TECHNO-ECONOMICS OF SOLAR THERMAL

POWER GENERATION IN INDIA

CHANDAN SHARMA

CENTRE FOR ENERGY STUDIES

INDIAN INSTITUTE OF TECHNOLOGY DELHI
HAUZ KHAS, NEW DELHI - 110016
FEBRUARY 2016
© Indian Institute of Technology Delhi (IITD), New Delhi, 2016
TECHNO-ECONOMICS OF SOLAR THERMAL
POWER GENERATION IN INDIA

by

CHANDAN SHARMA

Centre for Energy Studies

Submitted

in fulfillment of the requirements of the degree of

Doctor of Philosophy
to the

INDIAN INSTITUTE OF TECHNOLOGY DELHI

FEBRUARY 2016
 Certificate

This is to certify that the thesis entitled Techno-economics of Solar Thermal Power

Generation in India being submitted by Mr. Chandan Sharma to Indian Institute of

Technology Delhi in fulfillment of the requirements for the award of the degree of Doctor of

Philosophy is a record of bonafide research work carried out by him under our guidance and

supervision at Centre for Energy Studies, Indian Institute of Technology Delhi.

The results obtained herein have not been submitted in part or in full to any other University

or Institute for the award of any degree to the best of our knowledge.

Dr. Tara Chandra Kandpal Dr. Subhash C. Mullick

Professor Emeritus Professor
Centre for Energy Studies Centre for Energy Studies
Indian Institute of Technology Delhi Indian Institute of Technology Delhi
Hauz Khas, New Delhi – 110016 Hauz Khas, New Delhi – 110016

i
 Acknowledgements

It gives me immense pleasure to express my gratitude to all those who supported me during the

course of my study. First and foremost, I would like to express my deep gratitude to my

research supervisors, Prof. Subhash C. Mullick and Prof. Tara C. Kandpal, for providing me

thorough guidance, encouragement and invaluable suggestions throughout my research work

in spite of their busy academic and professional schedules.

I would like to extend my sincere thanks to the chairman and all members of my SRC (Student

Research Committee) for providing their valuable suggestions during the various evaluation

stages of my research work. I am also extremely grateful to the Head, Centre for Energy

Studies for providing facilities and extending every possible support.

I would like to express my sincere thanks to the Department of Technical Education,

Government of Rajasthan and Principal, Government Engineering College Ajmer for allowing

me to pursue my doctoral research work at Indian Institute of Technology Delhi under Quality

Improvement Programme of All India Council for Technical Education, Government of India.

Special thanks are due to Mr. Dhanne Singh, Mr. Rahul Rawat, Mr. Tarun Kumar Aseri and

Mr. Ashish Kumar Sharma for extending all kind of support during my period of study.

I wish to express my gratitude to my parents, my brothers and my sisters for providing their

support and blessings that has helped me a lot in completing my research work. Special thanks

are due to my wife Mrs. Pratima Sharma and two wonderful daughters, twelve year old Dhun

and 6 years old Prisha for constantly motivating me. Their presence in my life inspires me to

have positive thinking in times of distress and constantly striving for achieving new tough goals

in life.

(Chandan Sharma)

ii
 Abstract

This study is an attempt towards achieving better understanding of some of the aspects that

directly affect the techno-economics of solar thermal power generation. An attempt has been

made to assess the potential of solar thermal power generation in India. Also the effect of

several radiation data sources on the performance and levelized cost of electricity generation

(LCOE) in India has been studied. In addition, effect of several design parameters on the

levelized cost of electricity delivered has been analyzed. The extent of some of the potential

incentives (viability gap funding, interest subsidy, investment tax credits, production tax credits

and renewable energy certificates) required to achieve a desired value of LCOE for solar

thermal plants have been estimated. A preliminary effort has also been made to study the effect

of future reduction in the cost of solar thermal plants on the LCOE.

Results obtained indicate a large potential (229 GW for a threshold DNI value of 2000 kWh/m2)

of solar thermal power generation in India. However, the annual DNI availability at niche

locations in India is lower than that reported for solar thermal power plants in USA and Spain.

There is substantial difference between different sources of solar radiation data for the country.

Depending on the values of design DNI, solar multiple and hours of thermal storage, the

estimated LCOE for parabolic trough based plants is in the range Rs. 11.23/kWh-Rs.

12.88/kWh. The provision of incentives can help reduce the LCOE. For example, LCOE of Rs.

9.75/kWh can be achieved for a plant at Barmer with a provision of (a) 6.3% of capital cost as

viability gap funding or (b) an interest subsidy of 3% or (c) 32% investment tax credit or (d)

production tax credits for 10 years at a rate of Rs. 0.81/kWh. There is moderate possibility of

cost reduction in solar thermal power generation technology (estimated average learning rate

of 10%) and consequently even with global installed capacity of 1000 GW, the estimated

LCOE for India in 2050 is around Rs. 7.00/kWh.

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 Contents

Page No.
Certificate i
Acknowledgements ii
Abstract iii
Contents iv
List of Figures viii
List of Tables x
Nomenclature xiv

Chapter 1 Introduction and Literature Review 1

1.1 Relevance, justification and outline of the study 1
1.2 Organization of the thesis 8
1.3 Bibliographic review of literature on techno-economics of 11
solar thermal power generation
1.4 Concluding remarks 17

Chapter 2 Estimation of Potential of Solar Thermal Power Generation in India 18

2.1 Introduction 18
2.2 Review of CSP system requirements as reported in literature 20
2.2.1 Direct normal irradiance 20
2.2.2 Land requirement 20
2.2.3 Water requirement 21
2.2.4 Availability of transmission and other infrastructure 21
2.2.5 Potential for auxiliary supply 22
2.3 Methodology 23
2.3.1 Identification of wastelands in the country 23
2.3.2 Estimation of DNI and other climatic parameters for locations 25
with wastelands
2.3.3 Identifying wastelands with acceptable annual value of DNI 26
2.3.4 Accounting for the need to safeguard endangered species, 27
wellbeing of tribal population
2.3.5 Accounting for potential of wind and PV power generation 27
2.4 Results and discussion 29
2.4.1 Availability of wasteland (for a particular threshold value of 30
DNI)
2.4.2 Accounting for wasteland with large tribal population 30

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 2.4.3 Accounting for wasteland with habitat of critically endangered 30
species
2.4.4 Excluding wasteland under seismic zone 32
2.4.5 Exclusion of land with higher slopes 32
2.4.6 Accounting for the land suitable for wind and PV power 32
generation
2.4.7 Ground water availability in potential locations 35
2.4.8 Potential for solar thermal power generation 36
2.5 Concluding remarks 38

Chapter 3 Review of Radiation Data Sources Used for Predicting the Performance 39
of Solar Thermal Power Plants in India
3.1 Introduction 39
3.2 Solar radiation data sources 40
3.3 Methodology 46
3.3.1 Selection of locations 48
3.3.2 Radiation data sources in Indian context 49
3.4 Results and discussion 53
3.4.1 Estimation of LCOE 56
3.4.2 Parabolic trough plant 58
3.4.3 Central tower receiver plant 59
3.4.4 LFR plant 61
3.5 Concluding remarks 65

Chapter 4 Effect of Design Parameters on the Levelized Cost of Electricity 66

Delivered by Solar Thermal Power Plants in India
4.1 Introduction 66
4.2 Methodology 68
4.2.1 Selection of potential locations to be considered for analysis 69
4.2.2 Creation of the typical meteorological year files 70
4.2.3 Simulation using System Advisor Model 70
4.2.4 Estimation of LCOE 71
4.3 Results and discussion 72
4.3.1 Effect of increase of solar multiple on LCOE 72
4.3.2 Effect of design DNI on LCOE 77
4.3.3 Effect of hours of thermal storage on LCOE for PTC based plants 80
4.4 Concluding remarks 85

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Chapter 5 Effect of Incentives on the Levelized Cost of Electricity Delivered by 86
Solar Thermal Power Plants in India
5.1 Introduction 86
5.2 Potential incentives for solar thermal power generation 88
5.3 Effect of incentives on LCOE 91
5.3.1 Effect of capital subsidy on LCOE 91
5.3.2 Effect of interest subsidy on LCOE 92
5.3.3 Effect of investment tax credits on LCOE 92
5.3.4 Effect of production tax credits on LCOE 93
5.3.5 Effect of renewable energy certificates on LCOE 94
5.4 Estimation of the extent of incentive required for a desired value of 94
LCOE
5.4.1 Methodology 94
5.5 Results and discussion 109
5.5.1 Viability gap funding 109
5.5.2 Interest subsidy 111
5.5.3 Investment tax credits 112
5.5.4 Production tax credits 114
5.5.5 Revenue from sale of renewable energy certificates 114
5.6 Concluding remarks 115

Chapter 6 Cost Reduction Potential of Parabolic Trough Based CSP Plants and its 117
Implications for Levelized Cost of Electricity
6.1 Introduction 117
6.2 Global status of solar thermal power 119
6.3 Status of solar thermal power in India 121
6.4 Requirements on components used in CSP systems 124
6.5 Avenues for cost reduction of CSP technology 124
6.5.1 Cost reduction through technological breakthrough / innovations 125
6.5.2 Cost reduction through local manufacturing of CSP components 127
6.6 Methodology 129
6.6.1 Expected cumulative diffusion of CSP plants in the world 129
6.6.2 Learning rates of different components of CSP plants 131
6.6.3 Future capital cost of CSP plants in India 133
6.6.4 Envisaged capacity of CSP plants in India 133
6.6.5 Future levelized cost of electricity delivered by CSP plants in
133
India
6.7 Results and discussion 133
6.7.1 Estimation of future capital cost of CSP plants in India 133

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 6.7.2 Levelized cost of electricity in future due to likely reduction in 135
capital cost
6.8 Concluding remarks 137

Chapter 7 Conclusions and Recommendations for Further Work 139

Appendices
Appendix A: Details of some operational solar thermal power plants in 143
Spain and USA
Appendix B: Wasteland categories and corresponding area in different 144
States
Appendix C: State wise number of potential locations for wind power 145
installations and range of annual average wind speed
Appendix D: Framework for estimation of wastelands for solar thermal 146
power generation
Appendix E: Projected demand for electric power and estimated solar 147
thermal power generation potential in five states
Appendix F: Uncertainty in estimating renewable energy utilization 148
potential: A case of solar thermal power generation in
India
Appendix G: Expression for the levelized cost of electricity 163
Appendix H: Sample Calculations of LCOE for 50 MW central tower 164
receiver plant at Jaisalmer
Appendix I: Sample Calculations of LCOE for 50 MW LFR plant at 165
Jaisalmer
Appendix J: Assumptions for thermal storage media and related 166
parameters
Appendix K: Estimation of breakeven capital cost (million Rs. /MW) of 167
CSP plant for its LCOE to become equal to that of an
equivalent capacity Photovoltaic plant

References 168
List of Publications 184
About the Author 185

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 List of Figures

Figure No. Title of Figure Page No.

Figure 2.1 A schematic representation of methodology adopted for 23
estimation of potential of solar thermal power generation
in India
Figure 2.2 Allocation of wastelands between PV power and CSP for 35
threshold DNI 1800 kWh/m2
Figure 2.3 Allocation of wastelands between PV power and CSP for 35
threshold DNI 2000 kWh/m2
Figure 2.4 CSP potential in various states with annual threshold DNI 37
of 1800 kWh/m2
Figure 2.5 CSP potential in various states 37
Figure 3.1 Steps in appraising financial feasibility of a CSP project 40
Figure 3.2 A schematic representation of methodology adopted 46
Figure 3.3 A schematic representation of TMY 3 weather file 54
creation and performance prediction
Figure 3.4 Annual electricity output (GWh) of a 50 MW parabolic 59
trough plant at various combinations of location and solar
radiation data source
Figure 3.5 LCOE (Rs./kWh) of a 50 MW parabolic trough plant at 59
various combinations of location and solar radiation data
source
Figure 3.6 Annual electricity output (GWh) of a 50 MW central 61
tower receiver plant at various combinations of location
and solar radiation data source
Figure 3.7 LCOE (Rs./kWh) of a 50 MW central tower receiver plant 61
at various combinations of location and solar radiation
data source
Figure 3.8 Annual electricity output (GWh) of a 50 MW LFR plant 62
at various combinations of location and solar radiation
data source
Figure 3.9 LCOE (Rs./kWh) of a 50 MW LFR plant for various 63
combinations of location and solar radiation data source
Figure 4.1 Methodology adopted for deciding values of solar 69
multiple and design DNI
Figure 4.2 Variation of LCOE with solar multiple for PTC based 76
plant
Figure 4.3 Variation of LCOE with solar multiple for LFR based 76
plant

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Figure 4.4 Variation of LCOE with design DNI for PTC based plant 81
Figure 4.5 Variation of LCOE with design DNI for LFR based plant 81
Figure 4.6 Variation of LCOE with hours of thermal energy storage 84
for PTC based plant at Jaisalmer
Figure 4.7 Variation of electricity output with hours of thermal 84
energy storage for PTC plant at Jaisalmer
Figure 5.1 A schematic diagram of the approach used for studying 95
effects of incentives on LCOE delivered by solar thermal
power plants
Figure 6.1 Cumulative installed capacity of CSP plants across the 119
globe
Figure 6.2 Projected capital cost of CSP plants with and without 121
storage
Figure 6.3 Average LCOE projections for CSP plants 121
Figure 6.4 Schematic of approach used for analyzing effects of cost 129
reduction
Figure 6.5 Cost breakup of a 50 MW CSP plant (a) without storage 131
and (b) with 6 hours of storage
Figure E.1 Stake holders likely to be benefitted by potential 149
estimation of renewable energy sources
Figure E.2 Available wasteland in (km2) for different threshold 155
values of annual DNI
Figure E.3 Distribution of wasteland (in km2) between wind power 157
and solar power for different DNI and wind speeds
Figure E.4 Distribution of wastelands (in km2) between solar PV and 160
thermal power (threshold DNI 1800kWh/m2/year)
Figure E.5 Distribution of wastelands (in km2) between solar PV and 160
thermal power (threshold DNI 2000kWh/m2 /year)

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 List of Tables

Table No. Title of Table Page No.

Table 2.1 Threshold values of annual DNI suggested in literature 21
Table 2.2 Reported land requirement for different CSP technologies 22
Table 2.3 Water requirement for various CSP technologies 22
Table 2.4 Wasteland categories considered suitable for solar thermal 25
power generation
Table 2.5 Details of NASA – SSE and NREL – SEC Radiation data 26
sources
Table 2.6 Wasteland and climatic conditions for the state of 28
Rajasthan
Table 2.7 List of states in India having wasteland with DNI more 31
than threshold value
Table 2.8 Wastelands inhabited by large tribal population in various 31
states
Table 2.9 Wastelands highly prone to earthquakes in various states 32
Table 2.10 Estimated wasteland area having wind speeds more than 4 33
m/sec in different states
Table 2.11 Allocation of land for wind power, PV power and solar 34
thermal power (DNI more than 1800 kWh/m2 and wind
speed more than 4 m/sec)
Table 2.12 Allocation of land for wind power, PV power and solar 34
thermal power (DNI more than 2000 kWh/m2 and wind
speed more than 4 m/sec)
Table 2.13 Potential for solar thermal power generation in various 36
states
Table 3.1 Criteria for the classification of climatic zones and 48
locations selected for analysis
Table 3.2 Comparison of various radiation data sources 52
Table 3.3 Specifications of CSP plants based on three different 55
technologies
Table 3.4 Financing conditions and other requirements as suggested 55
by CERC for estimation of LCOE
Table 3.5 Sample calculations of LCOE for a parabolic trough power 57
plant at Jaisalmer
Table 3.6 Annual electricity output (GWh) and LCOE (Rs./kWh) for 58
combinations of location and solar radiation data source for
a 50 MW parabolic trough power plant

x
Table 3.7 Annual electricity output (GWh) and LCOE (Rs./kWh) for 60
combinations of location and solar radiation data source for
a 50 MW central tower receiver plant
Table 3.8 Annual electricity output (GWh) and LCOE (Rs./ kWh) for 62
combinations of location and solar radiation data source for
a 50 MW LFR plant
Table 3.9 CUF (fraction) for combinations of location and solar 64
radiation data source for a 50 MW power plant based on
three CSP technologies
Table 3.10 Range of CUF for all the locations from different solar 64
radiation data sources for the three CSP technologies
Table 4.1 Locations selected for the analysis and corresponding 70
annual DNI
Table 4.2 Specifications of the solar thermal power plants considered 71
in the study
Table 4.3 Effect of solar multiple on electricity output and LCOE for 74
50 MW PTC based plant
Table 4.4 Effect of solar multiple on electricity output and LCOE for 75
50 MW LFR based plant
Table 4.5 Number of hours in a year when DNI exceeds a stipulated 76
value at different locations
Table 4.6 Effect of design DNI on electricity output and LCOE for 78
50 MW PTC based plant
Table 4.7 Effect of design DNI on electricity output and LCOE for 79
50 MW LFR based plant
Table 4.8 Effect of hours of thermal storage on LCOE for different 82
values of solar multiple
Table 4.9 Variation of annual electricity output with hours of thermal 83
storage and solar multiple
Table 5.1 Effect of capital subsidy on LCOE 91
Table 5.2 Effect of interest subsidy on LCOE 92
Table 5.3 Effect of investment tax credits on LCOE 93
Table 5.4 Effect of production tax credits on LCOE 93
Table 5.5 Effect of the price of renewable energy certificates on 94
LCOE
Table 5.6 Input parameters used for estimation of LCOE 98
Table 5.7 Maximum acceptable LCOE for various combinations of 102
WACE and solar RPO

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Table 5.8 Viability gap funding required (as a fraction of capital 110
cost) for various combinations of proposed WACE and
solar RPO
Table 5.9 Interest subsidy for various combinations of WACE and 110
solar RPO corresponding to different debt-equity ratios
Table 5.10 LCOE for zero percent interest rate on debt and for zero 110
percent rate of return on equity for various debt-equity
ratios
Table 5.11 Required rate of Investment tax credit for various 113
combinations of WACE and solar RPO corresponding to
different debt-equity ratios
Table 5.12 Rate of production tax credit for various combinations of 114
proposed WACE and solar RPO corresponding to different
debt-equity ratio
Table 5.13 Unit price of RECs for different ratios of debt and equity at 115
different WACE
Table 6.1 Range of LCOE for different solar power technologies in 117
India
Table 6.2 Global status of CSP plants 120
Table 6.3 Status of solar thermal power in India 122
Table 6.4 Different estimates of cost breakup of a 50 MW parabolic 123
trough based CSP plant in India
Table 6.5 Comparison of capital cost and LCOE for various 124
renewable energy supply based options in India
Table 6.6 Requirements on the components of CSP plants 125
Table 6.7 Brief description of technological improvements in CSP 126
components and their implications
Table 6.8 Potential vendors identified in India for different CSP 127
components
Table 6.9 Possibility of manufacturing of different CSP components 128
in India with strengths, limitations and possible solutions
Table 6.10 Three scenarios for global cumulative diffusion of CSP 129
plants
Table 6.11 Learning rates for various systems of a CSP plant 131
Table 6.12 Benchmark capital cost as specified by CERC 132
Table 6.13 Envisaged cumulative installed capacity of CSP plants in 133
India
Table 6.14 Cost breakup and future capital cost for CSP plant without 134
storage in the optimistic scenario

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Table 6.15 Estimated future capital cost of CSP plant (without 134
storage) for different scenarios
Table 6.16 Estimated future capital cost of CSP plant (with 6 hr 134
storage) for different scenarios
Table 6.17 Effect of cost reduction on LCOE for CSP plant without 136
storage in optimistic scenario
Table 6.18 Weighted average LCOE for CSP plants (without storage) 136
for different scenarios
Table 6.19 Weighted average LCOE for CSP plants (with 6 hour 136
storage) for different scenarios
Table A.1 Details of some operational solar thermal plants in Spain 143
and USA
Table B.1 Wasteland categories and corresponding area in different 144
states
Table C.1 State wise number of potential locations for wind power 145
installations and range of annual average wind speed
Table D.1 Framework for estimation of wastelands for solar thermal 146
power generation
Table E.1 Projected demand for electric power and estimated solar 147
thermal power generation potential in five states
Table F.1 Brief summary of three studies carried out to estimate 153
potential of solar thermal power generation in India
Table F.2 Annual DNI values for five locations as specified by three 155
solar radiation data sources
Table F.3 Foot print of CSP technology assumed in the studies for 159
potential estimation
Table F.4 Footprint of different CSP technologies 159
Table F.5 Potential of solar thermal power generation in India for 159
different CSP technologies
Table F.6 Effect of change of parameters on the availability of 161
wastelands
Table H.1 Sample Calculations of LCOE for 50 MW central tower 164
receiver plant at Jaisalmer
Table I.1 Sample Calculations of LCOE for 50 MW LFR plant at 165
Jaisalmer
Table J.1 Assumptions for thermal storage media and related 166
parameters
Table K.1 Cost and performance parameters for CSP and PV plants 167
Table K.2 Breakeven capital cost of CSP plants so that LCOE becomes 167
equal to the present day LCOE of Photovoltaic plant

xiii
 Nomenclature
Symbols
C0 Capital cost
d Discount rate
fd Fraction of debt
fe Fraction of equity
fs Fraction of capital cost as salvage value
fvgf Fraction of capital cost provided as viability gap funding
Id Interest rate on debt
n Useful life
Pc Price of conventional electricity
Pste Price of solar thermal electricity
Re Rate of return on equity
T Loan repayment period
ξ Annual rate of escalation in O&M expenses

Abbreviations
CDM Clean Development Mechanism
CERC Central Electricity Regulatory Commission
CSP Concentrated Solar Power
CTR Central Tower Receiver
CUF Capacity Utilization Factor
DNI Direct Normal Irradiance
DSG Direct Steam Generation
ECS Electrical Conversion System
EPC Engineering Procurement and Construction
EPIA European Photovoltaic Industry Association
ESMAP Energy Sector Management Assistance Program
ESTELA European Solar Thermal Electricity Association
FIT Feed-in-Tariff

xiv
GHI Global Horizontal Irradiance
GIS Geographical Information System
HTF Heat Transfer Fluid
IEA International Energy Agency
IRENA International Renewable Energy Agency
ISCCS Integrated Solar Combined Cycle System
ITC Investment Tax Credit
JNNSM Jawaharlal Nehru National Solar Mission
LCOE Levelized Cost of Electricity
LFR Linear Fresnel Reflector
MNRE Ministry of New and Renewable Energy
NAEO Net Annual Electricity Output
NREL National Renewable Energy Laboratory
PTC Parabolic Trough Collector
PTC Production Tax Credit
PV Photovoltaic
REC Renewable Energy Certificate
REN Renewable Energy Network
RPO Renewable Purchase Obligation
SAM System Advisor Model
SAPG Solar Aided Power Generation
SCS Solar Collection System
SEC Solar Energy Centre
SEGS Solar Energy Generating System
SWERA Solar and Wind Energy Resource Assessment
TCS Thermal Conversion System
TMY Typical Meteorological Year
UCE Unit Cost of Electricity

xv
UNEP United Nations Environment Programme
VGF Viability Gap Funding
WACC Weighted Average Cost of Capital
WACE Weighted Average Cost of Electricity

xvi