17-01-2013, 04:24 PM
Harnessing Solar Energy:Options for India
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Executive Summary
The Jawaharlal Nehru National Solar Mission (JNNSM) announced in December 2009 envisages the
installation of over 20,000 MW of grid-connected solar power and another 2,000 MW of off-grid
solar power by 2022. Since the announcement, the Ministry of New and Renewable Energy (MNRE)
has come up with several rounds of guidelines for various applications and the Central Electricity
Regulatory Commission (CERC) with tariff orders. Given that the current installed capacity stands at
merely 10 MW, to realise these targets, clear long-term policies have to be put in place and
implementation of the policies and projects has to be stringently monitored.
There are three primary solar technologies that convert solar energy into useful consumable forms
of energy:
Solar photovoltaic (PV) technologies convert solar energy directly into electrical energy
using solar PV cells. These can be strung together to form modules and can be scaled from a
few watts to light a single bulb to many megawatts for utility-scale generation. It is this
modular nature of solar PV that lends itself to decentralised generation.
Solar thermal technologies convert solar energy into heat energy for non-electrical use, for
example, in the residential and commercial sectors for heating water, in industries for
thermal heat application, and in agriculture for drying. Thus, these have tremendous
potential to reduce fossil fuel usage.
Concentrated solar thermal power technologies (CSP) consist of a configuration of mirrors,
called a solar field that concentrate solar energy on to a receiver, raising the temperature of
the heat transfer fluid it carries, thus generating heat energy, which can be stored and
transferred to a turbine for electricity generation on demand. Most CSP technologies are
meant for utility-scale production.
This report discusses the applications of the first two technologies. CSP technologies are intrinsically
different and merit a separate report.
Over the next few years, large outlays of public and private funds are expected for solar technologies.
Therefore, it is important for the public at large to be educated on several aspects of solar energy –
the techno-economics of its applications, government policies and their implications, and social,
environmental, health and employment benefits. The purpose of this report is to make the basic
information available on solar energy accessible to many. Hence, this report covers several topics
with a broad brush stroke, while it delves into a few applications in detail.
Utility-scale generation is important for India given our large electricity shortfall. On the other hand,
it is small-scale grid-connected generation and off-grid decentralised generation that can enable
socio-economic empowerment to millions. About 16% of villages in India are not connected to the
grid. Furthermore, many households even in electrified villages do not have grid supply due to
difficulties with last mile connectivity. This is where small decentralised solar applications can help
with access to clean energy for everyday needs like lighting and cooking.
The overall goal of the off-grid guidelines of the JNNSM is to achieve wider dissemination of solar
technology, and a generous capital subsidy of up to 90% is offered for rural applications. Even so,
there are several bottlenecks to large-scale dissemination. Primarily, the techno-economics,
financing and institutional mechanisms of several solar applications are not well understood.
Therefore, these form a focus of this study. In addition, this study looks at the Government of India’s
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solar-specific policies, targets set by the JNNSM, financial incentives, budgetary impacts, capacity
addition and grid parity for solar PV technologies. Wherever they make sense and analysis supports
them, policy recommendations are made. This summary provides the highlights of each of the
chapters.
JNNSM Targets
Table 1 gives the targets announced by JNNSM for each of its three phases. A more detailed
discussion the JNNSM guidelines, incentives and regulations, along with a timeline of the
evolution of solar-specific and rural electrification policies of the Government of India can be
found in the chapter ‘India’s Solar-specific Policies’.
Commentary on the JNNSM
What should be the metric to evaluate the success of such a grand programme? Should it be the
megawatts of installed capacity, the megawatt hours of energy output, or the wider societal impact?
Given the lack of electrification and access to clean energy sources in India’s villages, coupled with
transmission and distribution (T&D) losses, decentralised distributed systems make very good
sense. Therefore, should the targets set for off-grid power have been bolder? While grid-connected
large-scale PV can help achieve price reduction through economies of scale, there is an urgent need
for off-grid decentralised distribution as well. Furthermore, the economics of several applications
are very viable even at today’s high solar costs.
The target set for Phase 1 of 500 MW of utility-scale solar PV is sliced in different ways as a means of
illustrating the societal and budgetary impact. The net present value of cash outlays for generationbased
incentives for electricity generated from solar PV installations alone in Phase 1 will be around
`110 billion (at a 10% discount rate). It has to be pointed out that these calculations are based on
the announced tariffs. However, due to over-subscription of capacity, the investors were asked to bid
for a discounted tariff and the lowest bidders are to be allocated the solar projects. On 16 November
2010, bids were received and the discounts ranged from `0 to `7. Hence, the power purchase
agreements (PPAs) that will be signed by the developers will be for tariffs that are lower.
A 500 MW capacity can meet the minimum need of 14,290 villages where each village is provided a
microgrid of 35 kWa capacity based on solar energy and another renewable source. Apart from the
a A 35 kW capacity will be sufficient to meet the minimum demand of a village of 150 households. This is
computed in the section on rural electrification in the chapter ‘Solar Photovoltaic Applications’.
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capital subsidy of `150 per Wp promised by the government, an additional generation-based
incentive of `4.25 per kWh generated can be provided for twenty-five years of operation of the
microgrids, and the net present value of this will be `110 billion.
Slicing the numbers differently, providing 13.5 million households each with 18 W solar PV panels
will work out to be 500 MW, and would require a total investment of `97 billion.a The magnitude of
this must be judged in relation to the 40,000 villages and 28 million households that may still remain
un-electrified in 2012.b Hence, off-grid applications for rural electrification should be prioritised
considering they make economic sense as well. Moreover, given the inadequacy of the grid, kerosene
is likely to remain the mainstay for lighting in many households. Kerosene is expensive, subsidised,
and has adverse environmental and health effects. The net present value of subsidising kerosene for
fifteen years to 28 million households (at a 10% discount rate) is around `167 billion.c This should
be compared to the total expenditure of ` 45 billion for 28 million solar lanterns at the rate of `1,600
per lamp.
Photovoltaic Applications
Utility-scale PV plants pose few technical challenges. Though generation of electricity from solar
energy is expensive today, with the generation-based tariff offered by the government, it becomes
economically viable to the investor. The real advantage of solar-PV-based electricity is that it can be
generated close to demand centres, thus avoiding large T&D losses. Furthermore, in India today,
diesel is used by small commercial enterprises as well as large buildings (private and public) to
generate electricity during grid outage. Given that power generation from diesel is highly polluting
and is increasing India’s dependence on oil imports, solar energy could play a crucial role here. The
chapter on solar photovoltaic applications discusses several applications that are either
economically viable today or will be in the near future. A brief summary of the analysis follows.
Solar PV Options for Rural Electrification in India
Simple effective solutions including solar lanterns and solar home lighting systems (SHLS) are
discussed in the chapter on photovoltaic applications, along with solar-based microgrids. While solar
lanterns can be a stopgap measure till electrification, SHLS and microgrids can provide sufficient
power to meet residential and community-based requirements, and can easily be integrated if and
when the grid does reach these areas. Microgrids based on solar energy and other renewable energy
sources to meet the needs of a village or cluster of villages can be viewed as a permanent solution as
long as appropriate institutional mechanisms are in place for sustainable operations. Prevailing
financial, policy and institutional mechanisms for wide-scale adoption are discussed.
Even at today’s high prices, solar-based microgrids offer a competitive solution to grid extensions. A
detailed techno-economics of grid extension versus solar-based microgrids can be found in the
section on rural electrification. Alternate subsidy regimes to the current capital subsidy are also
discussed.