies and its subsequent access to a consistent flow of clean energy. Encouraged by the positive growth, Gujarat has also launched about 75 solar projects over two years. Moreover, Gujarat chief minister Narendra Modi has always been a believer in entrepreneurship. Therefore, harnessing the solar power is the most sensible thing the Modi government has done for the state, which is high on industrial production.

India currently does not have an over-reaching energy strategy, but what it has in place could be called disparate policies. With the country being blessed with 5,000 TWh (Terra Watt per hour) of solar insolation annually, India stands to gain a lot as far as clean energy production goes. It can also set up independent energy generation units to make its villages and cities self-sustainable.

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Latest : Rooftop Solar Projects in India

With a high population density, large tracts of land required for large-scale solar projects will be hard to come by in India in the near future. And this is where small-scale rooftop solar projects can fill in the gap and address the ever-increasing domestic energy requirements. A look at the challenges involved in promoting and implementing these projects in context of the ongoing Jawaharlal Nehru National Solar Mission.

Annie Philip (annie.ac@gmail.com) is an independent journalist based in Mumbai.

With an average of 300 sunny days a year and high solar insolation, India has the capability of producing 5,000 trillion kilowatts of clean energy annually.[1] The potential to lead the way in the solar power space, in addressing domestic energy requirements and as a supplier of equipment to other countries is immense.

The Jawaharlal Nehru National Solar Mission (JNNSM), launched in 2010, set an ambitious target of deploying 20,000 MW of grid-connected (including rooftop installations) and 2,000 MW of off-grid solar power by 2022 in three phases.

The JNNSM Phase II policy document has declared Phase I (up to 2013) a success story, with encouraging response from project developers.[2] A new World Bank report[3] attests this and states that the JNNSM Phase I is “well-poised to make India a global leader in the development of solar power”, and that it has been “instrumental in bringing down the cost of solar power to a level that is competitive across the world”.

However, almost all of the solar power projects of Phase I were “ground-mounted utility scale grid-connected systems”.[4] Large-scale solar projects are space intensive. “A 1,000 MW plant may require nearly10,000 acres of contiguous land”.[5] With a high population density, land required for solar projects will be hard to come by in India. And this is where rooftop projects can fill the gap. Rooftop projects also improve productivity as transmission and distribution losses are reduced, and they require a low gestation time.[6]

JNNSM Phase II (2013- 2017) aims to deploy 1,000 MW of grid-connected and off-grid rooftop solar projects.[7]

To achieve a nationwide impact through solar power, particular attention will need to be given to small-scale solar applications, including rooftop projects. These projects will require continuous support and evaluation from the Ministry of New and Renewable Energy (MNRE) and the states. The bigger focus on large utility-scale projects is because these projects are easier to monitor and allow for achieving policy targets on time for policy makers.[8] Rooftop solar projects pose quite a few challenges which need to be addressed before solar panels on roofs across India become a common sight.

Solar Space Market

As of October 2013, India’s total installed capacity reached 2,100 MW[9] from a mere 17.8 MW[10] in early 2010. Of this, grid-connected solar capacity amounted to 1,969 MW and off-grid systems accounted for 131 MW.[11]

The Indian solar market is estimated to reach US$2.05 billion in 2015, up from US$1.05 billion in 2012, according to an analysis by Frost and Sullivan.[12]

The JNNSM has been effective in bringing down the cost of solar power in India. A tariff of Rs 17 per kW hour was fixed by the regulator when the solar mission was launched in January 2010.[13] Over the course of two years, the tariff reduced dramatically from Rs 17 per kWh to Rs 10.8 in November 2010 and further to Rs 7.49 per kWh in December 2011.[14]

Rooftop Solar Power

Grid-connected : The Rooftop Photovoltaic (PV) and small Solar Power Generation Programme (RPSSGP) scheme (under JNNSM) aims to encourage states to set up small solar grid-connected projects. This endeavor will help “create a database of performance of solar plants under different climatic and grid conditions”.[15] RPSSGP is a generation based incentive (GBI) scheme and the projects are connected to the grid at voltage levels below 33 kV.

Interestingly though, a Centre for Science and Environment report states that “almost all projects under the RPSSGP are actually ground-based”.[16]

MNRE launched a pilot scheme for promotion of large area grid-connected roof top solar PV projects in cities. It is primarily targeted at cutting the dependence on diesel generators for backup in commercial establishments. A 30% subsidy on the system cost is provided through Solar Energy Corporation of India (SECI), a government-run implementation agency.

Off-grid: Off-grid solar applications include solar lighting systems (lantern, home and street), solar power plants, charging stations and pumping systems. JNNSM has set a target of 20 million solar lighting systems for rural areas by 2022.[17]

A good example of an off-grid solar project would be the micro grid executed by Mera Gao Power (a USAID-backed enterprise) in Damdampurawa village, Sitapur district, Uttar Pradesh in early 2013. Each household in the village was provided two LED lights and one mobile-charging point at Rs 25 per week (works for seven hours every evening) and a one-time setup cost of Rs 40 was charged. The roof of a sturdy house was chosen to install the two solar panels and battery (two panels can serve up to 50 households).[18] The project brought a vast improvement to the life of the villagers.

States and the Domestic Consumer Space

In the domestic consumer space, a typical house solar installation of 1KW power costs about Rs1.7 lakh with the battery costing approximately Rs 60,000 to Rs 70,000. The battery needs to be changed every five years.

Many states now have their own solar policies with Kerala, Tamil Nadu, Gujarat and Karnataka investing significant allocation to rooftop projects directed at households.

Challenges and Looking Forward

Policy barriers: A report[19] by World Bank in 2010 pointed out certain policy and regulatory barriers as key impediments to solar power development in India. Based on interviews with developers in the solar power space, it cited a lack of clarity in guidelines as a hindrance. For the domestic consumer, a tedious approval process to obtain subsidy,[20] and the presence of multiple partners (MNRE, state implementation agency, project developer) makes installation a cumbersome task.[21]

There have also been administrative issues because of the “proliferation of different solar programmes”.[22] Currently there are, at least, “three programmes with similar mandates and overlapping areas of operation” among off-grid projects in rural areas .[23] These include programmes by the MNRE and Ministry of Power, which differ in their view of the type of decentralised energy sources to be used and the permanency of the off-grid system. The result is that “no single entity is fully aware of villages being electrified through various decentralized energy programmes across the country”.

For the domestic consumer, rural and urban, a single point of contact from financing to installing to operating to maintaining is required for the smooth implementation of the solar project.

Operational issues: The power grid in India has been known to have severe stability problems with major grid collapses. Solar power, being more erratic than conventional power, poses an important challenge to grid stability.[24] With multiple small solar projects connected to the grid, there is a possibility that the electricity network can become imbalanced.[25] As the number of these projects increase, it will be vital to monitor grid stability for its sustainability.

Effective storage becomes an important issue during India’s monsoon season[26]. In the current scenario, solar power for households can only be stored in expensive batteries made from environmentally toxic materials[27]. After-sales service was also identified as a challenge area for small-scale project developers[28].

Costs, financing and conventional energy sources: Even with subsidies, the installation cost of a domestic solar system at present remains high for most consumers in India. However, solar PV power is now cheaper than diesel generated power.[29] “The MNRE anticipates solar power achieving grid parity by 2017-18 and parity with coal-based thermal power by 2025, but this recognises that cost trajectory will depend upon on the scale of global deployment and technology development and transfer”.[30] Ultimately, the growth of solar power in India is closely tied to the cost of conventional energy power. As solar power costs turn more competitive, demand from consumers will naturally push supply in the domestic segment.

The second phase of the JNNSM is facing a major shortage of funds [31], and rooftop solar projects are bound be affected as they rely largely on MNRE funds. But, in a positive development, “the RBI allowed loans given to individuals to set up off-grid solar and other renewable energy solutions for households as priority sector loans”.[32] However, the banking community will require training to become familiar with dynamics involved in financing of the solar sector, especially the off-grid segment for rural areas.[33]

One model does not fit all and role of State: The feed-in-tariff model presents some challenges in implementation.[34] A key issue is monitoring of projects. It is possible that power generated from sources other than solar, including utility supply and power generated from subsidised fuels, is fed into the grid, and a model like feed-in-tariff could end up being misused.[35] In fact, the Delhi government scrapped its solar rooftop scheme fearing such abuse and exploitation.[36] It also poses a high burden on the discom because purchasing power from individual households might be uncompetitive, as the per unit cost of electricity may be higher due to the small size of the project.[37] The dynamic nature of the solar energy market also makes it difficult to fix the tariff.

So should households install grid-connected or off-grid rooftop solar projects? What should be the model of operation? States/ local bodies will need to decide on the suitable model to adopt based on local conditions. States will have to step up mandatory regulation and provide an encouraging environment for the domestic consumer and for organisations setting up off-grid applications in rural areas. Punjab has made it mandatory for houses constructed over an area of above 5,400 sq feet to install solar power projects.[38]

Engaging the customer: Getting the domestic consumer interested in solar power is perhaps the most important step to popularise rooftop solar installations. An expansion of the service network, large scale visibility/ publicity and provision of information to customers, as mentioned in the JNNSM Phase II policy document, is required. The MNRE has to rope in state and local civic authorities and residential associations.

At present, the market has different types of solar devices of varying quality, including poor quality imported products. JNNSM Phase II has plans both for developing “star rating systems” and standards for components used in solar systems. Also, all roof types may not be suitable for installation and may require refurbishment.[39]

Another concern for the domestic consumer would be ownership (in case of shared roof) and renting the roof for rooftop solar projects. The owner may consider the roof as a source of income in the future. When the incentive (based on generation) is fixed (Gujarat’s rooftop scheme), the owner may be hesitant to enter into a long-term agreement “where there is a risk of disproportionate green incentive versus the rise in rent income.”[40]

Despite the difficulties involved in harnessing solar power on a smaller scale, rooftop solar projects present a real opportunity for energy security for India’s vast populace, especially the large majority (400 million people)[41] who lack access to modern forms of energy.

Separate policy to aid PSUs in solar sector on the cards

To cater to the increase in interest among public sector undertakings (PSUs) to set up solar/wind power projects, the Ministry of New and Renewable Energy is considering a separate scheme/policy for PSUs.

“There is a lot of interest and these are cash-rich companies, so there is a proposal for a separate scheme under which public sector companies can invest. However, it is still in the discussion stage,” said Bharath Reddy, senior manager (PV), Solar Energy Corporation of India (SECI), a government body set up to promote solar power development in India.

Almost every PSU has plans for wind and solar projects–more solar than wind. Companies like ONGC, BHEL, NTPC are investing big bucks to get into renewable energy. While projects by private power producers are in capacities of about 50MW or 100 MW, PSUs are working on large plans.

“PSUs can be a great push for solar, with the kind of balance sheet and bandwidth they have, they can set up big plants in the range of 500-1000 MW in a quick span of time. Many of the PSUs and other government entities are sitting on huge land banks and utilising them for setting up solar power plants can be a great idea,” Anil Jain, managing director, Refex Energy Ltd, said.

While actual work on the ground is not consistent with grandiose plans, there is activity nevertheless.

NTPC Ltd has commissioned about 10 MW of solar projects and has 100MW more under execution. It has has signed agreements for setting up wind energy projects of about 700 MW. Neyveli Lignite Corporation (NLC) is working on setting up two 10 MW solar plants, and is soon set to commission a 50 MW wind farm.

NTPC is targeting a total of 1,000 MW capacity through renewable energy sources by 2017, and NLC is looking at about 300 MW over the next two years. BHEL too has commissioned about 7 MW in the country.

The biggest of the PSU projects is the 4,000MW, 6-PSU project in Rajasthan, which, if it comes, will be the world’s largest single location solar project. BHEL, SECI, SSL (Sambhar Salt Ltd), PGCIL (Power Grid Corporation of India), SJVNL (Satluj Jal Vidyut Nigam) and REIL (Rajasthan Electronics & Instruments Limited) are part of this venture.

The changing dynamics of India’s National Solar Mission

As expected, there was a considerable leaning towards the open (non-DCR ie no restrictions on module sourcing) category that was oversubscribed by over four times as against only two times for the DCR category. But average bid for the DCR category was much higher than expected at approximately INR 20 million ($330,000), which is more than double the price difference between domestic and imported modules.

This price difference is most likely evenly split between the domestic module suppliers (to finance their working capital and augment their limited manufacturing capacities) and project developers, who expect a considerable risk premium for using domestic modules with associated supply uncertainty and poor bankability. The use of a separate DCR category has starkly highlighted the limitations of Indian manufacturing sector and caused a big split in the Indian solar industry with module suppliers and project developers in firmly opposite camps. The question now is that where does the domestic manufacturing sector go from here and what is the best way for the government to boost local industry?

It is not entirely clear as to how much capacity was awarded on accelerated depreciation (AD) basis but we believe that it may be as high as 150 MW. We have always maintained that this policy provides a large and unnecessary financial incentive to a small part of the industry and is not in the best long-term interest of the solar industry. Ceterus paribus, the 70 paise tariff difference for AD bidders still favours them unduly against non-AD bidders. Not only does AD incentive detract from quality approach to project execution and development, but it also crowds out genuine long-term investment in the sector.

One of the more encouraging outcomes from the bidding process was the considerable interest shown by foreign project developers and utilities. This is a very welcome move in many ways as it reduces the cost of capital and makes solar power more competitive. It also brings more credibility to the market and hopefully, will result in much needed international expertise in project execution and deliverability.

Bridge to India’s analysis shows that almost 50% of total capacity has been won by international bidders. Prominent names include Sun Edison (100 MW), Acme (backed by EDF, 100MW), Fortum and Focal Energy (40 MW each) and SolaireDirect (30 MW). Indian IPPs including Azure Power, Hero Energy and IL&FS also fared strongly with nearly one-third of total allocation.

The list of winning bidders was just as interesting for missing names – thanks in part to the stretched balance sheets and parlous state of the economy, the traditional Indian corporate houses (Jindals, GVK, GMR, Lanco, Adani, Reliance, Aditya Birla) were conspicuous by their absence. And many prominent Indian IPPs either did not participate or did not win anything (TATA power, Welspun, Kiran energy, Green Infra, ReNew to name a few). This is an indication that the bids were too aggressive either because of strong overseas interest (lower cost of capital) or perhaps a compromise on project quality/returns.

With average project cost of around INR 58 million/MW for tier 1 imported modules, a fixed tariff of INR 5.45/kWh doesn’t seem nearly attractive enough even accounting for the INR 10 million of capital cost subsidy (VGF). Our calculations show that a typical project will show a risk adjusted equity IRR of 14-15% with these numbers. Many of the successful bidders are likely to have a tough time with project costs creeping up and interest rates not softening anytime soon. But a stronger Rupee will provide a much needed respite.

Latest on Solar Power in India

What India truly needs is the setting up of small and medium size solar panel manufacturers who can offer turn-key jobs to individual houses!

The Solar Energy Corporation of India (SECI) is the nodal agency established by the union government for implementing solar projects in the country. SECI has tied up with Japan International Cooperation Agency for raising funds for the initial infrastructure development and plans to provide loans to developers at low rate of interest that could vary between 4% and 5%.

SECI plans to set up a 1,000 MW solar park in Mehboobnagar district of Andhra Pradesh, in the Telengana region. This will be located on a 5,000 acre area, according to Rajendra Nimje, managing director of SECI. As per present plans, the entire capacity will come up in the next 18 to 24 months, and the Collector of Mehboobnagar has agreed to make available necessary infrastucture, at an estimated outlay of Rs600 crore. To facilitate the work, Solar Energy has entered into an agreement with Andhra Pradesh Industrial Infrastructure Corporation for facilitation of land.

Developers will be chosen through competitive bidding while the basic infrastructure is made ready in four to six months. It is expected that most solar units in the park will be in 10 MW capacity some are expected to be larger.

SECI has other ambitious plans too. One of the largest solar parks in the world will be set up with a 4,000 MW capacity in Rajasthan, while three others are planned in Odisha, Tamil Nadu and Rajasthan, besides a second one in Andhra Pradesh. It is estimated that the unit rate for sale could be around Rs5.50 which compares with the rate for power being sold in most states to the end consumer.

Nimje expects that SECI would be able to achieve the target of 10,000 MW of solar power by 2017. Karnataka, its neighbour, has similar solar energy plans and expect to announce its solar energy policy soon. Karnataka minister for power, DK Shivkumar stated that the government would encourage people to take up roof top solar energy to be tapped for their own family use and make available the excess to the State grid, for which a good price would be paid by the government.

In fact, it is proposed that the government would make it mandatory and ask all new building owners to have provisions for providing solar energy on the roof top. The proposed policy would be placed before the Cabinet soon. In the meantime, due to increasing power needs, state government plans to obtain 400 MW of power from Damodar Valley Corporation

He has also directed all electricity companies to ensure rural areas and homes get three-phase supply at least seven hours a day, particularly farmers should not suffer.

The question of obtaining permanent power supply through the natural solar source needs to be made mandatory all over the country. What we truly need is the setting up of small and medium size solar panel manufacturers who can offer turn-key jobs to individual houses. Such a move will reduce the heavy burden on the power generators who have to import fuel at great cost.