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Under the aegis of Rd. Atul Sharma Assistant Professor Department of Mechanical Engineering RGIPT, Rae Bareli
Submitted by SHIKHA YADAV (ROLL NO: M-10-28) NIJHUM BERA (ROLL NO: M-10-17)
In the world energy scenario, both India and china are going through an energy transition. If China has expanded its 2020 target from 1.8 GW to 20 GW-that's more than triple the amount of PV solar power installed in the entire world during 2008 then India is also not far behind, India has also started "the most ambitious solar plan that any country has laid out so far," the National Solar Mission matches China by setting a new target of 20 GW solar capacity by 2020. What's more, India estimates that the plan could bring the nowprohibitive cost of solar down to US $.08-.10 per kWh by 2017-2020, making it costcompetitive with fossil fuels. India's solar plan will meet this cost by levying taxes on gasoline and diesel, as well as implementing other measures like a feed-in tariff, solar power purchase obligations, tax breaks for manufacturers, exemptions on tariffs for imported equipment, and a national renewable energy standard that mandates a certain percentage of India's power be generated from solar. And there is the provision that the Indian government will provide $100 billion in subsidies over 20 years to utilities for buying solar-generated power. Though these two countries are on close fight but still the two countries differ sharply in several respects. Residential energy consumption in China is twice that in India, in aggregate terms. In addition, Chinese households have almost universal access to electricity, while in India almost half of rural households and 10% of urban households still lack access. On aggregate, urban households in China also derive a larger share of their total energy from liquid fuels and grids (77%) as compared to urban Indian households (65%). Yet, at every income level, Indians derive a slightly larger fraction of their total household energy needs from liquid and grid sources of energy than Chinese with comparable incomes. Despite these differences, trends in energy use and the factors influencing a transition to modern energy in both nations are similar. In addition to urbanization, key drivers of the transition in both nations include income, energy prices, energy access and local fuel availability. India’s thirst for natural resources is not comparable to China and its impressive 7 percent average economic growth is not as high as China’s thundering 9 percent. Low energy capacity forced India to rely on imports in the period of increasing demand while is becoming the Dragon King in the Solar market. India’s main problem is not lack of knowledge but the lack of successful transition from research-based knowledge to sustainable commerciality.
A project usually falls short of its expectation unless aided and guided by right person at right time. We humbly state that this project is not a fruit of our individual efforts but of a number of persons, who directly or indirectly helped us in the project. We would like to express our sincere gratitude to our project guide, Dr. Atul Sharma, for providing us the opportunity to work with him on this project work. His suggestions in visualizing the project and sustained interest to attain the objective envisaged in the project are gratefully acknowledged. His invaluable guidance had been indispensable to bring about successful completion of the project undertaken. In the last, but not the least, we would also like to express our sincere thanks to all our friends and colleagues who have helped us throughout the project with their cooperation, moral assistance and creative criticism, which was an on-going challenge, always tempting us to perform better.
SHIKHA YADAV (Roll No:-M-10-28) NIJHUM BERA (Roll No:-M-10-17)
TABLE OF CONTENTS
TITLE Introduction Indian solar program Background The JNNSM Current situation Looking forward Chinese solar program The solar programs Current scenario Comparison of the Indian and Chinese solar programs Energy hungry tigers and dragons Recommendation for the Indian program Conclusion References
PAGE NO. 6 14 15 18 25 28 31 32 40 42 44 47 52 55
5 6 7
ADB BHEL BOS BP CERC DGESL FIT GOI IEA IIT IREDA JNNSM MFI MMCD MNRE MoP MTOE NCE NDRC NTPC NVVN PPA PPA PV REC RPO SERC SWH UNDP UNFCCC Asian Development Bank Bharat Heavy Electricals Ltd. Balance Of Systems British Petroleum Central Electricity Regulatory Commission Department of Geosciences Environmental Studies Laboratory Feed in Tariff Government of India International Energy Agency Indian Institute of Technology Indian Renewable Energy Development Agency Jawaharlal Nehru National Solar Mission Multilateral Financial Institutions Million Metre Cube Per Day of Natural Gas Ministry of New and Renewable Energy Ministry of Power Million tons of Oil Equivalent National Centre of Excellence National Development and Reform Commission National Thermal Power Corporation NTPC Vidyut Vyapar Nigam Ltd Power Purchase Agreement Power Purchase Agreement Photo Voltaic Renewable Energy Credits Renewable Purchase Obligation State Electricity Regulatory Commission Solar Water Heating United Nation Development Program United Nations Framework Convention on Climate Change WEIGHTS AND MEASURES − Unit of energy, equal to 1x109 – Unit of energy, equal to 1 unit – Unit of power, equal to 1x106 − Unit of power, equal to 1 billion (109) watts − Unit of weight, equal to 1,000 kg or 2,204.6 pounds − Unit of power that a PV module is able to supply when it receives 1000 watts per square meter of solar irradiance i.e at noontime. Conversion: Rs1 million − Equal to Rs1x106 Rs1 billion − Equal to Rs1x109 Rs1 trillion − Equal to Rs1x1012 Rs1 lakh − Equal to Rs1x105 Rs1 crore − Equal to Rs1x107
BU (billion unit) kWh (kilowatt hour) MW (megawatt) GW (gigawatt) MT (metric ton) Wp(Peak Watt)
CHAPTER 1 INTRODUCTION 6 .
Renewable and Non-Renewable energy Primary and Secondary Energy: Primary energy sources are those that are either found or stored in nature. natural gas. and biomass (such as wood). 1: Classification of Energy in Primary & Secondary. Other primary energy sources available include nuclear energy from radioactive substances.The Earth has provided us with a wealth of energy resources over the millennia. Figure No. and potential energy due to earth’s gravity. Wood burning is certainly an ancient way of heating and cooking and is still very much in use today both in developing and developed nations.1 7 . oil. Nature provides us with a number of energy resources. thermal energy stored in earth’s interior. from basic fuels such as wood and charcoal to modern scientific resources such as nuclear energy. or biomass energy. Some energy sources have non-energy uses. Commercial and Non-commercial energy c. Some of these energy resources are in unlimited supply. for example coal. (Boyle. Source: Author’s compilation from literature review. is being encouraged in developed countries as one of our renewable energy resources. which have been utilized by primitive civilizations and continue to be useful today. for example coal or natural gas can be used as a feedstock in fertiliser plants. Primary energy sources are mostly converted in industrial utilities into secondary energy sources. The major primary and secondary energy sources are shown in below figure. wood burning. 2004) Primary energy can also be used directly. Primary and Secondary energy b. oil or gas converted into steam and electricity. The different energy sources can be classified as into several types based on the following criteria: a. Common primary energy sources are coal. In fact. but others are being depleted and will eventually run out.
The trend of rising share of renewable energy to the total energy used by world is a live example of its rising value to the energy sector. These are also called traditional fuels. and not bought at a price used especially in rural households. natural gas etc. agro waste in rural areas.Commercial Energy and Non Commercial Energy: Commercial Energy The energy sources that are available in the market for a definite price are known as commercial energy. Renewable and Non-Renewable Energy Renewable energy is energy obtained from sources that are essentially inexhaustible. Commercial energy forms the basis of industrial. The most important feature of renewable energy is that it can be harnessed without the release of harmful pollutants. electricity generation. which are traditionally gathered. lifting water for irrigation. threshing. solar power. Non-commercial energy is often ignored in energy accounting. Non-renewable energy is the conventional fossil fuels such as coal. which are likely to deplete with time. oil. renewable energy sources are gaining international attention including World Oil & Gas majors which have specific departments dedicated to harnessing renewable sources. transport and commercial development in the modern world. lignite. agricultural. cattle dung and agricultural wastes. wind energy for lifting water and electricity generation. By far the most important forms of commercial energy are electricity. geothermal energy. fish and fruits. Non-commercial energy sources include fuels such as firewood. oil and gas. animal power for transport. tidal power and hydroelectric power. Examples: Electricity. In the industrialized countries. for drying grain. solar energy for water heating. but also for many household tasks of general population. With the consistently rising prices of fossil fuels. Non-Commercial Energy The energy sources that are not available in the commercial market for a price are classified as non-commercial energy. crushing sugarcane. commercialized fuels are predominant source not only for economic production. coal.coal and refined petroleum products. Examples of renewable resources include: Wind power. Example: Firewood. 8 .
Global Primary Energy Consumption3 The global primary energy consumption at the end of 2010 was equivalent to 12002. 9 .( One barrel of oil is 159 litres) Gas The global proven gas reserve was estimated to be 187.5 times that of Canada.Figure 2: Classification of energy as renewable & non-renewable energy. China (13.23%). 2.9% of USA. Saudi Arabia had the largest share of the reserve with almost 19.07.04 time of Japan but 1. 22.65. It may be seen that India’s absolute primary energy consumption is only 4. The primary energy consumption for few of the developed and developing countries is shown in Table.3% of the world.3 %. India was 4th in the list with 7%.K respectively.1% followed by Venezuela with 15. 2004) Global Primary Energy Reserves2 Coal The proven global coal reserve was estimated to be 860.35 million tonnes of oil equivalent (Mtoe). Source: Author’s compilation from literature review.938 MT by end of 2010. (Boyle. The USA had the largest share of the global reserve (27. 1. Oil The global proven oil reserve was estimated to be 1383.20 billion barrels by the end of 2010.14 trillion cubic metres by the end of 2010. France and U.6%) followed by Russian Federation (18.9%. 2.23%). The Russian Federation had the largest share of the reserve with almost 23.
5 14.2 500.6 69.1 55.6 2858. 10 . 90.9 38.5 7.9 67.5 98.3 20.8 Nuclear Energy 192.3 2.7 5. Non OECD countries account for 93.4 0.2 4028.2 372.4% of the world’s proved oil reserves.2 20. June 2010) Global Reserve to Production Ratio4: The R/P ratio will remain a critical aspect to analyse the severity of fossil fuel reaching ‘Peak’ conditions.8 82.7 252.4 775.2 0.1 6.9 14.9 12.1 3.1 2432.7 316.2 19.1 ^ 158.4 4.6 23.9% of natural gas reserves.7 3.3 3.4 Table No.2 Hydro electric 58. though oil & natural gas proved reserves have generally risen over time.8 163.3 38.4 690.2 66.1 Natural Gas 621.0 5.6 123.5 62.6 3555.6 626.2 1713.4 12. 2010 (In Million tonnes oil equivalent) Country USA Canada France Russian Federation United Kingdom China India Japan Malaysia Pakistan Singapore Total Oil 850.1 16.1 93.7 84.7 85.9 209.3 83.4 147.1 5.6 155.5 277.1 25.3 96.Primary Energy Consumption by Fuel .6 25.1 32.5 201.7 428.6 2285.9 62.6 73.8 31.1 4.8 12002.0 84.5 42.6 Renewable Total 39.1 Coal 524.0 102.2 524. The below given figure gives a glimpse of R/P ratio of the major world entities.1 0.2 35. 1(Source: BP Statistical Review of World Energy. Coal remains the most abundant fuel by global R/P ratios.
10. India spent more than Rs.hydro. Jharkhand. there has been a marked increase in the share of natural gas in primary energy production from 10% in 1994 to 13% in 1999. contributing to 52. oil imports accounted for $21 billion. The current consumption for natural gas is about 55. Coal production is concentrated in these states (Andhra Pradesh.5 million tonne(MT).5 Natural Gas Supply Natural gas accounts for about 10. The majority of India's roughly 5. the demand is expected to be around 200 MCMD. the result is the length of time that the remaining reserves would last if production were to continue at that level. 77.4 billion barrels in oil reserves are located in the Bombay High.000 crore on oil imports at the end of 2010. Bihar. 6 Electrical Energy Supply The all India installed capacity of electric power generating stations under utilities was 1. India is the fourth largest producer of coal and lignite in the world.If the reserves remaining at the end of the year are divided by the production in that year. This amounts to almost 7% of the world reserves and it may last for about 106 years at the current Reserve to Production (R/P) ratio. the world’s proven coal reserves are expected to last only for 118 years at the current R/P ratio. Cambay.Indian Energy Scenario Coal dominates the energy mix in India. Krishna-Godavari. Madhya Pradesh. India imports 70% of its crude needs mainly from gulf nations.5 Trillion cubic meters. and West Bengal).thermal 11 . India today is one of the top ten oil-guzzling nations in the world and has overtook Korea as the third largest consumer of oil in Asia after China and Japan.12. Maharashtra. India’s oil consumption by end of 2010 is expected to reach 155. Natural gas reserves are estimated at 1.581 MW as on 31st May 2004.860 MW. Reserves/Production (R/P) ratio.931 MW .In the current scenario.9% of the total primary energy consumption. of which domestic production will be only 34 MT. Oil Supply Oil accounts for about 30 % of India's total energy consumption. Orissa. upper Assam.1. against total export of $64 billion. Uttar Pradesh. In terms of sector wise petroleum product consumption.7 MTOE as against production of 45 MTOE. In 2003-04. In contrast. consisting of 28.62 per cent of energy consumption in the country. Over the years. Energy Supply Coal Supply India has huge coal reserves. at least 60600million tonnes of proven recoverable reserves (at the end of 2010). There has been a decline in the share of oil in primary energy production from 20% to 17% during the same period. transport accounts for 42% followed by domestic and industry with 24% and 24% respectively. By 2030.
pipeline explosion or well fire can create a huge mess. but they aren't perfect. For example. In the process of burning the gasoline.The carbon dioxide coming out of every car's tailpipe is a greenhouse gas that is slowly raising the temperature of the planet. there are four big problems that fossil fuels create: Air pollution . the internal combustion engine is not perfect.nuclear and 1. sea level will rise significantly. but it is a strong possibility that. if the ice caps melt. Super tankers being loaded with oil in Saudi Arabia Global warming . it also produces: Carbon monoxide. It is bad enough now that.720 MW. While fossil fuels have played an important role in getting society to the point it is at today.869 MW. The Exxon Valdez spill is the best known example of the problem. Environmental pollution . The ultimate effects are unknown. Unfortunately. Air pollution from cars and power plants is a real problem in big cities.When cars burn gasoline. a poisonous gas Nitrogen oxides. An oil spill. The gross generation of power in the year 2002-2003 stood at 531 billion units (kWh) 7.wind (MoP). but minor spills happen constantly. many cities have dangerous levels of ozone in the air. in the summer.The process of transporting and storing oil has a big impact on the environment whenever something goes wrong.and 2. flooding and destroying all coastal cities in existence today. there will be dramatic climate changes that affect everyone on the planet. eventually. they would ideally burn it perfectly and create nothing but carbon dioxide and water in their exhaust. the main source of urban smog Unburned hydrocarbons. the main source of urban ozone Catalytic converters eliminate much of this pollution. 12 .
Hydroelectric Energy sources. harnessing a form of natural power. Combined with the use of recycling. but do not emit carbon dioxide. but. one-third of the world's energy will need to come from solar. Fossil fuels are also natural energy resources. due to the fact that they take millions of years to form. and most other countries. population growth. Alternative energy refers to energy sources that have no undesired consequences such for example fossil fuels or nuclear energy. They all have lower carbon emissions. These are a major contributor to climate change Renewable energy resources involve. the rest of the world has little choice but to pay the higher price. Every day.The United States. sun or water. By 2050.Climate change. are not in unlimited supply and have been severely depleted in recent centuries. They also cause environmental issues due to mining and the greenhouse gas emissions created by their burning. everlasting energy resources. Alternative energy sources are renewable and are thought to be "free" energy sources. compared to conventional energy sources. Wind Energy. 13 . This increased content of Carbon Dioxide increases the warmth of our planet and is the main cause of the so called “Global Warming Effect”. These have been used successfully over the centuries and are on the rise again in many developed countries as clean. so they import it from oil-rich countries. When Middle East oil producers decide to raise the price of oil. Geothermal Energy. one way or another. Solar Energy. wind. Home security and home independency are the catch cries of the new era in sustainable development and self-sufficiency. the world produces carbon dioxide that is released to the earth’s atmosphere and which will still be there in one hundred years’ time. and fossil fuel depletion mean that renewables will need to play a bigger role in the future than they do today. This is called Alternate energy. the use of clean alternative energies such as the home use of solar power systems will help ensure man's survival into the 21st century and beyond. whether it is from the wind. and other renewable resources8.Dependence . These include Biomass Energy. cannot produce enough oil to meet demand. That creates an economic dependence. One answer to global warming is to replace and retrofit current technologies with alternatives that have comparable or better performance.
CHAPTER 2 JAWAHARLALNEHRU NATIONAL SOLAR MISSION-TOWARDS BUILDING SOLAR ENERGY 14 .
Orissa and West Bengal. Uttar Pradesh. Jharkhand.in 15 . Punjab. Madhya Pradesh. Uttarakhand. Maharashtra. India’s Solar Energy sector has the potential to be the biggest Energy Opportunity of the 21st century.Background Biggest Energy Opportunity of the 21st Century The GOI launched its ambitious JNNSM promises to catapult India into becoming the Largest Market for Solar Energy in the World. Tamil Nadu. Gujarat. Haryana. Solar Energy in India is poised to take off in an exponential manner because of a unique confluence of favorable Supply and Demand factors .India currently has less than 500 MW of Solar Energy capacity which accounts for less than 0. India has very high insolation which makes solar energy much cheaper to produce solar power in India compared to countries like Germany. This picture is going to radically change over the next decade because of the following factors.3: The Solar Map of India with the segregation of the suitable areas with their capacities Source: solar@ecoreserve. Karnataka. Germany despite receiving only 50% of India’s Solar radiation has more than 9 GW of solar energy capacity already installed and is going to probably hit 18 GW by 20119 . 106 5349 39823 4426 1072 304 87 2300 289 20 Figure No.1% of India’s total electricity capacity. In fact.The most suitable areas for solar radiation are Rajasthan. Denmark etc. Followed by Andhra Pradesh.
The MNRE is also promoting the concept of solar cities to reduce dependency on conventional grid power. .T. while current thermal usage is skewed toward residential and hospitality based water heating. powering irrigation pumps as well as street / home lighting.10Compared to the fact that 400 million people in over 1 lakh villages live without a power connection.It has been estimated that India suffers from more than 15-20% supply shortage in times of peak power.4:Un-electrified Village. the actual installed base off off-grid solar is truly miniscule compared to the energy needs of the population. India as on 30 June.India Figure No. 2008 Source: Progress Report Published by CEA: http://powermin.gov. Solar PV has significant potential in replacing diesel in cellphone towers.has a huge electricity demand supply gap – Large parts of India regularly face blackouts for lack of electricity supply leading to huge monetary losses . Andhra Pradesh Arunanchal Pradesh Assam Bihar Delhi Jharkhand Goa Gujarat Un-electrified Village 0 1668 5383 18395 0 20235 0 73 16 . Major cities like Gurgaon regularly face 10-14 hours of power cuts in summer months.in SI No 1 2 3 4 5 6 7 8 States/U. The potential for generation runs into the large multiples of GW hours allowing tremendous scope for implementation at the grass root level.
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Haryana Himachal Pradesh Jammu and Kashmir Karnataka Kerala Madhya Pradesh Chhattisgarh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal A & N Island Chandigarh D & N Haveli Daman & Diu Lakshadweep Pondicherry Total All India : 105379 0 312 113 355 0 1904 867 5018 361 2354 137 455 20994 0 12595 25 0 367 11492 548 1553 175 0 0 0 0 0 Table No.Large parts of India don’t have electricity grid connectivity and it is cheaper to power them through solar energy rather than extending power lines Increasing expensive and unreliable electricity supply . Solar Energy is the only form of Energy whose cost trend has been declining over the long term while all other major forms of energy have seen their costs increasing.2 (Source: DGESL website) Lack of power grid availability – Solar Energy is ideally suited for providing power to those areas which don’t have power lines connecting it. Despite solar energy prices being higher than other forms of electricity. it is expected that solar energy will equal that of grid prices in the next 5 years in most parts of the globe.The rates of electricity prices are going up rapidly each year due to a combination of factors like higher costs of fossil fuels. Not only is the power expensive. the quality and reliability of the supplied electricity is very poor. 17 . A study has found that poor farmers who receive “free electricity” in India are willing to pay for quality electricity supply rather than do with the “unreliable free power” Solar Energy approaching Grid Parity – The costs of Solar Energy has been decreasing rapidly over the last 2 years. increasing capital expenditure by utilities and privatization of power.
It had twin objectives of addressing India's energy security challenge and combating the threats of climate change. 2010. an additional 3000 MW by 2017 and 20. The Indian government through the JNNSM has provided strong support to the growth of this industry. The Mission anticipates achieving grid parity by 2022 and parity with coal based thermal power by 2030.Gas.11 CERC guidelines aims at providing 20% + returns to private investors through a higher guaranteed rate to electricity generate from solar power ( FIT) Solar Energy is a Non-Polluting Green Form of Energy – The biggest advantage for solar energy is that it is a non-Carbon Dioxide emitting form of power . JNNSM with the objective to create conditions. through rapid scale up of capacity and technological innovation to drive down costs towards grid parity.Oil are eventually going to be depleted over the next 20-100 years .GOI launched on January 11.While other fossil fuel forms of Energy place have large unaccounted costs in terms of pollution. The GOI has introduced several policies and incentives since to boost investor confidence in this sector and enable India to be a Solar Energy Super Power.Strong Support from the Government – Solar Energy needs a push from the Government in terms of regulation and incentives as it is a costliest form of power currently.and Solar Energy is a virtually unlimited source of energy . The amount of Solar Energy striking the earth is much more than humans will ever need. The Jawaharlal Nehru National Solar Mission MNRE . Solar along with other forms of Renewable Energy have none of these harmful effects. 18 .000 MW by 2022 through mandatory use of Renewable Purchase Obligation(RPO) by utilities backed with a preferential tariff. The Mission has a target to add grid connected solar power generation of 1000 MW by 2013. Solar Energy is virtually Unlimited – While Coal. health hazards. The government has set a target of 20 GW by 2022 with 1000 MW of solar power to be set up through private investment by 2013. global warming and environmental destruction (BP Oil Spill).
• To achieve 15 million sq.5 19 . • To deploy 20 million solar lighting systems for rural areas by 2022. • To ramp up capacity of grid-connected solar power generation to 1000 MW within three years – by 2013.000MW installed power by 2017 or more. based on availability of international finance and technology. • To create favourable conditions for solar manufacturing capability.000 MW or more.Key highlights of the Jawaharlal Nehru National solar mission include • To create an enabling policy framework for the deployment of 20. could lead to conditions of grid-competitive solar power. an additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff. • To promote programmes for off grid applications. meters solar thermal collector area by 2017 and 20 million by 2022. This capacity can be more than doubled – reaching 10. The transition could be appropriately up scaled. reaching 1000 MW by 2017 and 2000 MW by 2022 .000 MW of solar power by 2022. which if successful. particularly solar thermal for indigenous production and market leadership. The ambitious target for 2022 of 20. will be dependent on the ‘learning’ of the first two phases. Figure No. based on the enhanced and enabled international finance and technology transfer.
JNNSM is divided into 3 phases with the ultimate goal of reaching grid parity with coal by 2030. 1)Phase I(up to 2012/2013)–remaining period of 11th five year plan & first year of 12th year plan Target of 1100 MW 2) Phase II (2013-2017) –remaining 4 years of 12th five year plan Target of 3000-10000 MW 3) Phase III (2017-2022) – 13th five year plan 20000 GW overall Figure No. priority sector lending Coal tax Budgetary Support for MNRE though 2011 Budget has not given anything UNFCCC Funds – Again not certain as no international agreement 20 . 3) Incentives • • • • • Zero import duty on capital equipment.6 :The targets for JNNSM Source:MNRE documents The Objectives of the Solar Mission 1) Solar Lighting-Deploy 20 million solar lighting systems for rural areas 2) Solar Heaters–Achieve 15 million sq. meters by 2017 & 20 million by -2022 of solar thermal collector area 3) Solar Manufacturing – Global Leader in Solar Manufacturing with Targets 4-5 GW equivalent of installed capacity by 2020 including setting up of dedicated manufacturing capacities for poly silicon material to annually make about 2 GW capacities of solar cells 4) Off Grid Solar Applications – Solar Mission has set a target of 1000 MW by 2017 Funding of the JNNSM will be done by 1) Renewable Energy Credits (REC) – State Electricity Regulatory Commissions (SERC) to fix a minimum percentage of energy purchase from renewable sources of energy 2) NTPC’s Trading Arm NTPC Vidyut Vyapar Nigam Ltd ) is chosen as the nodal agency for entering into a Power Purchase Agreement (PPA) with solar power developers.NTPC will mix expensive solar power with cheaper coal power . raw materials and excise duty exemption Low interest rate loans.
5 9 15. These companies were speculators and has no intention of building the plants anyway Transfer Projects It has also allowed 80 MW projects to be transferred to JNNSM rate which has led to strong state objections.5 21 105 8 36 12 12 44 153 1 5 7 7 8 12 3 5 3 5 5 8 5 8 30 150 13 54 80 100.25 3 5. Note these solar project 21 .8 8 16 8 16 2 10 2 10 3 5.05 (B)Solar Thermal Project New NVVN(a) Migration(b) Total(a+b+c) Number MW Number MW Number MW 1 50 1 50 1 20 1 20 5 400 3 30 8 430 7 470 3 30 10 500 Table No. The 2 MW project winners are already flipping the projects as many non-serious players won the projects.5 15 30.05 126 304. The State nodal agencies have also started objecting to the tariff policy as 80 MW of Solar Projects were awarded the base FIT of Rs 17.91 as they were transferred to the Indian Federal Subsidy from their initial PPAs with individual states.3: Project capacities allocated by MNRE Source : MNRE State Andhra Pradesh Chhattisgarh Gujarat Haryana Jharkhand Karnataka Madhya Pradesh Maharashtra Orissa Puducherry Punjab Rajasthan Tamilnadu Uttarakhand Uttar Pradesh Total State Andhra Pradesh Gujarat Rajasthan Total Smaller 2 MW PV Projects India has set a target of 1100 MW for the first phase with around 100 MW allocated for 2 MW projects which have the best chance of being built.8 10 9.First Phase (How it has fared so far) Details of Grid Solar PV Power Projects under JNNSM (A)Solar PV Project New NVVN(a) Migration(b) IREDA(c ) Total(a+b+c) Number MW Number MW Number MW Number MW 4 20 11 10.5 2 4 2 4 0 0 10 9.25 1 5 3 11 3 5 7 21 1 5 8 8 9 13 1 1 1 1 2 7 7 8.
33 Jharkhand 176.03 Jammu and Kashmir 2089.6 Karnataka 42 Kerala 4.16 Maharashtra 20 Manipur 160 Meghalaya 437 Nagaland 10. While the first phase is already in trouble the government is already thinking of auctioning another 296 MW of solar projects in April which doesn’t look like that it can help as the majority of the First Phase projects are already in trouble. Following table shows relevant details of projects sanctioned during 2010-11 under Off Grid Solar applications of JNNSM Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Table No.08 Himachal Pradesh 12636.developers who have managed to get transferred will get tariffs which are almost 60% higher than the lowest bidder for the 5 MW Solar Project at Rs 10.5 Arunachal Pradesh 216 Assam 650 Bihar 225 Chhattisgarh 1043.75 Haryana 407.18 Tamilnadu 35 Tripura 90 Uttarakhand 1828 Capacity (In KWp) 1687 320 500 1022 2336 2 53 1375 529 6091 416 195 10 1100 3068 150 144 760 72 50 766 10907 148 107 68 2547 22 .41 Orissa 0 Punjab 440.4 Released CFA State (In Lakhs of INR) Andhra Pradesh 438. The government will have to potentially bailout these companies if it wants to see its Solar Mission be successful. The developers might find it profitable to lose their deposit money rather than building the plant.This will also mean a much large taxpayer outgo to the 16 Project Winners for the 80 MW than for the 150 MW projects Larger PV 5 Projects and Bigger Solar Thermal Plants The rest of the 620 MW projects are in serious trouble with no major construction happening.75 Rajasthan 2371 Sikkim 186.95.5 Lakshadweep 1387 Madhya Pradesh 932.65 Delhi 0 Gujarat 13.
→ To create awareness about the usage of solar systems → To encourage and promote sustainable business models → To support channel partners and potential beneficiaries → To organize consultancy services and seminars. wherever possible 23 .08 25 653.04 4337 100 1542 40402 Figure No. awareness campaigns → To help replace kerosene and diesel.02 27822.8(Source: MNRE) Solar Research and Development National Centre of Excellence (NCE) to be established Research Council to be set for Guidance 50 startups to be funded to develop solar related technologies Government Fellowship program to train 100 scientists Ultimate Aim to reduce solar costs and BOS costs to achieve grid parity Solar Heater Incentives Off Grid Solar Subsidies The main objectives of this section of the scheme are: → To promote off-grid applications for meeting the targets set in the JNNSM.27 28 29 Uttar Pradesh West Bengal Others Total 1304.
to meet unmet community demand for power in unelectrified rural areas.70 per Wp without battery storage. Himachal Pradesh. In Border areas and islands like Lakshadweep. Subsidy. will be provided a capital subsidy of Rs 150/watt in special category states of NE India. Financial and Microfinance institutions: These institutions are mainly into providing loans to the consumer and accessing the interest subsidies through refinancing 3. integration and installation and O&M to the clients. Solar PV plants in micro-grid mode/local distribution network. The fast declining costs of solar energy IMHO will pretty much make this policy obsolete anyway in a couple of years. Sikkim. RESCOs (renewable energy service providing companies): These companies install. 4. System Integrators: These entities are the ones which provide design. state nodal The First Phase of the JNNSM has not inspired much confidence and compared to successful programs in Germany seems a total failure. and at around Rs. These subsidies will be changed every year. and Uttarakhand. Role of Different Entities in the Solar Power Mission 1. Financial Integrators: These firms serve the manufacturers and service providers by integrating different sources of finance available for them. 2. State much better than the Federal Government. For 2010 it is fixed at Rs.1. own and operate the renewable energy systems. For off-grid Solar PV Installations of a maximum capacity of 100 kW per site. 3. Program Administrators: Administrators include central and state ministries and departments. Note soft loans of 5% interest rate can also be availed. and for mini-grids for remote electrification with a maximum capacity of up to 250 kW the subsidies are as follows 2. supply. which is calculated on the basis of a cost benchmarked by MNRE. 5. is notionally equal to 30% of benchmarked cost of solar power systems.90 per Wp with battery storage. a capital subsidy of 90% of installation cost. 24 . Andaman and Nicobar Islands the subsidy availed will also be 90% for solar PV installations.
Financing Difficulties and Small Plant Size The Indian Government’s launched the ambitious JNNSM was done with much fanfare with a target of reaching 20 GW of Solar Capacity by 2022 under 3 phases from the 81 MW currently. Figure No.31 set by CERC and the Solar PV project bidding for 150 MW is going to see equally ferocious discounts. This has put the entire exercise in question with the biggest private utility saying JNNSM is a failure. is staying away from these auctions due to the above problems. While the government had the best intentions and had laid down a well-defined 10 year plan with subsidy support for both Solar Thermal and Solar PV Technology. India from the base prices of Rs 15. Without extensions of deadlines it looks highly unlikely whether the 37 winners will actually put up the plants. This has attracted companies in droves lMission. 25 . Tata Power. Renewable has a huge growth potential with Solar Energy the brightest Green Energy Sector. which is India’s largest private utility. Due to high interest the government went in for bidding of projects which led to firms.CURRENT SITUATION JNNSM in Jeopardy due to Irrational Bidding. This will eventually lead to project winners abandoning these projects or delaying it inordinately. However huge competition in this subsidy driven sector is not necessarily good for the growth of Renewable Energy as irrational bidding by small players would lead to project failures.7: REC Market The 150 MW Solar PV and ~500 MW of Solar Thermal Capacity which has been put to bidding are seeing massive discounts to the base price which would allow normal return. leading to a failure of the first phase. it has already run into problems.
Figure No. They have quoted extremely low tariffs. project management skills and power expertise.Figure No. 26 . the restriction of 5 MW per Business Group has made it unattractive for some of the multibillion large utilities from taking part in the process. the trading arm of NTPC and Developers has made the Banks wary of lending to the new solar sector. They have been selected for setting up 150-mw solar photovoltaic projects in first phase.8: The milestones achieved and goals set under JNNSM. The involvement of large utilities is necessary for the development of the nascent solar sector. Punj Lloyd and Mahindra Solar. Winning of these projects by fly by night operators out to make a quick buck by flipping won’t do the government any good. State Banks in India have already cast doubts on lending finance to these solar projects which depend on debt for 70% of the capital requirements. 9 Solar short list raises spectre of fresh scam – FC These companiesEnergy Headed Fordiscounts as Unknown Firms Win JNNSM Solar PV Auction have offered large a Crash and rank ahead of corporate majors like Indian Oil India Solar Energy Corporation. On analysis it can be said that half of the 30 lowest bidders on the short list are unknown companies. The companies have been short-listed on the basis of tariff discounts they proposed to offer. One firm was allowed to submit only one bid to set up a 5-mw plant. which according to industry experts are unrealistic. The convoluted nature of payments which involve the financially weak Electricity Distribution Companies. Their selection and very low quoted tariff rates have raised the spectre of another scam in the making. They bring in the required financial heft. Also in case of Solar PV.
27 . The Government of India has also signaled strong support for Solar Energy with 20 GW Target by 2020 which equals that of China . While some of these problems were discussed earlier like a) Debt Financing of Solar Projects b) Irrational Bidding c) Small Plant Sizes of 5 MW d) Unhealthy Competition .Solar Energy in India has the potential to be the biggest Energy Opportunity in the World because of a multitude of favorable factors. With even India’s Tata Power saying that the projects are not bankable as there is confusion how the electricity tariffs will go to developers. namely Gujarat which aims to put up more than 500 MW in the next year or two.other problems have cropped up. However this has resulted in a new set of problems seen with this type of bidding which has been seen in China.The JNNSM which was unveiled with much fanfare has promised much but teething problems threaten to crash the Solar Party in India. Compare that to China where debt is priced as low as 34% and the winners are huge utilities.While the companies will lose their bid deposits if they don’t finish the projects. The biggest problem is that the winners of the Solar PV Projects are mostly unknown small firms who have bid so low that make the returns negative for investors according to the MNRE. its difficult how these unknown firms could manage the financing .Bidding has gone as low as 23c/Kwh which is crazily low considering the debt costs in India are as high as 13% annually. India was trying to avoid the fate of the Czech and Spanish example of renewable energy subsidy boom and subsequent bust by auctioning the projects to lower bidders. Already JNNSM has been criticized by a parliamentary panel for the tardy progress. Note some states have taken the lead in pushing solar energy on their own. Indian Solar Energy will be the biggest loser as the failure of the Phase 1 of JNNSM of 1000 MW by 2013 will lead to even further delays.
Despite unavoidable criticisms of the reverse auction process .91/kWh for PV and Rs 15. As a significant first step towards achieving this.etc.Figure No. 1 GW of solar power is targeted by 2013. caps on capacities.82/kWh for solar thermal.31/kWh for solar thermal). Phase I is at best a proof of concepts. the test of which is not just the successful award or even commissioning of projects but in its scalability. The auction settled the debate on the viability of CERC’s feed-in tariffs as qualified bidders bid substantive discounts over CERC tariffs up to Rs. It is time therefore to ascertain the progress under Phase I and prepare for 28 .9 : the list for 'selected' 30 Solar PV projects (each 5MW) under Batch-1 JNNSM in 2010-11 (Source:MNRE) LOOKING FORWARD Over Phase I of JNNSM. the GoI.75/kWh for solar PV and Rs..5. were allowed to migrate under the JNNSM at FITs specified by the CERC (Rs 17. Further. successfully selected 37 developers offering 620 MW (450 MW of solar thermal and 150 MW of solar PV projects) to sign PPA with NNNV. investor participation was overwhelming and the government and NVVN deserve credit in having conducted the process in a time-bound manner and conveying the seriousness of the program to the global community. about 100 MW of projects.4. through a tariff-based reverse auction process. given the 20 GW target set out under the mission by 2022.
which go beyond mere letters of support from technology providers. the central government should get the technology proposed be evaluated by a panel of experts or the NCE.. as some players are finding out with groundmeasuring instruments. A better approach would also be to have specific solar thermal projects developed like Case-2 projects. The government and MFIs have a significant role to play in building capacity amongst the commercial banks in assessing and financing solar projects.g. NTPC 29 . it should not be applied blindly to emerging solar thermal technologies and the process must provide for demonstrating technical qualifications. Solar thermal technologies are emerging in nature and there are only a few operating plants around the world. as these are meant to further research and local adaptation of newer technologies and to provide operational data for commercial deployment to happen. With over 4 GW of solar thermal plants likely to be operational globally by 2013. Three other aspects of JNNSM need to be advanced significantly over the next two quarters. Over three-fourths of all projects under JNNSM face challenges in achieving financial closure. The above uncertainties combined with the lack of solar development experience amongst bidders and the fact that very few solar thermal bidders actually aligned with solar technology providers at the bidding stage. which is central to achievement of the ambitious targets under JNNSM. demonstration projects under Phase I of JNNSM have to be conceived and awarded quickly. Of particular interest is the realization of the solar thermal potential in India. the technical requirements for selecting Phase II solar thermal developers ought to be made more stringent. although several are in the planning / development stage. First.Phase II of the mission. This remains an important area to be addressed by the government and multilateral financial institutions (MFIs). If required. Solar thermal plant designs ideally require accurate local irradiation data and extensive engineering inputs in calibration and design of solar fields. with substantive preparatory activities undertaken upfront by the government and solar resource data provided to bidders. Relying simply on the satellitederived data can lead to faulty conclusions. Involving Indian PSUs. has increased the riskperception amongst lenders and made it extremely hard for these projects to get nonrecourse financing. e. The role of the World Bank and ADB in utilizing their global solar experience in supporting local and foreign commercial banks in India is critical to the success of the program. While tariff-based bidding worked well in development of conventional thermal plants in India.
the government has to aggressively further the localization of manufacturing. particularly along the solar thermal value chain. Second.and BHEL and identified technology centers like IIT. field measurement of irradiation and mapping of solar resources across the country needs to have been done for at least one full year before Phase II planning commences. This is intricately linked to the pilot projects. Rajasthan and the Solar Energy Centre of MNRE in such pilots is essential to further research. Third. which will determine the preferred technology choices in India for commercialization and will require greater coordination amongst the ministry of industries and commerce and the user industries of MNRE and MoP to realize the dreams of low cost solar development in the country. 30 . enable dissemination of operational data and to provide for localization of manufacturing along the value chain.
CHAPTER3 CHINESE SOLAR ENERGY PROGRAM 31 .
The Chinese government charges a renewable energy fee to all electricity users. China's Commitment China’s efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels. China’s Big Three solar power companies — Suntech Power. fixed price. cheap or free land from local and provincial governments across China. had fallen 42 percent since December 2010. Converting more solar power into electricity is high on the political agenda in many countries. The price of a solar array. analysts say. China has a cost advantage. California is by far the leading solar state. wind turbines and other gear manufactured in China. and its market share is rising rapidly. power companies have to buy lots of new equipment anyway. China has achieved this dominance through lavish government subsidies in its solar industry. and alternative energy is increasingly priced competitively. Yingli Green Energy and Trina Solar — all announced in August 2011 that their sales in the second quarter were up between 33 and 63 percent from a year earlier. to make up the cost difference between renewable energy and coal-fired power. scientists have found innovative ways to harness the power of the sun — from magnifying glasses to steam engines. Loans at very low rates from state-owned banks in Beijing. Solar panel prices plunged by 42 percent per kilowatt-hour in the past year as manufacturers have sharply increased capacity. The fee revenue goes to companies that operate the electricity grid. In China. 32 . particularly in China. In the last two years. the agency said. measured by cost per watt of capacity. It accounted for at least half the world’s production in 2010. Solar power is more entrenched in European countries like Spain and Germany.6 billion of the world’s $29 billion market for solar panels. But. China has emerged as the dominant player in green energy — especially in solar power. huge economies of scale and other cost advantages have transformed China from a minor player in the solar power industry into the main producer of an increasingly competitive source of electricity.CHINESE SOLAR PROGRAMS Through the centuries. which have promoted its development with strong incentives called feed-in tariffs that require electric utilities to buy solar power at a high. The United States accounted for $1. amid the push to find domestic energy sources that are less polluting than fossil fuels.
China's new energy industry development plan. 33 . which includes the nation's renewable energy targets for the coming decade. In 2009. but the real question is whether this goal still exists or even remains realistic. Although costs are falling steeply through mass production. Another major factor that has rendered the Chinese government reluctant to unveil a feed-in tariff is the change in overseas demand. pushing the government to create alternate solutions such as developing the domestic market. Golden Sun and the Solar Rooftop program. while about 85% will go to Europe and North America.But China’s commitment to renewable energy is expensive.which can be four times more expensive than fossil fuels -. a leading Chinese solar PV manufacturer and one of the two largest such companies worldwide. about 160 megawatts of solar PV systems were installed in China. is still in discussion. That more than doubled the country's total installed capacity. those developers may break even or suffer losses. the Chinese government is not about to subsidize solar power on a national level. The subsidies through the Golden Sun Program can cover only half of the upfront investment. The global financial crisis froze China's exportoriented solar industry from late 2008 to early 2009. it might be hard for China to achieve its planned 20 GWs PV installation capacity target by 2020. Since then. through two major supportive programs. reducing the need for a domestic program. project developers who already have solar power plants in China are expected to get hurt.and fears that solar power won't deliver on some of the anticipated goals.Concerned by the high cost of solar -. Unlike Suntech and other solar PV manufacturers. Suntech Power Holdings. and it will not be formally announced in the short term. solar power is still at least twice as expensive as coal. If developers cannot get returns on their investment. the international market has rebounded. estimates that China will account for only 5% of its total sales in 2010.
34 . China’s energy policy promoted energy conservation and efficiency improvement through direct government technical support and program/project implementation and administration. They clearly demonstrate China’s determination to support the adoption of PV.Table No. reduce emission and utilize renewable energy. the BIPV (Buildingintegrated photovoltaic) subsidy program. high-polluting industries. China rolled out two national solar subsidy programs: the BIPV subsidy program and the Golden Sun program. In 2009. The BIPV subsidy program: In March 2009. with government shifting focus to improving the effectiveness of regulatory oversight. energy security and environmental protection were perceived as strategically important for the sustainability of China’s economic development. intended to encourage more effective policy implementation at the local levels. China passed several important energy laws to establish the legal framework to promote energy efficiency. clean technology and renewable energy are heavily promoted through various policy support and subsidy programs. while facing energy shortages yet still wanting to be self-reliant. thus energy policy is increasingly multifaceted: top down industrial restructuring became one important policy tool that moves the national economy away from high energy-demanding. energy and environmental targets were incorporated into assessment mechanism. China announced its first solar subsidy program. 3) in the 2000s. 2) in the1990s. offering upfront RMB20/watt for BIPV systems and RMB15/watt for rooftop systems.5: China’s new installed PV system capacity from 2004 to 2009 (Unit: MW) Source: China National Development and Reform Commission China’s energy policy went through different focuses at different stages of economic reform: 1) in the 1980s.
6. the subsidy will rise to 70 percent. The government will subsidize 50 percent of investment for solar power projects as well as relevant power transmission and distribution systems that connect to grid networks. the media reported that 111 rooftop-based or BIPV projects nationwide with a combined capacity of 91 MW have been allocated subsidies totaling nearly RMB 1.China’s Ministry of Housing and Urban-Rural Development announced a stimulus plan for BIPV applications in mid-April. and market incentives to accelerate the industrialization of PV technological and enable large scale development of the PV industry. For independent photovoltaic power generating systems in remote regions that have no power supply. The effort will be made through fiscal subsidies. 2.13 The summary of this project is listed below14: 1. announced the launch of the Golden Sun Demonstration Project. at similar rates to benchmark on-grid tariffs set for coal-fired power generators. 200012. The project is to facilitate the growth and expand the scale of the PV power generation industry.and component-based BIPV projects and RMB 15/watt for rooftop. Grid companies are required to buy all surplus electricity output from solar power projects that generate primarily for the developers’ own needs. almost all the provincial-level jurisdictions would need to have such a qualifying solar project]. 35 . the second national solar subsidy program. The total generating capacity in such pilot projects in each province in principle should not exceed 20 megawatts [GLF note: a most interesting target considering that for the full 500 MW of subsidized project to be deployed. while construction will have to be completed in one year and operations will have to last for at least 20 years. 3. 4. the ministry said in an announcement on its web site. in addition to other requirements.2 billion The Golden Sun Program: In 2009. China’s Ministry of Finance. each project must have a generating capacity of at least 300 kilowatt peak. Ministry of Science and Technology and the National Energy Administration of the National Development and Reform Commission. offering RMB 20/watt for construction material. To qualify for the subsidy. scientific and technological support. The government plans to install more than 500 megawatts of solar power pilot projects in two to three years.and wall-based projects. on July 21. On July 2009. 5.
Below is a summary of some key features in the two programs. is meant for roof top projects not less than 50 kw. If a national FIT policy for utility scale-solar plants is adopted. However. A feed-in-tariff policy will mandate that China’s two state-owned electricity transmission and distribution companies will subsidize solar companies by paying them above-market rates for the electricity generated from solar sources. and systems ground mounted systems Off-grid systems in rural areas System Size >= 50KW >= 300KW 36 . The Golden Sun policy explicitly excludes projects which fall under the Solar Roofs Program from benefiting under the Golden Sun program. a nationwide Feed-in Tariff (TIF) subsidy for large-scale PV system is also anticipated. and LDK Solar have announced large solar projects in the past year that are at least partially dependent on adoption of a national FIT policy17. the Chinese government has set up a benchmark FIT at 1.09 Yuan/kWh in the 10 MW Dunhuang solar project. An official at the Energy Research Institute at NDRC revealed that it will take at least two years to decide on a national FIT policy16. and more than 300 kw. and complements the Solar Roofs Program. which as the name implies. Any feed-in tariff could also provide a particular boost to China-based manufacturers as a result of the government’s controversial “Buy Chinese” procurement policy for domestic infrastructure projects19. the timing and details of the FIT subsidy is still quite uncertain15.22 per kilowatt hour of electricity produced at large-scale photovoltaic arrays. probably mounted on the ground instead of buildings. It is expected that the tariff will fall between US $0. The Golden Sun program targets larger utility-scale projects. BIPV Program Applications Golden Sun Program Grid connected rooftop and BIPV Grid connected rooftop. which focuses on remote offgrid installations18. including Yingli.16 and US $0. Currently. Suntech.Feed-In Tariff (FIT) In addition. it is predicted that this new type of solar policy will drive much faster growth in the Chinese solar market as compared to China’s existing roof-top subsidy and “Golden Sun” program. However. BIPV. a number of solar companies.
according to the PV Group’s analysis.44 billion in promoting the development of solar energy. a highend manufacturing center as well as an application and demonstration center. the total subsidized installations by year 2011 will be capped at 680MW. People’s Daily Online reported that Beijing will implement 6 major “Golden Sunlight” projects in order to accelerate solar energy development and application. a solar campus project. Between 2010 and 2012. 2010.16 comes as central government fiscal funding. national subsidy offered by either program alone is not enough to ensure a reasonable return on investment.000 kW on-grid solar power station demonstration project. Thus. research and development center. on-site consumption is encouraged. With today’s system cost. 14% for multicrystalline. RMB 0. a 50.Subsidy RMB15/W for rooftop systems RMB20/W for BIPV systems 50% of total cost for on-grid systems 70% of total cost for off-grid systems Other Terms Conversion requirement: efficiency minimum For grid connected systems. and 6% for thin film utility. Beijing announced its first comprehensive policy on promoting the development of solar energy. a rural solar power project and a solar energy-powered nightscape lighting project. of which RMB 0. and RMB 0. Beijing plans to spend RMB 1. The 6 major "golden sunlight" projects are composed of a 20. Beijing: On January 7.000 kW rooftop solar photovoltaic (PV) power generation project. PV developers will have to rely on additional subsidy from regional and local governments22.98 billion as municipal financial and fix asset investment. promote the development of the new-energy industry and develop Beijing into a solar energy technological. Any BIPV projects and over 20 MW PV projects in Beijing can enjoy RMB 1/Watts annually for three consecutive years on top of the national 37 . Buy back rate is based on local benchmark coal-fired grid price. Provincial/Municipal Subsidy Programs The Golden Sun program sets a cap of 20MW for each province. which also includes installations under the BIPV subsidy. Assuming all 34 provinces (including autonomous regions and municipalities directly under the central government) will participate in this program.3 as district/county fiscal funding. a solar thermal water project. Excess electricity would be sold to the 16% for monocrystalline.
subsidies23.15 1. To support this development. Jiangsu aims to install 400 MW of solar 苏 江 苏 江 江 PV (consisting roof-top. solar rooftop power and the ground installation in 2009.5 2. Under the plan.926 Table No.3 3. such as Suntech and Trina Solar. Jiangsu’s three-year solar PV development plan was officially laid out in the 江 江 江 苏 苏 苏 on June 2009.7 1. Its policy targeted to generate total 260MWp solar rooftop power by 2011. 2010 and 201125. Jiangsu: Jiangsu Province Development and Reform Commission issued its own solar energy subsidy policy on April 2009. Suntech has taken advantage of the preferential treatment and is developing a solar PV power plant in 38 . ground-mounted. and provide supplement subsidies for electricity generation.4 4. and building-integrated projects) by 2011.4 3. Hainan: The Hainan Province Development and Reform Commission. the Hainan Province Office of Construction and the Hainan Province Office of Science and Technology jointly issued Implementing Opinion on Promoting Scale Utilization of Solar Power in Hainan Province. The plan aims to help Suntech become an international enterprise with over 5 billion Yuan in annual income within three years while supporting Suntech’s other projects in Jiangsu to build a solar research center and a technology transfer center27. a generous feed-in tariff for the next three years is provided along the following scale (in Yuan/kwh): Year Ground-mounted Roof-top Building-integrated PV 2009 2010 2011 2. The Opinion instructs various departments of provincial government to grant incentives such as fiscal subsidies and reductions and exemptions from taxes to further the efforts of research development and manufacturing of solar energy infrastructure.0 2.7 3.6:Three year PV Solar plan of China Source: Authors’ compilation from NDRC data Jiangsu’s three-year solar PV development plan is also not shy about naming the specific solar companies that the province favors. and became the first province to implement the solar electricity buy-back (Feed-in Tariff) policy24.
as previously mentioned. as well as the market shifts in Europe as a result of changes in European FiTs. but now quality is of extreme importance both for exports and for use within China. Figure No. they are facing a demanding market. as well as to respond to a changing global market. and now it has that chance. For a long time Chinese manufacturers specialized in quantity. The changes include increased plans for solar installations. The great challenge now is for China to become a consumer of its own products. In the past China was the largest factory. China doubled its solar capacity target from 5GW to 10GW by 2015 and 50GW by 2020. Other provinces and municipalities such as Hebei. With Chinese manufacturers trying to meet increased demand both domestically and abroad.Hainan in cooperation with the local government28. churning out goods for export. Now it will be the greatest consumer and bellwether in the solar market. while 39 . Shandong and Shanghai also came out similar solar energy promotion policies29 after the central government rolled out these two national solar subsidy programs. This new solar plan shows a determination to support the local solar energy industry. China has longed to sit on the other side of the negotiating table.9 Recently.
However.However China has not enacted a national feed in tariff policy despite having the world’s largest solar manufacturing capacity.These low rates lead to low returns but stiff competition is being seen particularly from State Owned Giant Utilities like Datang. These projects are to be built in 8 of these provinces with 60MW projects planned in Xinjiang. as well as a 50MW project in Qinghai. ambition is not everything.Compared to global demand. China’s installed capacity is minuscule at only 300MW cumulative installations by 2009. While India has taken the lead in promoting solar energy through JNNSM which sets a target of 20 GW by 2022. Gansu and Inner Mongolia. China’s solar companies account for 35-40% of the world’s solar production which is estimated to be 12-15.This despite China being the largest wind energy installer in 2009 and forecast to be the biggest in 2010 as well. Unlike other countries China has opted to have separate Feed in Tariffs for different provinces and these rates are quite low at 20c/KwH. The increase in Chinese solar demand has been very slow and cautious.000 MW in 2010.Huaneng. We'll keep our eyes focused on China as solar manufacturers face new challenges and adapt to their own country's increased demands. Some of these companies have bid for all the 13 projects on offer in order to get a head start in the Solar Energy Business. With less than 1GW already installed. It's hard to predict how the goal will be achieved when it is driven by executive order and not from market-driven force.Guangdong Nuclear and others. the plan to install 9GW in 4 years and 40GW in another 5 years may be a figment of the policy makers' imaginations and not based on assessment of actual projects. Last year China had given out projects under the “Golden Sun” program but after that there has been little progress. Current scenario Stiff Competition China has recently invited bids for 280 MW of Solar Projects to be built in Northern and Western China. a 30MW plant in Ningxia and a 20MW project in Shaanxi Province. Extremely Slow in promoting Solar Energy China is the Largest Energy Consumer in the World and its Energy Demand continues to grow at a fast clip. 40 . Only those competitive players in the field will survive.meeting other requirements such as more stringent environmental and safety standards.
Suntech and Canadian Solar.Returns have been Zero to Negative for Investors in China’s Solar Projects The competition has been extremely high for these projects leading to zero to negative returns for investors. This is due to a) Low electricity rates on offer b) Aggressive bidding leading to even lower rates. 41 . Suntech has said that it has lost money in the projects it executed under the old program in China.Looks like this time won’t be any different. Giant state utilities can easily bid to win even if they lose money in the process. Some of the solar companies that are bidding are Yingli.
CHAPTER 4: COMPARISON BETWEEN INDIAN AND CHINESE SOLAR ENERGY STATUS & POLICIES 42 .
Recent figures confirm what the Pew report estimates. investment in renewable energy is being led by Asia. or US$13. In 2009.30 China-China will remain the leader under all three scenarios the report used as models (Business-as usual. Asia is leading because of its strong clean energy policies. 43 . the region’s clean energy powerhouses. or five times from what is currently installed. will account for 40 per cent of global clean power project investments by 2020. and Enhanced Clean Energy). Copenhagen. clean power projects carried within the G-20’s jurisdiction may reach US$2. especially China and India. China invested US$30 billion in clean energy. having based its calculations on Bloomberg New Energy Finance data. It accounted for 50 per cent of all investments in wind energy in 2010. The country sees clean development as an essential part of social development. India-India has also become stronger due to solid clean energy policies and will rank third by 2020 under all the models employed by The Pew report. Altogether. This represents a huge leap.3 trillion by the end of the decade. Driving these impressive figures is the country’s unwavering adoption of sustainable development strategies and acknowledgement of the necessity to shift the economic development model. China. Japan and South Korea. Asian countries have established themselves as the driving forces in renewable energy.As the decade comes to an end and a new one begins. Its renewable energy generating capacity may grow to 91GW. The country is expected to attract $169 billion in clean energy projects over the next decade. According to a recent report released by The Pew Charitable Trusts. the report projects.5 billion. India. since in 2009 it was projected to be number ten. The Asian giant has the potential to attract a total of US$620 billion over the next decade.
Imports for coal grew to 16. The expanding population increased overall energy demand by 3 percent in the last 15 years. India also suffers from a sizable annual energy deficit. yet the country faces a dire energy shortage that needs to be addressed with clean technologies as soon as possible. 2010. By 2030. and the ranks of the middle class will swell to 170 million. 44 . In addition to severe water. From April to December of 2009.7 percent growth in 2006-2007. The Indian government has taken action to offset these risks by investing in the increasingly lucrative clean technology industry. Low energy capacity forced India to rely on imports in this period of increasing demand. focused government activity and potential opportunities have heightened interest in the sector. If population alone is an indicator. India’s resources could be more strained than China’s in the future. this growing economy indeed has the potential to make leaps and bounds in renewable energy and clean technology. forcing factories across the country to enact blackout periods during peak demand. up from the 9. Although India’s renewable energy market is not nearly as mature as China’s. solar water pumps and other solar power-based rural applications can change the face of India’s rural economy was even affirmed Prime Minister Manmohan Singh at the launch of the Solar Mission in Jan. energy deficits ran at 9.8 percent.7 percent from April to December of 2009. The rapid spread of solar lighting systems. an increase that exposes India to rising commodity prices and negatively affects its energy security. air and land pollution produced by conventional energy. With 500 million people lacking access to electricity and instead relying on dirty coal. India’s overall population is projected to surpass China’s. while demand for oil and coal has quadrupled.Energy Hungry Tigers and Dragons: Comparing India and China India’s thirst for natural resources is not comparable to China and its impressive 7 percent average economic growth is not as high as China’s thundering 9 percent.
Indicative of India’s other clean technology incentives. The market’s five-year growth rate was 72 percent. This mission expands such applications. roughly equal with its 2008 figures. well behind China’s leading position at US$34. the Solar Mission reduces capital costs for solar energy investors by granting a 5 percent concessional duty on all equipment needed for installing photovoltaic and thermal units. down 13 percent from the previous year. which put India ahead of developed countries like Canada but still behind China’s 147.6 billion. the government remains committed.Table No. the movement for decentralized and disbursed industrialization will acquire an 45 . Despite this downturn in private investment. a program dedicating $932 million to expanding solar power infrastructure. the government also launched the JNNSM.7 :Comparison between India and china Investment Climate In 2009. At the end of 2009. The Union Budget of India for 2010-2011 allocated an unprecedented 46 percent of the total budget to develop infrastructure. As a result.5 million directed to the MNRE as part of India’s comprehensive National Action Plan on Climate Change. Compared to China’s US$331 million in VC investments. Indian renewable energy attracted US$190 million in venture capital.3 billion in private investment. Indian renewable energy attracted $2. placing it tenth in the G-20’s investment ranking. This includes a 61 percent budget increase totaling US$223. India’s drop in investment reflects both the impact of 2009’s economic downturn and slight vulnerability of its still-nascent renewable energy market.5 percent growth.
added momentum. and the inherently disorganized nature of India’s parliamentary democracy also makes sustained. China is solving the problem with forward-thinking. Democracy is not a particularly efficient system of governance.891 MW. The policy disconnect between government ministries. The sector that attracts the most investment is energy generation. and sub-sectors makes it difficult for direct national policy to penetrate the layers of red tape and local interest that separate political jurisdictions. On the other hand. India is still working to overcome the traditional obstacle of clean technology that has previously hampered its development worldwide: high capital costs and high risk. India’s relatively developed and subsidized domestic solar energy may provide a challenge for foreign firms hoping to enter the market and directly compete with local firms. India is also one of the world’s top producers of wind energy with an annual 10. India’s main problem is not lack of knowledge but the lack of successful transition from research-based knowledge to sustainable commerciality. but India still needs to navigate past this barrier. deep government commitment.200 MW. just trailing China’s 12. including bioenergy and small hydropower largely mirrors China top renewable energy industries although not the same volume. long-term renewable energy planning and funding more vulnerable to the head butting of political parties. much like China Complex bureaucracy also inevitably acts as a barrier to efficiency.Non-solar related policies include reduced duties on permanent magnets and electricity generators encourage the development of wind power. Market Outlook With so much needed infrastructure construction—80 percent of the India of 2030 is yet to be built—and new government backing. states. which. as well as an exemption from basic customs and special duties for geothermal energy generation. 46 . In this constant management flux. the opportunities in smart infrastructure development and energy are great.
CHAPTER 5: RECOMMENDATIONS FOR INDIAN PROGRAM 47 .
the main source or ‘raw material’ for the generation of power. Given that post-PPA execution. bankers and financial institutions. This timeline is likely to be much longer for the first few projects since the model PPA by govt. 2008. 48 . Project Deadlines The guidelines allow 28 months from the date of Power Purchase Agreement (PPA) for commissioning the project whereas experience from other markets such as USA and Spain have indicated this to be around 36 months from the date of financial closure. the main concern is regarding the payment security to solar power developers. It is important that policies are modified to ensure the success of the mission objectives in “pioneering a graduated shift from economic activity based on fossil fuel to one based on non-fossil fuels and from reliance on nonrenewable depleting sources to renewable sources of energy” as stated by the PM while launching NAPCC on June 30. This lapse is being perceived as significant and detrimental to the development of solar thermal power projects by leading international experts. Delays may be expected in procuring requisite data accurately to assess project feasibility and secure guarantees of performance from technology providers.From a solar thermal perspective the Guidelines for selecting new grid connected solar power projects have failed to address many concerns and pre-requisites to ensure a successful rollout. as there is no assurance that an adequate mechanism is there to support the NVVN in the requisite manner so as to ensure that it can fulfill the expectations of investors by providing appropriate security to solar power developers. Typically solar resource data is required to be computed from 12 year solar cycle period and projected over 25 years to estimate the electricity generation potential of the site and determine the economic feasibility of the project. Delays due to lack of Solar Resource Data Penalties for delays are despite the lack of availability of solar resource data. Penalties for Delays Stringent penalties for delays (ranging from 20% to as high as 100% of the performance guarantee) have been proposed without due consideration to the practical requirements for a successful project. at least 6 months will be required for financial closure of solar thermal power projects. nominated agency (NVVN) has not been considered bankable by investors.
Analysis of project feasibility prior to project implementation is expensive (US $ 200. Most developers were expecting to invest in project feasibility after project approvals. This is in addition to environmental and other mandatory clearances which may take longer than assumed. payment guarantees for 25 years. In the absence of reliable feasibility. The timelines for these clearances and allocations would be outside the control of the project developers and will be hard to estimate for the first few projects.Delays in Clearances Further delays may be anticipated on account of land acquisition (a typically sized 50 MW project requires 2 km by 2 km area). penalties for higher (and lower) than CERC specified generation (23% CUF) from a non-firm source and lack of deemed generation clauses have added to the project risk factor. 49 . Hybrid solar projects All operating solar thermal power projects world over utilize 8 – 25% fossil fuel for plant parasites. the solar project developers need comprehensive and reliable feasibility assessment for getting requisite guarantees from their technology provider prior to providing the bid guarantees. technical performance. power evacuation arrangements by the state grids (most potential locations are in desert areas and nearest sub-station may be 25 km away) and allocation of water (600 million liters per annum for 50 MW project with estimated 25% capacity utilization). electricity output and economic feasibility). Allocation of projects: need for long term policy While the Govt. Although CERC tariff mechanism provides for 10% auxiliary consumption there is no clarification how or where this auxiliary requirement would come from. Some developers have suggested that all short-listed applicants that do not qualify under Phase I due to quantity restrictions.000).000 . PPA signatory. may be provided priority in the selection process during Phase II of the Mission.$ 500. is right in seeking a bid guarantee to gate the selection process to financially sound companies. has a low capital base and a balance sheet that does not enthuse bankers). foreign technology partners are unable to provide project parameter guarantees (project cost. PPA issues Issues such as PPA bankability (NVVN. price guarantee with a fast-tracked legally implementable remedial framework for delays.
Foreign technology companies interested in investing in local manufacturing are unable to do so due to insufficient local demand. during the 3-year period is insufficient and discourages investments in domestic manufacturing. Few other suggestions which we think might be fruitful areas follows The cap on equity dilution should be immediately removed. There has to be a proper assessment of the bidders and their seriousness of implementing the project. as envisaged in the guidelines. Transmission projects must be fasttracked to these regions and grid connectivity augmented to usher the benefit from grid connected solar projects Why are foreign companies not enthused? Most countries implementing solar power projects have higher feed in tariff support. The central and state governments should offer attractive unit cost valid for at least 2 years which should be same for all states.Such a clarification would encourage more companies to apply during the selection process. lower rates of interest. Indigenization One of the key mission objectives is to achieve grid parity through indigenization. 50 . Grid connectivity Grid transmission network and sub-station capacity to handle immediate generation from solar thermal power projects are considered inadequate. A longer term position would encourage development of domestic manufacturing in meeting the mission objectives. and allowance for 25% usage of fossil fuel and loan guarantees mitigating the risk factors. The guidelines announced have negated the inherent advantages of cheaper materials and manpower availability in India and created artificial barriers for the entry of international solar thermal power and technology companies. If any state wants to offer more it should be allowed and the % increase should be declared as incentive for precommissioning of the project over the targeted date. An off-take of 500 MW.
The reverse bidding should be stopped and should not allow unhealthy competition as it will water down the mission and the dream. 51 .No focus has been made on solar desalination plants along Indian coast. Imports of total plant should be allowed to bring in competition in the domestic sector and create a balance. Since the target till 2020 is quite huge the states should be given full freedom to act as ultimately our objective should be achieved. No technology cap should be made.
2010-50 was seen in different sectors where buildings constitute14 % . Jawaharlal Nehru National Solar Mission (JNNSM). Developing renewable energy can help India increase its energy security. lower its carbon intensity.The projection CO2 emission reduction under BLUE Map scenario. It aims to increase the capacity to generate renewable energy by 40GW to 55GW by the end of the 13th Five-Year Plan (2022). biomass.9 Gt compared to 1. Climate Change Science. The government has set ambitious targets.CHAPTER 6: CONCLUSION In the post Copenhagen era India has undertaken many climate policies like Low carbon strategy. Green India Mission (GIM).transport 37%.2Gt in 2030 based on an average annual GDP growth of 8% to 9% between 2006-07 and 2031-32. The 52 . National Mission on Sustainable Habitat (NMSH).while BLUE Map Scenario limits the increase of 2. India has 150GW of renewable energy potential. Some of the major initiatives among them are: • Ministry of Renewable Energy is promoting following sources of renewable energy: → Solar energy: it is planned to install solar energy plants in one million households → Biomass → Hydel energy • • • • Wind energy and Geothermal energy sources also being explored Cleaner fuels being promoted through administrative and legal ways Public awareness and inclusion of subject of climate change in educational curriculum at school levels Water conservation and harvesting is another area where lots of efforts are being put in. and wind and half in solar. India’s Integrated Energy Policy envisages CO2 emissions for 2031/32 to be 5. A “Carbon Tax” on Coal to Fund Clean Energy. and waste-to-energy.5 Gt to 3. and realize its aspirations for leadership in high-technology industries. contribute to more balanced regional development. its impact on health and means to mitigate this impact.industry 17% and power sector constitute 32% respectively.34Gt in 2007. reduce the adverse impacts on the local environment. about half in the form of small hydropower. Himalayan Ecosystem under the different Ministries of the GOI are contributing in creating awareness about the climate change. cogeneration.
For the generation of such targeted energy during the specified period .  Failure to develop least cost resources first. During the planning period from 9th to 11th plan. there are  Skewed financial incentives for facilitating investments in renewable energy.India needs Rs 12878/. Meeting this goal may require 40–80GW of additional capacity in renewable energy capacity by 2017. It seeks to increase combined solar capacity from 9MW in 2010 to 20GW by 2022.2010) respectively although the estimated potential capacity were too higher than the generation. in comparison with 21700MW up to 31.  Failure to adequately address utilities long term financial concerns. wind etc.2011 as against 21700MW during 2011-12-2016-17.  Inadequate evacuation and access infrastructure.  Inadequate long term funding sources.The different barriers in the renewable energy barriers and the way of success in the following manner. solar. In the barrier of financial viability. [iv] Facilitate financing of renewable energy. the progress solar power is satisfactory in the sense that the capacity addition in MW were recorded as 3475 up to the 9th plan which catapulted to 6761 and 12230 in the 10th plan and 11th plan ( up to 31. [iii] Enable direct purchase and distributed generation of renewable energy. the barriers are. The target of renewable energy during 2011-12 -2016-17 was published where the wind energy target constituted 13400MW followed by solar energy .5 percent in 2008. market based government interventions.  Too many incentive programs.National Action Plan on Climate Change (NAPCC) has set the even more ambitious goal of a 1 percent annual increase in renewable energy generation which stands at about 3. 53 . [ii] Create national renewable energy fund to mitigate impact on utilities. depending on India’s demand for power and plant capacity.03. [i] Provide streamlined. In the support infrastructure.12. The suggested solutions of these barriers are. The Jawaharlal Nehru National Solar Mission (JNNSM) has set its own ambitious target of adding 1GW of capacity between 2010 and 2013.crore separately for biomass.
In the regulatory approvals.The stalwarts in power plants like TataBP solar have stayed away as they found the terms offered unviable. [ii] strengthen state nodal agencies and state regulators. The Government of India needs to create a level playing field in the energy sector. Lack of good quality data.  Underdeveloped industry value chain.training men in all the demands solar power industry will throw up. [ii] Introduce and enforce “take or pay” for renewable energy generation. If quick action is not taken the local industry will wither away and we will be flooded with Chinese made products in the world of solar. Many small generating solar power plants have quoted and won rates that will prove unviable in the long run. Although In the world of manufacturing. Their remedies are. technology and infrastructure China has stolen a march over India in the field of solar energy India had a head start over China. the barriers are. but china over the recent years has taken the lead over us. 54 . The question of subsidies for solar power producing plants has to be reworked.  Delay in clearance and approvals. light-touch regulation for renewable energy.The government also needs to start coaching. [iv] Catalyse R&D and supply chain innovations and investments. This in turn will lead to power cuts and industry will come to a standstill.  Land and resource acquisition issues Their remedial measures are [i] Move to unified.  Long development cycle. [i] Make renewable energy evacuation a high transmission priority. This will lead to either these plants closing down after a short period or will have substandard material resulting in frequent break downs. [iii] invest in high quality. integrated resource monitoring systems.In addition many of those new solar power plants have no prior experience in the field of power generation.
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