India must harness its
Solar Energy Potential
[R V Shahi's Weekly Column for
Infraline, March 3, 2008]
Recently the Ministry of New and Renewable
Energy (MNRE) of the Govt. of India has notified a very attractive scheme for
development of Solar Power. It carries a strong incentive to motivate
developers of Solar Photo Voltaic Systems. India's electricity needs are so
large that in spite of best efforts on non conventional energy generation,
substantial dependence on power generation based on fossil fuels cannot be
avoided. And, therefore, there is a certain degree of inevitability in
increased CO2 emissions atleast over next 25 years. However our
strategy and policies must aim at minimizing the incidence of CO2
increase. What are the options? We are already emphasizing on the need for a
much larger capacity through nuclear systems - from presently about 4,000 MW to
almost 60,000 MW in next 25 years. Similarly maximum thrust is being given to
harness almost entire 1,50,000 MW of hydro electric potential. Shortage of gas
has been experienced over last 10 years and the situation is likely to
continue. But, as far as the strategy goes, the government as well as the power
sector players - both in government and private - are trying their best to
develop as much as possible the gas based power generation capacity. India has
already emerged as one of the three largest players in developing the power
generation systems based on Wind Energy. Thus, responding to the needs for
adequately addressing the climate change concerns, every possible option is
being explored and being worked with to see that maximum amount of electricity
is produced through all such sources of energy which can obviate CO2
emissions. One of the possible areas where we have not been able to make a
visible dent is in the field of Solar Energy. This situation is true, as a
matter of fact, for the world as a whole. India, alongwith the rest of the
world has been working on Photo Voltaic Systems for last several decades but its
contribution in the overall electric generation profile has remained
negligible. Harnessing Solar Energy to commercial use, and more specifically
for power generation, has remained a global challenge for over five decades for
researchers and technology developers. We have remained more or less stagnant
for now about two to three decades at a level of capital cost which is
excessively high. Finally, in last two years, some breakthrough is appearing
visible, but we have yet to see the concrete outcome.
The discussion on energy has assumed the center
stage in view of the global warming issues occupying summit level agenda. All
possible options are being evaluated. India has more than 300 days a year of
sunny weather in most part of the country. Therefore, Solar Energy is
particularly relevant for us. The Infraline Energy and IDFC organized a Round
Table discussion on "Solar Energy : Opportunities and Possibilities" on
February, 27, 2008 at New Delhi. I had the job of co-ordinating the
discussions, and we had an eminent panel of speakers consisting of Shri V.
Subramanian, Secretary, Ministry of New and Renewable Energy (GOI), Shri J.S.
Jawa, Director General of Solar Society of India, Shri K. Subramanya, Chief
Executive Officer of TATA BP Solar and Shri Harish S. Mehta, Director of Suzlon
Energy. Key note address by the Secretary of MNRE was followed by presentations
by other panelists which in turn were followed by detailed interactions.
While opening the subject I made the following
Global efforts on research and
development for harnessing Solar Energy for various uses and more specifically
for power generation have fallen short of the expectation. Considerable headway
has been made in various other areas of knowledge and technology but in respect
of generating power from Solar Energy our effort on making it cost effective has
eluded us. And as a result, in spite of sun rays being available in various
parts of the world, harnessing of this eternal source of energy has been a lame
duck affair. So far, globally only 6,000 MW of power generation has been
possible through Solar Photo Voltaic Systems.
No doubt, in the recent years
serious efforts have been mounted and as a result, the rate of increase in
capacity addition through these systems has been radically increased. During
the entire 90's, in the world as a whole, only about 1,000 MW could be added,
while in the last 5 years (during the period 2000-05) the capacity addition has
been of the order of more than 4,500 MW. As per the Renewables Global Status
Report - 2006, as in 2005 we had a total capacity of the order of about 5,500 MW
of which about 3,600 MW was grid connected.
India's energy development
programmes, which continue to be heavily dominated by fossil fuel power
generation, are already under global pressure and, in coming years it would be
viewed even more critically, even though per capita emission of CO2
in India is significantly lower than the world average and far too less as
compared to per capita emissions in a number of developed countries. Therefore,
power generation through renewables and especially through Solar Energy would be
a national necessity.
The most recent initiative of the
MNRE to provide substantial amount of support and incentive to the extent of Rs.
12 per kwh of generation from Photo Voltaic Systems is laudable. However, the
energy professionals and research and technology developers have a challenge to
accelerate the process of evolving more cost effective technologies so that
under the burden of heavy government support the total capacity to come into the
system does not get constrained. After all such supports cannot be sustained,
and in fact it is not (it is limited to 50 MW), on a very large scale in any
such government scheme. India provides a vast market. With more than 56% of
rural households not having access to electricity, decentralized distributed
generation through systems based on Solar Energy could provide an effective
answer to the challenge that is before all of us to electrify rural India.
In his key note address the Secretary, Ministry
of New and Renewable Energy, gave details of the recently notified incentive
scheme of the Govt. of India and made the following observations:
In spite of efforts from the
government as also from various agencies, our capacity on manufacture of Photo
Voltaic Solar Systems has remained less than 200 MW. Of this almost 70% goes
for export and the balance about 30% for domestic market. Solar system
development requires technological revolution of the type that has happened in
the telecom sector particularly on cell phones. Paradoxically, cell phones have
reached villages but not electricity, and as a result, they need to resort to
various means for charging of the cell phones.
We need to have grid connected
solar power and to let the grid purchase and pay for it. In many of the
European countries, particularly in Germany, a lot of push and incentive is
being provided for solar power. In Germany there is a separate Renewable Energy
System of cross subsidy in
generation exists in a number of European countries. Since the quantum of
generation through renewable is proportionately low, the impact of higher cost
paid for such generation on overall basis is only marginal.
In India, in the electricity
sector the role of government has been reduced and Regulators have been given
enormous authority. But, Regulatory Commissions have yet to create and provide
the required momentum for electricity generation and supply through renewable
Electricity Act 2003 has
prescribed that the State Regulatory Commissions shall prescribe a specified
percentage of electricity generation through Renewable Energy sources. Most
states have yet to do it. There are states where scope for local generation
through such sources is rather limited. For example, in Delhi not even 1% could
be locally generated through these systems. The provision should therefore be
implemented in a manner that a fixed percentage is either generated locally or
procured from outside under this category.
Under the Electricity Act 2003, it
needs to be examined whether the Central Electricity Regulatory Commission can
do it for the whole of the country (this point was subsequently clarified that
though the Act provides for each State Regulatory Commission to formulate the
policy and fix a percentage, there is a provision under the Act for Forum of
Regulators, and the function of this Forum is to discuss and create consensus on
such issues. This Forum is chaired by the Chairman of the Central Electricity
One of the reasons why the issue
has not received the right attention particularly at the state levels is that
the Renewable Energy Development Agencies are inadequately structured and
staffed. Generally this organization is very weak in every state.
To accelerate the process of power
generation through Solar Energy, the government has come out with a new policy
on Solar Power Generation Projects. The salient features of this policy are as
The Ministry of New and Renewable
Energy would support grid connected Solar Power Projects as demonstration
Upto a maximum of 50 MW would be
supported under this scheme during the period of Eleventh Plan (2007-12).
The Indian Renewable Energy
Development Agency (ERADA) will be the nodal agency in handling of fund and
monitoring of projects etc.
Registered companies will be
eligible (individuals, NGO's, financial institutions, societies and other
unorganized investors are not eligible for direct participation).
The Solar Photo Voltaic Plant of a
minimum capacity of 1 MW per plant at a single location will be eligible.
In any state upto a maximum of 10
MW capacity can be developed (this provision has been made with the purpose that
projects are developed in large number of states rather than being concentrated
in one or two states).
Any one developer can develop as a
single or multiple projects with a maximum of 5 MW of capacity.
The projects would be developed on
build, own and operate basis.
Captive plants are not eligible
for incentive under the scheme.
Projects to be developed and
completed by December, 2009, will be eligible for full incentive. Those
completed in 2010 would get the incentive reduced by 5%. Those completed in
2011 will have a further reduction in incentive by another 5%, and so on.
Though the generation Per MW is
likely to be more than 1.5 million units per year, the incentive structure has
been worked out assuming a generation of 1.5 million units only. Considering a
reasonable rate of return the tariff would work out to Rs. 15 per kwh. Keeping
in view the tariff that the state utilities/distribution companies will pay as
per Regulatory Commission's decisions, the incentive provided by the Govt. of
India is Rs. 15 minus tariff paid by the utility subject to a maximum of Rs. 12
For the Solar Thermal Power
Generation (as opposed to SPV plants) the incentive will be limited to Rs. 10
per kwh (as compared to Rs. 12 in the case of SPV plants).
Only normal depreciation shall be
allowed and not the accelerated depreciation.
In the past, most of the
incentives were linked to financial support by way of capital. This approach,
over a period of time, has been receiving criticism. It is true that in many
cases capital incentive was provided but in practice electricity generation did
not take place or was not to the level expected. The incentive approach in the
new scheme of January, 2008, for promoting Solar Power Generation addresses this
criticism inasmuchas the incentive is available only when electricity generation
The operation of the whole scheme
has been kept outside the government. IREDA, based on the certificate of
electricity being received by the concerned utility will make the required
payment of the incentive to the developer.
In order that state utilities are
fully associated and they make full payment on the basis of rate decided by the
Regulatory Commission, an incentive of 10 paisa per unit of electricity has been
provided for them and they will be paid only after they have paid the bills of
the project developer.
Two more presentations were made - one by the
CEO of TATA BP Solar and another by the Director of Solar Energy Society of
India. A number of points were also made by the Director of Suzlon Energy.
Only important points from their presentations are outlined below :
A Solar National Programme with a
funding of about Rs. 5000 crores over a 5 year period, if properly structured
and administered, can make a significant dent on enhancing the proportion of
solar power generation as well as Solar Energy use.
A cess on generation of power
through other sources could be considered for mobilizing resources to fund the
We may mandate all new corporate
and commercial buildings with connected load of more than 500 KW to install
Solar Power Generation of atleast 5 to 10% of their requirements.
The nationalized banks could be
persuaded to provide priority sector lending at subsidized rate.
An interesting slide in the
presentation by TATA BP highlighted that while as of now the cost of electricity
generated through Solar PV System is almost five times of the cost of
conventional power, the way technological changes are taking place and given the
fact that there would be a large scale expansions of generation, by the year
2017, solar power could compete with conventional power. And, in fact, from
beyond 2017, as per this presentation, the solar power may be even less
expensive than the conventional power.
Another slide from their
presentation, giving the source as "EPIA - 2006" highlighted that predominance
of coal may go away by 2050, gas may assume a large proportion, almost equal
proportion of that of Solar Energy, in the primary energy mix. By the year 2100
the Solar Energy would be the most dominant form of energy in the overall
The potential of Solar Photo
Voltaic Systems as per National Electricity Plan of CEA is 50,000 MW out of
180,000 MW for renewable. Only 3 MW has been tapped so far.
Direct Solar insulation for over
10 months is available in the deserts of Rajasthan and Gujarat. Even if 1% of
it is used 6,000 MW of electric power will be available.
One of the recent trends is Power
Tower System (PTS), in which solar collectors known as Helio Stats are used to
collect solar heats. The first power tower was built in Southern California to
generate 10 MW during mid 80's.
Some of the well known
thermal power plants in different parts of the world are given below :
25 MW Solar Plant
Parabolic trough collectors
Expected to be completed by 2009.
64 MW in Nevada
Sol 1 Power Plant USA.
Parabolic trough collectors
Electricity supply agreement signed with
50 MW Andasol-I
Plant in Spain
Parabolic trough collectors
5,10,000 sq.m. solar field and upto 7
hours of thermal storage. Expected by 2008.
50 MW Andasol-II
in Setille, Spain
Parabolic trough collectors
6,20,000 sq.m solar field and upto 12
hours of thermal storage to be completed in 2008
Plant in Setille, Spain
10 MW Tower Plant with low temperature
Storage is for an hour for half load.
850 MW Solar Power plants Southern
Construction started for 1 MW. 850 MW to
be completed by 2010
Some of the important points that emerged during
the course of interactions after various presentations are worth mentioning and
are given below:
A capacity of 50 MW as a cap for
the whole of Eleventh Five Year Plan as provided in the Scheme of the Government
appears rather low. Similarly, a cap of 10 MW for a state, no doubt, aims at
disbursal of plants throughout the country, but then if 10 MW is built only in
five states the limit is reached. A counter to this is that in the past our
track record has not been so good to inspire a confidence that we can do much
more. However, it may be reasonable to assume that once the scheme picks up,
developers demonstrate the outcome, the government may be forthcoming with
revising the limits which have been fixed.
While SPV plants could be viable in the
lower capacity range and could be well supported with the incentive that has
been provided, the solar thermal plants will have their optimal capacity in
the range of 25 to 50 MW. Therefore the eligibility criteria will need to be
modified to consider these technical realities. Another school of thought
suggested that technologies have developed whereby even in the range of 5 to 10
MW solar thermal plants could provide optimal solutions. What would be
necessary is that specific cases are brought out and presented to the
authorities so that an appropriate view could be taken for changes required, if
any, in the policy. Definitely solar thermal plants with new technologies could
deliver much larger capacities in the country and therefore they must be incentivized appropriately.
We do not have a large number of agencies
producing and supplying solar systems either for power or for heating. The few
that we have need to rework their approach towards marketing as also towards
after sales service. On both these fronts there are considerable gaps.
On the whole Ministry of New and Renewable
Energy, Govt. of India, deserve to be complimented on this new scheme on solar
power notified in January, 2008. Given the need of energy, consideration of
climate change, interest and enthusiasm of technology developers, manufacturers,
utilities and regulators, the scheme is bound to succeed. As it is, it is
understood that Expression of Interests have already been submitted for about
300 MW. This is such an area where constant interactions between the government
and other stakeholders will be necessary so that policy changes are moderated in
a manner that they are investor and developer friendly and provide support for
overall objectives to be fully realized.
Before closing I would like to highlight two more
Major power sector organizations
like NTPC, Tata Power, Reliance Energy, BHEL and a few large state government
generating companies should come together, mount massive research initiatives
and commit to develop about 5,000 MW based on Solar Energy in next 5-7 years.
With appropriate regulatory support the cost impact could definitely be absorbed
in large amount of conventional power generation. This initiative will help in
evolution of cost effective solar technologies including also small
decentralized distributed generation systems apart from large solar thermal
recall, in mid 2005, during an interaction I had with then President of India
H.E. Dr. Abdul Kalam, the President expressed a desire to have a 5 MW Solar
Power Plant in the President Estate which is a large complex. About 10 acres of
land needed would only be a small portion in a corner in the Rashtrapati Bhavan
complex. I did a detailed exercise on this and made considerable progress. A
team of engineers, finance experts from PFC, REC and also engineers from NTPC
worked on this. Fund could also be organized without financial support from
Government as such. In view of multiplicity of authorities and agencies in
Delhi, in spite of several meetings and consultations, consents of all concerned
could not be secured. I would write a separate piece on this giving the details
of the work done and further possibilities. I do feel that this is a great idea
and it must be pursued. Coming from Rashtrapati Bhavan, this would convey a
strong commitment and message, and the solar power will secure its rightful