Who needs ultra mega solar power plants?

Government plans to set up four large-scale solar power plants that will cost a whopping Rs 1.2 lakh crore. Will they serve millions of energy poor?

By Chandra Bhushan
Last Updated: Monday 10 August 2015

The bigger the better seems to be the mantra of Central government ministries these days. If the Union Ministry of Power can promote ultra mega thermal power projects, each with a capacity of 4,000 MW or more, why should the Union Ministry of New and Renewable Energy (MNRE) be left behind? MNRE too wants to set up four ultra mega solar power plants (UMSPP) of 4,000 MW using solar photovoltaic (PV) technology. The rationale put forth for investing in big plants is that it will reduce the cost of solar PV power from the current Rs 7-8 per unit (kiloWatt-hour) to Rs 5 per unit over the next seven to 10 years. The plants would be set up at Sambhar in Rajasthan, Khargoda in Gujarat and Ladakh and Kargil in Jammu and Kashmir. 

On January 29, 2014, MNRE announced setting up the first UMSPP project in Sambhar. Three ministries—MNRE, Union Ministry of Power and Ministry of Heavy Industries and Public Enterprises—and six public sector undertakings (PSUs) have come together to develop and operate the project. It will be completed in seven years and will cost Rs 30,000 crore. This is excluding the cost of land, and transmission and distribution ( T&D) infrastructure. When fully operational, the plant is expected to generate 6,000 million units of electricity annually for 25 years, and offset more than four million tonnes of CO2 a year.

Responsibilities among PSUs have been divided, as is the equity share. Bharat Heavy Electricals Ltd will supply equipment; Solar Energy Corporation of India will sell electricity; Rajasthan Electronics and Instruments Ltd will look into operation and maintenance; Sambhar Salt Ltd will make available 8,000 hectares (ha) of surplus land it has in Sambhar; Power Grid Corporation will look into power evacuation; and Satluj Jal Vidyut Nigam will be in charge of managing the project. It will be set up in phases. The first phase aims at achieving 1,000 MW by the end of 2016. The remaining 3,000 MW will be generated through tenders to different developers to generate 500 MW each.

The Sambhar UMSPP will be funded through viability gap funding (VGF), which means the government will pitch in to meet a portion of the capital cost to make the project viable. The government will provide a VGF of Rs 1,000 crore from the National Clean Energy Fund (NCEF) for the first phase. NCEF was set up to promote clean energy through a cess of Rs 50 on every tonne of coal consumed in the country. MNRE has also approached the World Bank for loan assistance of US $500 million for the first phase of Sambhar UMSPP.

Is it worth it?

At first glance, the UMSPP project is too good to be objected. It will use surplus land and bring down the cost of solar energy. PSUs will use public funds to set up a project of public interest. The country will get the much needed electricity as well as contribute to mitigating climate change.

But is that so? Let’s assess the project from the aspects of priorities and challenges that the country faces.

We have singularly failed in providing access to adequate, affordable and clean energy to a large section of the country’s population. As per the Census 2011, one-third of households—about 400 million people—do not have access to electricity. In rural India, about 45 per cent of the households—more than 77 million—continue to use kerosene to light their homes and shops. With no access to any source of lighting, 1.2 million households go dark after sunset. The country is paying huge development costs because of this energy poverty—education, health and economic development are getting stymied.

In such a scenario, should we invest in large and expensive solar power plants that will feed electricity into a leaking grid (the T&D loss in the country was 24 per cent in 2011-12) and provide subsidised solar electricity to the rich domestic, commercial and industrial consumers? Or should we invest in small solar power plants and local (mini) grids that can provide electricity to the energy poor?

Deba, a small forest village in Chhattisgarh, is not connected to the main grid. A solar mini-grid is its only source of electricity

Before answering this question, it is important to examine what makes more sense: big or small solar power plants?

Solar energy is decentralised—sunlight falls everywhere. Demand for electricity too is decentralised. This makes solar PV technology, which is modular, most suitable for decentralised generation and consumption. This is the precise reason a majority of solar PV installations are decentralised.

Germany, the leader in solar energy, has most of its solar PV installed on rooftops. About 1.3 million households have installed 30,000 MW worth of solar PV panels. They are either feeding it to local grids or consuming it domestically. With large-scale rooftop installation, Germany has brought down the price of solar energy by 70 per cent in the past 10 years. Therefore, the idea that investing in big projects alone will bring down the cost of solar power is not true. Large-scale investment in small power plants will yield the same result.

Besides, big solar power plants are viable only when they use solar thermal energy. Unlike PV, solar thermal is a centralised technology. It converts solar radiation into steam, which is then used to run a large conventional turbine. Big solar plants across the world, such as those in the US and Spain, are mostly based on solar thermal technology.

India is the only country which is investing in big solar PV projects. We have installed 2,000 MW grid-connected plants, mostly in Gujarat and Rajasthan. In the past five years, the price of solar energy has halved. It is debatable whether this reduction is because of installing 2,000 MW solar power, or due to the glut in the solar industry and dumping of solar PV panels by Chinese and US companies. Considering that India accounted for only 3 per cent of the global demand, the price reduction seems to be mostly due to the glut. But this does not mean that increase in demand will not reduce the price. It will. The question is how should we ramp up this demand?

We should ramp up solar energy to provide electricity to the millions that have not seen an electric bulb. For this, the government needs to incentivise businesses to invest in small-scale solar plants and mini-grids.

Bright future lies in mini-grids

The four UMSPP of 16,000 MW that MNRE plans to install will cost more than Rs 1.2 lakh crore (this is excluding the T&D infrastructure costs), and require 35,000 ha. At least 10,000 MW worth of small solar plants and mini-grids can be set up using this money and much less land. These small solar plants, equipped with energy storage option, will have the potential to provide at least one unit of electricity to each household per day. This is sufficient to light up 40-50 million households, or half of those without electricity in rural India.

The government can make this possible by incentivising solar mini-grids with the same model it employs for grid-connected, large-scale solar power plants. Like grid-connected projects, mini-grid projects should be provided with a feed-in-tariff (FiT) or VGF. They can also be made grid interactive. This means, when the grid reaches a village, the mini-grid can be used to export power to the grid as well as import from it, depending upon growing needs or deficits. Consumers can be asked to pay the grid tariff; the government can pitch in with the remaining as FiT or VGF. This model can also be used in urban areas for rooftop power producers.

The other major advantage small solar power plants have over the big ones is instead of a few big businesses setting up large-scale solar power plants, we can promote thousands of small businesses through solar mini-grids and social entrepreneurs to serve the local population. This will create jobs at the local level and build local economies.

This model will revolutionise the way power is produced and consumed in India. This will also bring down the price of solar power—the main objective of setting up UMSPPs. It will be a better way of utilising the resources of NCEF and PSUs. n

Chandra Bhushan is Deputy Director General of Centre for Science and Environment, a non-profit in Delhi

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  • 1] When unit like MW is used

    1] When unit like MW is used in solar power discussions it is confusing for a common man . Does it mean MWp or MW . Wp relates to a solar panel & output of actual energy is much smaller. If solar lights are to be popularised experts should find a solution. Otherwise common man would feel cheated when word watt is used when Wp is meant.

    Posted by: Anonymous | 6 years ago | Reply
  • One cannot disagree with the

    One cannot disagree with the analytically rigorous exposition in the piece. However on revisiting the 15 February 2012 piece-Truth about Solar Mission-it is time to bring in a critical examination of the operating protocol among various stakeholders. Obviously, policy inducements are driven and engineered by the industry advocacy groups for whom consumers and clean energy are as alien as F-in-T or VGF to a rural energy consumer.
    Being a discrete researcher in the rural energy security issues I submit that we initiate a thorough examination of the processes involved in framing the RFD-results framework document; RFQ-EOI across various public institutions charged with the responsibilities of ensuring clean energy security to the Indian population.

    Posted by: Anonymous | 6 years ago | Reply
  • The mega projects are

    The mega projects are definitely desirable to bridge fathomless and gap between present shortages and demand which would astronomically increase with affluence growing all round both in lower and higher strata of society of India.

    Posted by: Anonymous | 6 years ago | Reply
  • UMSPPs can co exist with mini

    UMSPPs can co exist with mini grids and rooftop solar PV units. After all, there is enough sunlight for everyone.

    Investment in ultra mega units does not mean that the government has closed the option of decentralised units.

    It is upto the state govts and local bodies to take up such smaller projects and promote them with the necessary incentives.

    Posted by: Anonymous | 6 years ago | Reply
  • Excellent. There has been no track record of Big Projects completed in time India mainly Power Projects. It is mainly due to number of clearances. As one US Cynic put it,"You Indian Guys are better than Bill Gates in creating Windows".
    DEspite all the push and propaganda given to solar in India it is nowhere Wind:
    In Rajasthan major solar activity is on. The solar installations in India:
    Solar Energy Grid Connected
    Rajasthan 1,147.01
    Gujarat 1,000.05
    Madhya Pradesh 563.58
    Maharashtra 363.07
    Andhra Pradesh 186.00
    Tamilnadu 148.00
    Karnataka 78.22
    Uttar Pradesh 71.26
    Telangana 63.00

    On the otherhand Wind energy is far ahead:
    As of 31 March 2015 the installed capacity of wind power in India
    was 23,444 MW :
    Tamil Nadu (7,253 MW),
    Gujarat (3,093 MW),
    Maharashtra (2,976 MW),
    Karnataka (2,113 MW),
    Rajasthan(2,355 MW),
    Andhra Pradesh (916 MW),
    Madhya Pradesh (386 MW),
    Kerala (35.1 MW)

    In India Dust is a major problem for harnessing solar PV power. Even small panels at Traffic signals are not properly maintained(smoke and dust). In Rajasthan during summer sand storms(Loo) occurs which carry sand particles at high velocities. Did any body studied its effect on the smooth solar panel surface? Water is very scarce in Rajasthan desert. How to keep these huge solar panels clean? Mere targets are of no use but reliability and production of power are prerequisites. It is all public money. Thorough research is needed on the life cycle of these solar plants .

    The need of the hour in our country are Solar co-operatives and solar roof top,hybrid solar/wind.
    A community solar farm or garden is a solar power installation that accepts capital from and provides output credit and tax benefits to individual and other investors. In some systems you buy individual solar panels which are installed in the farm after your purchase. In others you purchase kW capacity or kWh of production. The farm's power output is credited to investors in proportion to their investment, with adjustments to reflect ongoing changes in capacity, technology, costs and electricity rates. Companies, cooperatives, governments or non-profits operate the farms.
    Community solar in the United States
    An estimated 85 percent of US residential can neither own nor lease systems because their roofs are physically unsuitable for solar or because they live in multi-family housing. At least 52 projects are under development in at least 17 states, and at least 10 states encourage their development through policy and programs.
    Federal and other tax policies are necessary to finance community solar farms. U.S. Senator Mark Udall introduced the SUN Act (Solar Uniting Neighborhoods) to extend the existing 30% tax credit to community solar farms in 2010 and 2011.
    The bill would enable groups of individuals or homeowner associations to develop utility-scale solar power facilities in collaboration with local utilities that would distribute the power and credit owners based on their percentage of investment in the solar farm, extending the tax credits accordingly.
    “These projects have the potential to drastically increase the adoption of clean energy nationwide, but the tax code hasn’t kept up,” Udall said. “You can get a 30-percent tax credit for putting a solar panel on your house, but not for investing in a solar farm.”
    Dr.A.Jagadeesh Nellore(AP)

    Posted by: Anumakonda Jagadeesh | 3 years ago | Reply