14 December 2011
On day-2, the Intersolar India conference was packed with a lot of interesting sessions taking place simultaneously and a marked increase in the number of participants compared to Day-1. The sessions covered topics such as quality Issues in construction, project management, development and financing, off-grid market in India and solar thermal applications.
In the presentation ‘Investment attractiveness of the Indian off-grid solar market’, Mr Sushil Rajpurohit of Knowledgefaber (India) highlighted the challenges faced by current power generation in India using old legacy equipment owned by coal power plants running at low utilisation factors and huge transmission losses varying between 25 to 35%.
Off-grid and rural electrification have tremendous opportunities in India in both electric and non-electric power applications such as solar water heating, solar cookers, water pumps, home/street lighting. The other big opportunities are in captive power plants (10-20 GW potential) and in telecom towers (6.3 GW potential). The compounded annual growth rate of this market has been more than 32% over the past few years.
The main challenges of the off-grid sector are the lack of customer awareness and initial capital costs. Mr. Munawar Moin, Managing Director of Rahimafrooz Renewable Energy Ltd. (Bangladesh) presented a solution to overcome challenges for off-grid implementation with his experience in Bangladesh on installing solar home systems (10-85 Wp range) in one million households by June 2011. According to him, the main success factor was the ‘proud ownership’ of the solar home systems by households who were able to afford it through some grant and extensive micro-credit schemes. He also highlighted the need for continuous support and training to the users on the operability aspects of these systems.
In a presentation Mr. Ernesto Macias Galan, President of the Alliance for Rural Electrification (Belgium) shared that the overall market potential of off-grid systems globally is 20-100 GWp in the next decade. He also noted that when looking back, all predictions done on PV market potential in reports from 8-10 years ago have grossly underestimated the growth of PV market. In the Q&A session, there was a comment made by a representative from SMA that the specifications set by the MNRE in India for off-grid home systems are very peculiar and do not allow for good innovative technologies to be chosen for this sector.
In the session on ‘Project Financing’ there were several presentations and discussion covering industry and policy issues related to financing of solar projects. Mr B. Venkateswara Rao, General Manager of Indian Renewable Energy Development Agency Limited (IREDA, India) said that there are only 3 major factors affecting the competitive rates of solar power production: project costs, Plant Loading Factors (PLF) and interest rates of financing. IREDA has offered term loans for up to 70% of the project costs for 14 projects under the national solar mission totalling 3.4 billion Rs (~ $65 million) at an interest rate of 11-13.5%. Based on data collection of commissioned plants in India, he observed that the PLF for c-Si based plants is in the range of 13-18%, while thin-film based plants have shown higher PLF of 19-19.5%. He updated that under the national solar mission scheme, 14 projects have commissioned by end of November, 67 projects have commissioning deadline of March 2012 and 11 projects have deadline of June 2012. He highlighted that evacuation facility and land issues are the most important factors affecting successful commissioning of grid-connected projects. EPC contractors in India are now gaining experience with the help of foreign infusion and technology transfer from Europe and US. He also briefly mentioned the plans to extend capital subsidies for off-grid systems and imposing of a ‘Green Cess’ on 10kW and above consumers.
In sharing of perspectives from the Wall Street and public equity investor community, Mr Vishal Shah, Managing Director of Deutsche Bank (US) highlighted that the Indian solar market is transitioning from 2nd phase of market learning to the 3rd phase of market growth. What India needs is a stable long-term policy outlook, aggressive solar targets, access to low cost of capital and increasing presence of downstream solar companies. Mr. Anmol Singh Jaggi, Managing Director of Gensol Consultants Private Limited (India) shared his own working of the profitability of the 2nd round of projects under the national solar mission and concluded that even though the bidding has been aggressive up to Rs 7.49, the IRR can be expected to be around 17.5%. He further explained that the Renewable Energy Credit (REC) scheme with its accelerated depreciation mechanism is very attractive and can result in even better IRR compared to projects developed under the national solar mission rounds.
The afternoon session titled ‘Solar Energy Applications in the Indian Industry’ had a panel of industry practitioners as well as policy makers from the MNRE. Mr Ashvini Kumar of the MNRE commented that the Indian Government has been working on developing the renewable energy sector for the past 30 years, but the announcement of the Jawaharlal Nehru National Solar Mission (JNNSM) displays the commitment of government for the solar energy sector beyond a shadow of doubt. Answering a question about why only large-scale projects are targeted under the JNNSM, Mr Kumar explained that the intention of the policy is to allow the solar sectors to go to critical mass that would enable cost economics and he is very happy that 183MW grid plants are already commissioned in the last two years and this number will be 400MW by end of financial year 2011.
The announcement of the Jawaharlal Nehru National Solar Mission (JNNSM) displays the commitment of government for the solar energy sector beyond a shadow of doubt.
In his presentation Mr Deepak Gadhia, Chairman of Gehrlicher Solar India Pvt Ltd. highlighted that 37% of the total energy use in India goes into getting high temperatures and hence solar thermal has very good potential of development here. In his lively presentation of cases from his 30 years of experience in solar thermal application development, he concluded that “it is the time now to bring professionalism apart from passion in the solar thermal industry in India”. This can be achieved with technology transfer and increased awareness and training. He further commented that in Indian renewable energy sector today, “there are more consultants and middle-men around than there are manufacturers“
Mr Sudhir Kapur from the MNRE commented that solar thermal can be very well integrated with energy efficiency measures especially in old coal power plants, which consume 7-15% of the electricity produced and which would also have the space for installing solar thermal augmentation units. Mr Stefan Hess, Project Manager at Fraunhofer Institute for Solar Energy Systems (ISE, Germany) supported this by sharing that based on experience in Europe there is often a synergy between energy efficiency improvements and solar thermal system installations for process heat applications.
A late afternoon session focused on R&D in solar thermal systems domain. It was encouraging to see that the indigenously developed technologies such as the NALSUN selective solar coatings developed by the National Aerospace Laboratories in India has now a majority share (>90%) of use in the manufacturing of solar water heaters. Dr. Shireesh Kedare, Adjunct Professor, Indian Institute of Technology, Bombay (IIT-B, India) also presented an indigenously developed ARUN solar thermal concentrating technology that has been successfully proven with payback periods of around 3 years without any subsidies.
Overall, it was an eventful day with very informative presentations and lively discussions that highlighted the need for innovative financing and manufacturing capability development in the Indian solar energy sector that has now got a major boost after the introduction of JNNSM and similar state-owned policies separately in 3 other states viz. Rajasthan, Gujarat and Karnataka.
Written by Nilesh Jadhav, Contributing Editor – India, Solar Novus Today
See also “The Importance of Solar in the Developing World,” report from Intersolar India.