Beehives or elephants?

How should India drive its

solar transformation?
September 2014

Tobias Engelmeier Ajay Goel

Tobias.Engelmeier@bridgetoindia.com Ajay.Goel@tatapowersolar.com
www.bridgetoindia.com www.tatapowersolar.com
www.bridgetoindia.com
 Challenges with the India needs to look beyond coal to ensure its energy
current scenario security

Issues with expanding

coal based power
infrastructure in India

© BRIDGE TO INDIA, 2014 2

 Cost of power from large scale solar is already at par
Cost trends
with imported coal

Highlights

• At the generation side,

the cost of solar power
for a utility scale
project is already at par
with the cost of power
from imported coal.

• Solar power will also

achieve parity with
domestic coal by the
year 2019.

• Even though storage is

expensive, the cost of
power with storage will
likely become
competitive with the
cost of power from
imported coal post
2017.

© BRIDGE TO INDIA, 2014 3

 We have modeled four distinct scenarios for solar
Scenario definition
capacity addition in India

Solar power is unique as it can be deployed in variety of forms ranging from distributed generation
(residential & large rooftops) to centralized generation (utility scale & ultra-mega scale projects)

Comparison of four scenarios of 25 GW each

Distributed
generation

Centralized
generation:

© BRIDGE TO INDIA, 2014 4

 Potential for solar India can add up to 145 GW of solar over the next 10
installation years

Highlights Distributed generation Centralized generation

• At 145 GW, solar could
contribute about 13%
to India’s power
generation in 2024.
• Most grid operators
today consider 20% of
power from intermittent
sources like solar
acceptable.
• We believe that the
“ceiling” will rise
substantially in the next
ten years as grids
become “smarter”.
• Therefore, we consider
13% generation from
solar plausible.
• The 145 GW would be
distributed across
different grid-
connected system
types (“bees” to
“elephants”).

© BRIDGE TO INDIA, 2014 5

 Economics of solar power should be evaluated at
LCOE vs. LCOP
point of consumption than point of generation

Levelized Cost of Energy (LCOE)

Cost of evacuation Cost of land/ T&D charges Cost of smart meters/ Commercial losses / Additional cost of
+ + + + +
of power rooftop lease and losses energy accounting theft of power balancing the grid

Landed Cost of Power (LCOP)

From consumer’s perspective, what matters more is the LCOP at the point of
consumption than the LCOE

© BRIDGE TO INDIA, 2014 6

 Detailed modeling shows interesting cost trends for
Cost trends
each scenario over next 10 years

Highlights Unsubsidized LCOE and LCOP in 2015

• Large size projects are
more cost effective
today; however
rooftops would witness
steeper cost decline
over next 10 years.

• LCOE for rooftops

would fall by ~30%
whereas that for utility
scale by 17%. Unsubsidized LCOE and LCOP in 2024
• Gap between LCOP &
LCOE is as high as Rs
2.00/unit for utility
scale compared to Rs
0.20/ unit for rooftops,
highlighting advantage
of distributed gen.

• The gap between

LCOP & LCOE would
still remain at Rs 1.50
/unit for centralized
projects after 10 years.
© BRIDGE TO INDIA, 2014 7
 6.75 Lakh total jobs can be created if 100 GW is
Job creation
implemented across the four scenarios

Highlights
• Most jobs are created
in the small rooftop
market, which would
see a large number of
small installers and a
very diverse value
chain.

• Most solar jobs require

the regular addition of
new capacity to
sustain.

• Jobs in ultra-mega
projects will suffer most
from project related
ebbs and flows.

• The industry structure

will be characterized by
fewer (and probably
more professional)
players, the larger the
project size.

© BRIDGE TO INDIA, 2014 8

 Speed of deployment is fastest for small rooftops and
Speed of deployment
slowest for ultra mega projects

Highlights
• For smaller rooftops,
smaller size & captive roof
space imply quicker
deployment of systems that
can be built in days.

• Large rooftops additionally

require contractual
agreements and thus
system can be installed in
few months.

• Utility scale projects need

longer time for land
acquisition & clearances,
hence they can be installed
in 6-8 months.

• Ultra mega projects require

a couple of years of time
frame for deployment;
increased time required for
planning, land acquisition,
evacuation infrastructure
development, financial
closure, etc.
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 Implementation Implementation challenges are minimum for utility
challenges scale projects due to already developed ecosystem

Highlights
• Financing challenges are a
common thread across all 4
scenarios.
• Small rooftop market is
fragmented & disorganized
and it needs to become
more organized with
standardized, ready for
installation solutions.
• Things are broadly in place
for utility scale projects as
there is a proven track
record; large rooftops are
gaining pace with net-
metering gradually coming
in place.
• For ultra mega projects, the
ecosystem needs to be
developed esp. for land
acquisition & transmission
infra development.

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 The country should focus on providing broad based
Way Forward
support across scenarios
Creating dependable solar policies to encourage investments & easy implementation process
Highlights
• Incentives (GBI/ subsidy/ VGF)
• Similar to the diesel
Financial • Setting up of “green funds” and solar/renewable focused
gen-set market, solar NBFCs
could become a
“default” rather than a
“design” market. • Single window clearance
• Mindset of the • New substations
Infrastructure
regulators and policy • Setting up of green corridors
makers needs to move • Weather and demand forecasting
away from the current
school of thought • Demo projects in public places or government buildings
where power gen. Ease of • Standards for system quality; Performance monitoring
happens centrally. business • Stakeholder meetings
• Existing regulations • Government backing of contracts to improve bankability
and policies need to be
re-evaluated, with due
importance given to • Regulations for net-metering & smart grids implementation
Regulation
generation being at the • Long term clarity on regulatory & policy provisions
point of consumption.

While the government should continue to encourage large scale projects to add to the power generation
capacity in the country, a much larger emphasis should be given to rooftop projects which will lead to a more
organic growth of the sector.

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 Thank you for your attention

We are happy to support you in case there is any query

Contact

www.bridgetoindia.com
Follow us on facebook.com/bridgetoindia

© BRIDGE TO INDIA, 2014

 Looking only at gen. costs would skew the analysis
Cost trends
towards large project sizes due to economies of scale

Highlights

• Levelized Cost of Energy

(LCOE) for large projects
(“horses” and “elephants”)
is the most competitive.
• Costs fall faster for
distributed solar.
• The cost reduction in
ultra-mega projects is
limited as the scale effect
achieved from the very
first project.
• Infrastructure costs for
additional evacuation
takes away some of the
scale advantage of the
ultra-mega projects.
• As these projects move
out of very high CUF
locations, their advantage
fades away.

© BRIDGE TO INDIA, 2014 13

 A look at the landed costs makes distributed solar
Cost trends
solutions an attractive choice for India

Highlights

• Landed Cost of Power

(LCOP) is the lowest for
large rooftop projects as
they benefits from
avoidance of T&D losses.
• Utility scale projects lose
a part of their
competitiveness due to
T&D losses.
• Ultra-mega projects suffer
the most as they are
usually placed in remote
locations.
• T&D losses and
infrastructure availability
vary widely across India –
so in some states utility
scale projects are more
competitive than in others.

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