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Clouds over solar

 
By Sunita Narain
Last Updated: Thursday 11 June 2015 | 11:04:44 AM

Clouds over solarIndia’s solar power policy is now entering round two. And there is much that needs to be reviewed and reworked as the business of solar energy has seen massive turbulence in India as well as globally. In the first phase (2010 to 2013) of the Jawaharlal Nehru National Solar Mission (JNNSM) the target was to set up 1,000-2,000 MW of grid-based solar power in the country. By 2013, the country has indeed commissioned some 1,000 MW of solar power, but 700 MW of this target comes from the non-JNNSM state of Gujarat.

The next phase of the national solar mission kicks in from 2013. The Union Ministry of New and Renewable Energy has set a target of 9,000 MW of solar power by 2017, of which 5,400 MW will be paid by cash-strapped states. But three years is a long time in this fast-moving business. There have been drastic changes—for the good and the bad—in this sector since the mission began in 2010.

First, the good news: the price of solar energy has come crashing down in the past two-three years. In November 2010, when the first tender for solar photovoltaic (PV) power was opened, the lowest tariff was Rs 10.85 per kWh. A year later in December 2011, when new bids were opened, the tariff was down to Rs 7.49 per kWh. This makes solar energy attractive as it is now close to grid parity, with energy utilities buying power at Rs 4-5 per kWh.

But this is only one part of the story. The first bad news is that there is no money to pay for the second phase of solar power development. In the first phase of the national solar mission, one unit of expensive and clean solar power was bundled with four units of cheaper and dirtier coal power to pay for the price difference. But this was when the country had unassigned electricity from NTPC’s coal-based thermal power plants. Now there is an energy shortage. Bundling is not possible.

Second bad news is that 90 per cent of domestic solar manufacturing has closed or filed for debt restructuring. Solar imports have flooded the market. This is when the stated aim of the national solar mission was to encourage domestic manufacturing. It even specified domestic content requirement for the first phase, which would be ramped up subsequently. But when JNNSM specified domestic content requirement for solar PV installations, it left out thin-film technology from its ambit, focusing on crystalline silicon technology. As a result, imported thin film technology, which is not so durable and efficient, today dominates the Indian solar industry.

The reason is simple. There is a glut in global solar module market. China has built a huge capacity, which has no buyers in the increasingly cash-strapped world. Countries like Spain, Italy and even Germany are pulling back on their ambitious solar targets. In this over-supplied market, the price has come crashing down. It is estimated that in 2011, PV modules cost 60 per cent less than what they did in 2008. The price goes down each day.

All over the world solar manufacturing industries are feeling the heat. In just the last year over two dozen companies have filed for bankruptcy in the US and Europe. Even Chinese companies are reportedly reducing production or shutting shop. In this situation dumping and protection is the name of the game. Already the US and Europe have imposed hefty anti-dumping duty on Chinese solar imports. India is reportedly contemplating a similar move. But this is not the only issue at hand. Indian solar industry, in fact, has less to do with China and more to do with the US. The bulk (no exact estimates exist) of the commissioned plants have been built with low-interest loans (at 6-8 per cent) from the US Exim Bank. These loans came with conditions that procurement will be from US manufacturers only. Indian manufacturing industry is hit hard.

This is not the only injury. Under the climate change agreement industrialised countries have agreed to provide fast-track financing to developing countries. To fudge accounts, the US has added these commercial and conditional loans provided by US Exim Bank to Indian solar industry as part of its contribution to climate change finance. So, there is double benefit for the US—its domestic industry benefits and it gets accounting advantage in climate negotiations. The question now is how India will marry the two objectives of cheap energy, which it gets because of crashing solar prices, and domestic manufacture, critical for employment and energy security.

The third bad news in the solar sector development is of even more fundamental nature. The fact is that grid-based solar power continues to reach only those households that are connected to energy supply. In fact, what it does is to subsidise expensive solar for the already-reached population. In a situation where the transmission and distribution losses are 20-25 per cent, it also means that all power generated by solar plants is “lost”. These plants work at a maximum of 20 per cent capacity. Therefore, there is much to rethink in the next phase of solar power development. Let’s discuss the options next fortnight.

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  • I am really enriched by

    I am really enriched by reading this beautiful editorial. Honestly, I was not aware of so many other sides of solar energy. Thank you Dr Sunita Narain for such information.

    Posted by: Anonymous | 6 years ago | Reply
  • The editorial points to some

    The editorial points to some very interesting facts that are not talked about in the renewable energy circle. It refers to bidding of solar PV power at Rs 7.49 per kWh in December 2011. However, one has to wait and see if the bidder is able to actually make any profit out of this venture, especially if technology used for the project is of inferior quality or has a shorter life span.
    The editorial also points out the fallacy of government supporting mega players who set up plants far from the demand centres and feed solar electricity into the grid whose T&D losses are huge. It could be very different if government created a level-playing field for grid-interactive roof-top solar systems in city centres. This would provide scope for greater participation of residential and commercial energy consumers and eliminate the T&D losses to a great extent. This has a better potential to sensitize urban electricity users; those who invest in solar solutions will also take greater care to use electricity more rationally by adopting energy conservation and efficiency measures.

    Posted by: Anonymous | 6 years ago | Reply
  • While I agree with the major

    While I agree with the major part of the editorial and the concerns related to the solar policy, I do not agree with the following: 'In a situation where the transmission and distribution losses are 20-25 per cent, it also means that all power generated by solar plants is ÔÇ£lostÔÇØ. These plants work at a maximum of 20 per cent capacity. '

    The solar installed capacity has a low capacity factor - implying that 1,000 MW of solar power installed is equivalent to about 200 MW of baseload capacity (average generation). This is not wiped out by T&D losses. Even at 20% losses, 160 MW of average generation is created. Actual technical losses are lower than 10% (some of the losses are commercial -viz actual consumption - but not paid for).
    The statement that power generated by solar is lost is misleading.

    Posted by: Anonymous | 6 years ago | Reply
  • The editorial on solar Energy

    The editorial on solar Energy gave a realistic picture of the global solar industry.
    However, the following comment is misleading: "In a situation where the transmission and distribution losses are 20-25 per cent, it also means that all power generated by solar plants is ÔÇ£lost." These plants work at a maximum of 20 per cent capacity."

    The efficiency of solar photo voltaic power generation does not have anything to do with T&D losses of the system. The figure "20 to 25% T&D loss" refers to the whole system. If the power generated by the SPP is also transmitted and distributed along with the rest of the power, 20 - 25% of that also can be considered to be lost in transit. The balance, 75 - 80% will reach the consumers.
    On the other hand, if the Solar Farms are located nearer to the load centres, or if we go for roof top generation on a large scale, there will be very little T&D loss, and practically all the energy will be available to the consumer. Consequently, as the proportion of solar power goes up, the total system loss also will come down as a percentage.
    The fear about large scale imports is also exaggerated. About half the investment in a solar farm is on Balance Of Systems, and there is no reason why India can't make them as cheap as anybody else. At the same time, it might be expedient to take advantage of the current crash in international solar module prices, while the bonanza lasts.
    However, I must say that for a country which is anxious to import Nuclear Power Plants wholesale, the accent on self reliance in solar module manufacturing is really charming!
    RVG Menon, Trivandrum

    Posted by: Anonymous | 6 years ago | Reply
  • A very good article by

    A very good article by Sunita. Interesting and informative !

    The prices of the panels have come down. How about the urban rich shifting over to solar power and LED lights for meeting a part of the household electric consumption?

    Posted by: Anonymous | 6 years ago | Reply
  • Solar Paint Technology is

    Solar Paint Technology is also evolving slowly, which is better than PV technology. Where are we in India with Solar power production thru paint? Is the paint available in India? Can we have huge solar power production in MWs using paint technology? Better some one brings out the light on this please.

    Posted by: Anonymous | 6 years ago | Reply
  • I agree with the views and

    I agree with the views and the concerns expressed are interesting-The Union Ministry of New and Renewable Energy should understand that electricity supply is an essential commodity /service,instead of viewing it as employment generator by increasing the indigenous content (specially of PV panels),we should view the reduced overall cost as an advantage which would give filip to indigenous industry-generating employment indirectly. The world should be treated as one and let Indian companies in PV manufacture compete or close down. Having known BHEL closely in the capacity of GM - and also Tata Solar Power(earlier Tata BP-who made huge loss in solar business last year)and also Moser Baer-who are feeling the heat, my advice if somebody is listening-is that the focus of these companies should change to delivering cheapest but quality solar projects-i e on integration and not just manufacture of PV panels.You will be surprised to know that Power Conditioning Units (PCU)of real good quality are all imported- solar batteries used in OFF grid system use maximum imported materials and together with imported PCU and MPPT charge controllers contribute 60 % of the cost-while PV panels do only 30 %--hence all others abroad except PV panel manufacturers in India, are enjoying the sun shine. Let the large system integrators import every thing (if required to reduce cost)to make solar power dirt cheap-that is what the country wants-let MNRE monitor only the quality of products and systems used by integrators and give a token subsidy only or eliminate the subsidy. The subsidy can be through indirect measures like accelerated depreciation or other tax benefits or forcing distribution companies through RPO for buying exported power at premium,till grid parity is achieved.

    Posted by: Anonymous | 6 years ago | Reply
  • Roof top solar panels should

    Roof top solar panels should be encouraged with liberal subsidies to reduce load on the conventional thermal grid power.

    Posted by: Anonymous | 6 years ago | Reply
  • It's a nice editorial

    It's a nice editorial regarding current situation of Solar Power Generation projects. To add to the contents, REC mechanism (for Solar Projects) is going to contribute for more & more installation. Wherein Captive Industrial consumers can install their own Solar Projects with claim over Depreciation (direct saving in Income Tax) and easy hedging of increasing electricity tariff by regulatory boards.

    Focus shall be shifting from Govt. supported solar projects to stand alone Solar Projects.

    Yogesh Birla
    Director
    Birla Solar Project Co.
    Jodhpur (Rajasthan)

    Posted by: Anonymous | 6 years ago | Reply
  • I believe time has come when

    I believe time has come when Government should realize and spend money in constructive way. We should promote solar home systems and solar lantern. Micro grid and rural electrification can help to address the real challenge of country instead of directly connecting the solar power into the grid and losing it through T&D losses.

    To produce solar equipment itself takes huge amount of energy. I have No problem if 70% of our product comes from China, Let China invest into energy to produce solar panels.

    We should see to it that Indian manufacturers also survive .... Gov can buy Indian manufacturers' products at higher price and subsidise it. Same way as Japan gives subsidy on food grains .

    Law can be made that 50 % of the products should be manufactured in India.

    Posted by: Anonymous | 6 years ago | Reply
  • Dear Mr. Mohanty, I agree

    Dear Mr. Mohanty,

    I agree that it is still unclear whether or not Rs. 7.49/kWh is a viable tariff. We will see in a months time from now if they manage to commission their plants but we will probably not know for a long time if they are making a profit or not. Hopefully they have done their calculations correctly.

    Posted by: Jonas Hamberg | 2 years ago | Reply
  • Dear Rangan, It is a valid

    Dear Rangan,

    It is a valid comment you are making. It is true that transmission and distribution (T&D) losses are the same for solar as for any other power generator and that not all power are lost.

    I think the important fact is that solar can be used more locally without the grid to avoid the losses. Even if technical losses are at 10 % there are also losses in under-billing, theft and bad planning which needs to be seen to. However, there is of course always a trade off as smaller installations might need battery-back up. A more useful approach could be through mini-grids in rural areas and roof-top installations that can feed into the grid as well as consume locally (net-metering) in urban areas.

    Posted by: Jonas Hamberg | 2 years ago | Reply
  • Dear B. S. Gupta, You're

    Dear B. S. Gupta,

    You're comment is very incisive, we have another article which focuses on what to do about manufacturing in the next phase of the solar mission: http://www.downtoearth.org.in/content/solar-mission-phase-ii-may-reign-import-thinfilms-technology-boost-domestic-industry

    There are of course two sides to the coin and not having a manufacturing base in the future may be costlier in the long run for India.

    According to CERC figures Power Conditioning Unit (in simple terms the machine that makes the electricity from the solar power plant work well with the electricity grid) is 7 % of the total cost of a utility scale solar project while modules are still contributing 43 % of the cost. There hasn't been (and probably won't be) any talk of putting up barriers for using imported modules in OFF-grid projects (it would be too hard to check anyway), only those that are utility scale are considered and only those sponsored by the central government - no state scheme is considering it.

    Posted by: Jonas Hamberg | 2 years ago | Reply
  • It is downright moronic if

    It is downright moronic if not contorted and twisted logic to deploy SPV or solar photovoltaics to feed the grid, especially in power-rich or energy-resource-rich regions where we have barely utilised 15% of our hydel, microhydel, biomass and other resources.

    Any crystalline-silicon or c-Si solar panel is built up of individual cells delivering about 2 watts of power. This makes hundreds of electrical joints to assemble a panel rated in hundreds of Watts.

    Although lot of market-entrant manufacturers are offering panels at progressively lower prices, their reliability and provenness in terms of failure-free operating years is in question. In fact, the new breed of polycrystalline SPV panels are reported to have hot-spots which result in burning of electrical joints at high current, which also coincides with high-intensity sunlight hours. Burnouts are likely.

    The cost of Rs 10 per kWh also appears to be a window-dresssed figure.

    It is a standard practice to rate SPV panels at x Watts for 4 or 5 hours or according to Langley's Constant for a given region, which places a limit on the number of peak insolation hours. This is known as rated wattage at peak insolation hours. Thus, even if we assume that a panel delivers 100 watts for 5 hours, the energy output is no more than 500 Wh and the cost of a 100 W panel is merely Rs 5000. But if the SPV panel cost is at 50% of the system cost, this would be Rs 2500 for a 100 W panel! Instead, Cost per Watt or Kilowatt would be a more honest fugure.

    In order to deliver power for all 24 hours a day, the battery and regulators require to store five or six times the energy produced, as is the standard for SPV systems, i.e. slow-drain batteries. These are required in addition to charge regulators, output regulators and invertors and a cost of Rs 5 per KwH for all this equipment is simply impossible.

    While I have no doubt that these systems will be and lot of entrereneurs of various hues will make good money, how long such systems will work in a failure-free way is a huge huge question.

    This reminds me of the "prestigious" nuclear power plants commissioned in the 70s and 80s which were inaugurated with great fanfare but, in truth, were critical, i.e. feeding the grid for no more than 15 minutes at a time!

    Posted by: Anonymous | 6 years ago | Reply
  • Dear Udit, While it is

    Dear Udit,

    While it is important to make sure that standards are kept high on modules so it doesn't give a bad name to the solar industry as a whole, shouldn't the market work this one out itself? Developers buying the panels wouldn't be unaware of risks and in general, to my best understanding, they demand guarantees from manufacturers so that if the panels degrade faster than expected they do get their money back, it would therefore make no sense for manufacturers to willingly

    So far the output from large scale grid-connected solar has been quite good (see:http://www.downtoearth.org.in/content/solar-power-plants-output-high-varying-widely)

    It is still too early to tell if the low tariffs given to solar will give a profit to the companies, but the good thing about Independent Power Producers is that if it doesn't then at least it is only the company losing money, not the state.

    As for batteries, they are not used in large utility-scale projects and that is perhaps the best argument for the grid-connected projects as batteries inflict a heavy environmental cost.

    I don't know where the figure of only 15 % of small and micro-hydel and biomass is being utilized. As far as I know biomass is struggeling because of the increasing prices of their feedstock and in place like northern Rajasthan where solar is being set up there are little hydro-resources to be had.

    Posted by: Jonas Hamberg | 2 years ago | Reply
  • Dear Yogesh, The problem with

    Dear Yogesh,

    The problem with the Renewable Energy Certificate (REC) mechanism (a way of trading the environmental benefits of renewable energy to companies and utilities that have an obligation to use renewable energy) is that until it is shown to be enforced, which has not happened yet against anyone but captive power users, no large expansion will happen. the Renewable Purchase Obligations (RPOs) need to become enforceable first for an expansion to happen.

    Posted by: Jonas Hamberg | 2 years ago | Reply
  • It is always a case of

    It is always a case of buyer-beware.

    But only too often, some slick techno-economic presentations create misunderstandings or over-promise on deliverables and before you can blink, there is a folly in purchasing wrong equipment, mis-application, system failure and the entire industry gets a bad name. I have seen such cycles of hype-over-hype, flop, slander and then total abandonement of SPV since the 80s that I have been associated with this industry.

    If the proposed panels are not meant to charge batterries, they would work for only 4 ot 5 hours. What use is this unless there is a load whose demand matches the panels' output? This is why it makes sense to directly power such loads at their location by a requisite number of panels instead of huge centralised systems.

    Gigantic centralised SPV systems only tickle administrators' egos by giving them the chance to sanction huge sums of money. SPV is best suited to feed autonomous systems, i.e. remote areas and low power needs.

    Photovoltaic being a hi-current low-voltage source runs up a line drop of 10 volts for every 0.1 ohms of resistance by contacts or wiring, at a load of 10 Amps.

    The figure of 15% hydel and biomass utilisation is well known and can be sourced from the MNRE or any authority involved in India's energy programme.

    Posted by: Anonymous | 6 years ago | Reply
  • Excellent article. Efficient

    Excellent article. Efficient Solar PV can be best option as decentralised power in rural areas.

    Dr.A.Jagadeesh Nellore(AP),India

    Posted by: Anonymous | 6 years ago | Reply