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Viva Voce Presentation

COMMERCIAL EXPLORATION OF SOLAR ENERGY


PROBLEMS AND PROSPECTS
With special reference to Solar Water Heaters
Submitted By
V.S.K.VARMA, M.B.A., M.PHIL.,
Associate Professor, Department of Management Studies,
Maharajahs Post Graduate College, Vizianagaram
Under the Guidance of
.
Prof. M. LAKSHMIPATHI RAJU, Ph.D
(Retired)
Research Director,
Dept. of Commerce and Management
Studies, Andhra University

Prof. M. MADHUSUDHANA RAO, Ph.D


Joint Research Director,
Head of the Department,
Dept. of Commerce and Management
Studies, Andhra University

DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES


ANDHRA UNIVERSITY, VISAKHAPATNAM-530003
ANDHRA PRADESH, INDIA
2014

Need For The Study


Energy is central to sustainable development of the world. The
availability of the energy and the cost at which it is available
determine the pace of development whether it is industrial,
agricultural or technological development.
The standard of living in a country is also dependent on the per
capita consumption of energy. Energy has become a strategic issue
and countries have to rely on imports to augment their energy
supplies because of the lack of their domestic energy resources.
According to the research studies many of our energy sources are
drastically depleting while energy utilization is increasing rapidly
which may lead to energy crunch in future.

Production, transport and exploitation of the energy, all have a great


impact on environment and ecosystems as well.
Many of the conventional energy sources like coal, oil and natural
gas etc. are relatively harmful to the ecological environment because
of their high carbon emissions which is the main reason for global
warming.
Using renewable energy instead of fossil fuels would significantly
decrease the total amount of greenhouse gas emissions which would
help prevent stronger climate change impact.

Less foreign oil import. The global oil market has become
extremely volatile and our dependence on oil continues to grow.
With more emphasis on renewable energy and using domestic
renewable energy sources instead of importing foreign oil we would
drastically improve our energy security and energy independence.
Renewable energy offers variety of options to choose from as
countries can choose between sun, wind, biomass, geothermal
energy, water resources, etc.
Excellent potential of renewable energy resources. Our sun for
instance has almost unlimited potential. Wind, geothermal, biomass
all of these sources have excellent potential to satisfy our energy
needs.

Renewable energy can help in electrification of many rural areas in


developing world. In many rural areas renewable energy is cheaper
energy option to satisfy energy needs compared to traditional energy
solutions.

Benefits Of Solar Energy


Solar energy is clean energy in that it emits no effluents or pollutants
into the atmosphere unlike the thermal energy obtained by the
burning of coal.
Solar energy is forever. Unlike fossil fuels, whose stocks are getting
depleted everyday without being replenished and which we will
exhaust completely within a few decades (unless fresh sources are
discovered in the meanwhile).

Solar energy is abundantly available in India from Kashmir to


Kanyakumari, the country is blessed with an abundance of sunny
days.
Solar energy is modular and scalable. We can have a lantern or a
home lighting system of a few watts to megawatt size solar power
plants. We can add more power by simply adding more PV modules.
Solar energy can be generated at the point of use, in which case
there is no loss in transmission and distribution (T & D). In India,
the T&D losses in the case of conventional electricity account for as
much as 30% of the actual production. This problem can be obviated
by setting up PV panels on rooftops of buildings, minimizing T&D
losses as well as by setting up village level solar power plants or
plants close to the point of use.

Solar energy technology is simple and quickly implementable


requiring no or low gestation period.
There are no rehabilitation issues related to solar power projects as
are seen in the case of mega power projects. No need to displace
people from their homes and villages. On the contrary every home
becomes a solar power producer by setting up a set of PV panels on
its rooftop.

While wind energy is limited by geographical locations and can be


generated only where wind in good speed is available, solar energy
can be generated everywhere, where sunshine is available. The
minimum size for a wind energy project is such that it does not lend
itself to generation at the level of individuals. Not so with solar
energy which can be generated on everyones rooftop or wherever
open, shadow-free area is available.

Solar power projects require virtually no maintenance or very little


maintenance.. Unlike turbines in wind and hydel projects, there are
no moving parts in solar PV power projects. Since there are no
moving parts and no inputs required such as oil, coal or gas or even
water, solar PV projects have a long shelf life.

Applications Of Solar Power


Solar Photovoltaic Systems (PV)
Solar Thermal Power Plants
Solar Water heaters
Solar Energy Storage Systems
Solar cooker
Solar heat Technology
SPV lighting systems(lantern, street lighting system, traffic
signaling, message display systems )
SPV power plants (Standalone, grid integrated)

Objectives of the study


The study is conducted with the following objectives.
1. To review the position of solar energy in general in the world and in
India.
2. To present the role and applications of solar energy.
3. To present the opinions of solar water heater users, manufacturers
and distributors on solar water heater systems.
4. To analyze the policy of the central and some important state
governments on solar exploration in general and solar water heaters
in particular.
5. To identify the problems from solar water heater users view,
producers view and distributors view and to make suggestions for
an increase in the usage of solar water heaters.

Selection Of The Location For The Study


India has good number of cities with larger population. There are B
category cities with more than two million population per city.
Among them Visakhapatnam in Andhra Pradesh is the second largest
populated city with more than twenty lakhs.
Hoping that the people of Visakhapatnam represent the behavioral
pattern of the people of other cities, Visakhapatnam city is identified
for study.

Selection Of The Sample For Solar Power


Users For Water Heating
Demand for water heating comes from mostly individual
households, residents in apartments and hotels/lodges.
In the Visakhapatnam city as at the end of December 2012 according
to the information from New and renewable energy development
corporation of Andhra Pradesh,(NREDCAP) about 900 apartment
buildings,400 individual households and 200 lodges/hotels have
installed solar water heaters.
On the whole I have selected 12 percent of them i.e 180.This 180 are
picked up at the rate of 90(10 percent of 900 apartment buildings),
40 (10 percent of 400 individual houses) and 50 (25 percent of 200
hotels/lodges).

Collection of data
Primary Sources
Primary data has been collected from the individual households,
residents of apartments and the proprietors/manager of lodges/hotels
through a structured questionnaire. The questionnaire is canvassed
to the selected members personally. Further opinions are collected
through interviews from owners/managers of the sample unit.
In the production and distribution of the solar water heating systems,
the producers and the distributors are also playing a dominant role.
To know the quality, performance, price, technology and other
aspects of these systems some producers and producer cum
distributors are also selected and interviewed through a separate
questionnaire and their opinions are also presented in the
dissertation.

Secondary Data
The following secondary sources provided useful data regarding the
solar energy, its applications, previous researches in the solar Energy
sector, and various policies of the central and state governments.
Ministry of New and Renewable Energy Sources, Government of
India, New Delhi.
The Energy Statistics, Government of India, Ministry of statistics and
Programme Implementation.(MOSPI)
The Energy Resources Institute, (TERI) New Delhi.
Akshay-Urja, A Bi-monthly News letter published by Ministry of New
and Renewable Energy, Government of India.

Solar Energy Centre


Ministry of Statistics and Programme Implementation, Government of
India, New Delhi.
Indian Council for Social Science Research, New Delhi
New and Renewable Energy Development Corporation of Andhra
Pradesh, Hyderabad.
Annual reports of British Petroleum.
Central Electricity Authority, New Delhi.
Indian Renewable Energy Development Agency (IREDA)

Limitations Of The Study


The data collected from the consumers of solar water heaters are based
on their opinions only which always may not be exact. Some of the users
are not willing to share as they are very busy in their personal jobs.
If a bigger sample of users is selected, results could be more realistic. But
Because of shortage of time, more number of consumers could not be
approached and their opinions could not be collected.
List of solar water heater users is supposed to be available with District
level NREDCAP office. But such data were not available with that office.
So I approached the main Dealers that supplied Solar Water Heaters. In
view of non availability of Government official source of data I used the
data from dealers about the list of solar water heater users.

Financial Assistance
General category states for all types of beneficiaries: 30% capital subsidy or
loan at 5% interest on 80% of the benchmark cost
Special category states for domestic & non commercial categories (not availing
accelerated depreciation): 60% capital subsidy or loan at 5% interest on
80% of the benchmark cost
Special category states for commercial users category (availing accelerated
depreciation):30% capital subsidy or loan at 5% interest on 80% of the
benchmark cost
Benchmark Cost :
ETC based systems : Rs. 10,000/ sq. m.
FPC based systems : Rs. 11,000/ sq. m.

The Special Category States include Himachal Pradesh, Uttarakhand,


Jammu & Kashmir and the North Eastern States
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Actual Amount of Subsidy

Type of Water
Heater

Quantity of subsidy (per 100 lpd)


General category
states

Special category
states

ETC(Evacuated
tube collector)

4,500Rs/30% of
benchmark cost

9,000Rs/60% of
benchmark cost

FPC (Flat Plate


collector)

6,600Rs/30% of
benchmark cost

13,200Rs/60% of
benchmark cost

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Future Targets of Government Of INDIA


Doubling coal Indias production to 100 Cr.tonnes/year by 2020
Power Generation to increase by 50% by 2020.
5 Times increase in renewable capacity to 1,75,000 MW by 2022
Energy saving to increase to 10% of current consumption.

Findings From The Analysis Of Solar Water Heater Users


Opinions
Decision behind installing solar water heater
Out of the 180 respondents 63.9 percent of the respondents told that they
have voluntarily installed solar water heaters. For the rest of the
respondents (36.1 percent) the decision to install solar water heater came
out of compulsion.

Further analysis of the data specifies that among the Individual houses 92.5
percent of the households voluntarily decided to install solar water heaters

Among the Apartment Buildings majority of the respondents (60 percent)


installed solar water heaters out of compulsion

Out of the total 50 hotels/lodges surveyed 84 percent of the respondents


installed solar water heaters on their own.

Reasons Behind The Usage Of Solar Water


heaters
The combined opinion of all the respondents across three segments
implies that the primary reason behind their option for solar water
heater has been the economy of the usage of solar water heater in
comparison with other alternatives.
The second significant reason is the usage of solar water heater
doesnt cause any pollution.

According to the respondents frequent power cuts and the frequent


repairs with electric geezers are the third and fourth significant
factors respectively that influenced their decision to go for solar
water heaters.

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Type Of Technology Used

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Water heating systems with/without electricity back up

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Availability of supplier for repair

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Availability of hot water during winter

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Sources of finance for investment on solar water


heater

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Subsidy from the government for solar water heaters

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Satisfaction with the functioning of solar water


heaters
Among the individual houses segment 85 percent of the consumers
are satisfied with the functioning of the solar water heaters.

Among the apartment buildings 86.7 percent of the consumers are


satisfied with the functioning of the systems.

Whereas 82 percent of the respondents in the hotels/lodges segment


stated that they are satisfied with the functioning of the solar water
heaters.

Reasons for dissatisfaction with the


functioning of solar water heaters
Among the individual houses segment the consumers thought the
prime reason (ranked1) for their dissatisfaction is that the
temperature of the water is not enough for them for bathing purpose.

Second reason for their dissatisfaction has been the fact that during
the cloudy days they could not get hot water.

Third reason for their dissatisfaction happened to be the frequent


repairs.

When it comes to the Apartment Buildings also, the same order of


preference is given to the various reasons which are causing
dissatisfaction to the consumers.
But for the hotels/lodges segment even though the first and second
important reasons for their dissatisfaction are similar, third reason
leading to their dissatisfaction of course is the frequent repairs (rank 3)
and the least important reason (rank 4) for their dissatisfaction has been
the higher initial investment (compared to conventional electric water
heater) towards the installation of solar water heater.

Analysis Of Manufacturers/Manufacturers Cum


Dealers Opinions
Methods used for tapping demand
Manufacturers have given first priority for advertisement, followed
by contacts with the builders as the second priority to tap the
demand. The respondents told that they also like to tap the demand
by collecting the information from municipality records.

Manufacture/wholesale buying
It is found from the survey that 80 percent of the respondents are
making wholesale buying from the manufacturer and selling them to
the consumers.
Only 20 percent of the respondents are involved in manufacturing
also.
This clearly shows the lack of manufacturing capability in this
location to produce solar appliances. There are many business men
who are interested in selling the products only.

Sale of single or multiple brands


It has been observed that 33.33 percent of the respondents are
selling single brand only.

Remaining 66.67 respondents are selling multiple brands from their


outlet.

There will be a definite advantage to sell multiple brands, because it


can invite and appeal to more number of customers who are diverse
in terms of their tastes and preferences.

Rate of commission offered by the


manufacturers
It is observed from the study that 53.3 percent of the respondents
replied that they are getting a commission of less than 5 percent.
40 percent of the manufacturers/dealers responded that they are
earning a commission/margin of more than 6 percent but less than
10 percent.
6.7 percent of the respondents revealed that they are getting a
commission between 10 to 15 percent.

Provision Of Credit To The Customer


73.3 percent of the manufacturers/dealers are allowing credit sales.
26.7 percent of the respondents told that they are selling only on
cash basis. If the credit facility is offered by remaining
manufacturers/dealers, then potential consumers may come forward
to buy the solar water heaters.
It is identified from the study that the customers are interested to
buy
these
systems
on
installment
basis.
But
no
manufacturers/dealers are giving this facility.

Period of credit to the final customers


This information is collected from both manufacturers cum dealers
and exclusive dealers.
It is observed that, 20 percent of the respondents are allowing a
credit period of 11-20 days for their customers.

40 percent of the respondents stated that they are giving a credit


period of 21-30 days for their customers.

40 percent of the dealers/manufacturers are telling that they are


giving a credit period of more than one month for their customers.

Rate of interest charged on bank loan


60 percent of the respondents who were granted loans stated that 13
percent rate of interest is charged from them. Remaining 40 percent
of the respondents told that 14 percent rate of interest are charged
from them.
It is found through personal interaction with few
manufacturers/dealers, that bankers even though they know that they
have to give loans on concessional basis, simply they are thinking
that it requires lot of documentation, and the loan amounts are very
small and it creates more work and less return.

Potential
The technical overall potential assuming that 75% of pucca houses of
the country occupied by the owners will have solar water heaters could
be taken as 140 million sq. m. of collector area.
The achievable/economic potential based on purchasing power of
people/ requirement of hot water in a year/ availability of space for
installation of system/ availability of solar radiation etc. may, however,
be taken as 35-40 million sq. m. of collector area.

Electricity/Diesel Savings
A 100 lpd system (2 sq.m of collector area) installed in a home can
save 4-6 units of electricity/day depending on the place of installation
& hot water use.

On an average it could be taken as 5 units/day. Maximum average


saving with 300 clear days, therefore, could be taken as 1500
units/year.

Assuming 300 days of solar hot water use in Bangalore and 150
days in Delhi, the savings could be 1500 & 750 units per year
respectively i.e. replacement of a 2 KW electric geyser working for
2 hours in a day.
Considering all parts of the country and maximum installations in
areas where hot water requirement is more during the year, average
saving could be taken as 1200 units/year/100 lpd system.
1 million such systems installed will be able to save 1200 million
units of electricity/year.
A 100 lpd system (2 sq.m of collector area) installed in an industry
can save around 140 litres of diesel in a year.

Peak load shaving


1 system of 100 lpd can replace an electric geyser of 2 KW capacity
in a home.

1 million such systems will replace 1 million geysers of 2 KW


capacity each in homes.

Assuming that at least 50% of geysers are switched on at a time, this


will have a peak load shaving of 1000 MW.

CO2 Reduction
A 100 lpd system on an average saves up to 1500 units of
electricity/yr. To generate that much of electricity from a coal based
power plant, 1.5 tone of CO2 /year is released in atmosphere.
One million solar water heating systems installed in homes will ,
therefore, also result in reduction of 1.5 million tone of CO2
emission in atmosphere.

Suggestions
1. The quality of the glass material used to manufacture the tubes has
to be improved as some of the users are complaining that the tubes
are frequently broken
2. In the places where there are more salts in water, over a period of
time they have been forming a layer inside the tubes and this has
been reducing the heat absorbing capacity of the system. So there
should be a water purifying equipment which can desalinate salts
from the ground water.
3.

Presently many of the local manufacturers are using less quality


material for hot water storage tank because of which the hot water
is not available for a longer time.

4. The material used for covering the storage tank and the connecting
pipes (heat absorbers and hot water storage tank) should be good heat
insulator so that the water inside them can retain heat for a longer
time.
5. Government has to create more awareness about benefits in the usage
of solar water heaters. Government should actively advertise about
long term cost savings in terms of reduction in the consumption of
electricity and environmental benefits of Solar water heaters
6. Subsidy should be given at the time of installation itself. Since the
subsidy is not given at the time of purchase, the users could not able to
feel the economic incentive in purchasing the solar water heater.

7. Process of claiming subsidy is very time consuming and it should


be made simple. Many of the users are wasting their time revolving
around the office of NREDCAP (New and Renewable Energy
Development Corporation of Andhra Pradesh) for submitting the
installation report and for claiming the subsidy from the concerned
agencies.
8. The cost of solar water heaters should be further reduced in order to
attract more users. Even though there is a clear long-term cost
saving in the installation of solar water heaters, still users are
keeping the high initial investment in their minds.

9. Extensive awareness should be created regarding the subsidy offered


by the government Television, print and other media can be used to
attract more customers. Dealers and manufacturers can use word of
mouth extensively for the promotion of the solar water heaters.
Effective after sale service can create satisfaction for the existing
users and they will spread the benefits to the public at large.
10. Municipalities/corporations should give concession in house tax for
the users of solar water heaters. These tax rebates can be extended to
the commercial establishments such as hotels, restaurants etc. also.
The central government may reimburse this loss in revenue to the
Municipalities or corporations.

11. Government should insist banks to advance loans liberally for


installing solar water heaters. Banks must be given yearly targets in
terms of loans offered to various solar appliances. Further, bankers
who are promoting loans to solar appliances may be incentivized.
12. There must be separate incentives for the manufacturers and dealers
of solar water heaters. Incentive/Commission can be offered on
every unit sold to motivate the dealers to increase their sales.
Government can encourage small and medium scale entrepreneurs
to set up the ventures for manufacturing and offering repair
services for the solar water heaters so that more employment can be
generated by this growing industry.

13. The state government / local body may make it mandatory for the
apartment buildings to install solar water heaters. There used to be
a provision of this kind in Andhra Pradesh, but later on the
mandatory clause has been removed. It is found from the study, that
more apartment buildings constructed during the time of this
special provision installed solar water heaters. But later on it has
become optional for the builders because of which, the builders are
not showing interest for the installation of solar water heaters.
14. The state government should lead the common public with an
example by installing solar water heaters in hotels, lodges and
restaurants which are managed by the Tourism department.