Feasibility Study of Solar Energy in India
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Solar energy in its raw form may be pollution-free, but manufacturing the devices that get the energy out of light and heat requires metal and other material, requiring mines and smelters, therein causing pollution. Maybe the most exciting thing about solar energy today is not only that the costs continue to drop and efficiencies continue to rise, but that clean solar energy is arriving at last. New technologies allow new methods of manufacturing which pollute much less and often run on solar energy. Solar heating and solar electric systems can now generate thermal and electric energy over their service life up to 100 times the energy input during their manufacture. This ratio; the energy it will produce in its lifetime, compared to the amount of energy input to manufacture and maintain an energy system, has doubled in the last 20 years for most solar technologies. The ratio of energy out vs. energy in for solar systems has become so favorable that the economic and ecological viability of solar power is now beyond question. One reason solar energy still cannot compete financially vs. conventional energy is because the value of future energy output from a photovoltaic system is discounted when calculating, for example, an internal rate of return. These economic models that put a time-value on money, making long-term receipts not worth as much as near-term receipts cannot necessarily be applied to energy. In fact, endues pricing will significantly increase customer penetration, and this will have a correspondingly positive impact on the economics of Solar Water Heating as a stand-alone profit-making business. The business views solar energy as a potential key resource to help India's energy portfolio become greener, more diversified and more secure, while also creating jobs in the State. Solar energy can play an important role in allowing India to reach its Renewable Portfolio Standard ("RPS") goals. As stated by the Commission, "the development of additional renewable energy resources is a long-standing energy policy objective of the State. "The Indian solar energy industry can easily rise to the challenge of bringing solar energy to the forefront to help India address the twin challenges of energy security and combating global warming and climate change."India is particularly well positioned to reap the advantages of solar power, which is clean, free, forever and everywhere."
Chapter 1: Introduction
India is both densely populated and has high solar insolation, providing an ideal combination for solar power in India. Much of the country does not have an electrical grid, so one of the first applications of solar power has been for water pumping; to begin replacing India's four to five million diesel powered water pumps, each consuming about 3.5kilowatts, and off-grid lighting. Some large projects have been proposed, and a 35,000km² area of the Thar Desert has been set aside for solar power projects, sufficient to generate 700 to 2,100gigawatts. In July 2009, India unveiled a $19 billion plan to produce 20 GW of solar power by 2020. Under the plan, solar-powered equipment and applications would be mandatory in all government buildings including hospitals and hotels. 18 November 2009, it was reported that India is ready to launch its Solar Mission under the National Action Plan on Climate Change, with plans to generate 1,000 MW of power by 2013. Of the total energy produced in India, just 0.5% is solar. But with the Government of India's (GOI) target to increase the use of renewable energy to 10% of total power generation by 2012, solar panels are set to become a more regular feature in communities across India. The GOI has been pushing solar power to households in town and cities using incentives such as discounts on energy bills if solar is installed. However, for the hundreds of thousands of people that live in rural areas of the country, solar energy is more difficult to access. It may seem surprising that solar energy as applied to heating domestic hot water - an idea that has been around for a long time - offers what utilities and their residential customers want most in a new product/service. This document not only explains how and why, it shows how to get into the business and succeed on a commercial scale. Solar is also easier to sell using end-use pricing because it eliminates customer issues of high first cost and perceived risk that have been major weaknesses in how solar has been marketed in the past.
India's Emerging Solar Industry:
The global solar energy industry is in the early phases of what may be a 30 to 50-year expansion. By the end of 2007, the cumulative installed capacity of solar photovoltaic (PV) systems around the world had reached more than 9,200 MW, up from 1,200 MW at the end of 2000. Installations of PV cells and modules around the world have been growing at an average annual rate of more than 35% since 1998 (Solar Generation V Report, EPIA, and September, 2008). While contributing only a fraction of the world' energy needs today, by 2060 it may be the largest single contributor to global energy production. The European Photovoltaic Industry Association (EPIA) estimates that by the year 2030, PV systems could be generating approximately 2,600 TWh of electricity around the world, enough to satisfy the electricity needs of almost 14% of the world's population. India has the opportunity to play a major role in this global energy transformation. With significant technical and production resources, India can be a major supplier of PV cells and modules to meet the growing world demand. With the current pace of growth, India's solar industry could emerge as the fourth largest generator of solar energy in the world after, Germany, China, and Japan. As an increasingly significant energy consumer, solar power can play a significant role in the country's domestic energy supply. With over 50,000 villages in India without electricity, solar power has enormous potential to meet rural electrical needs, improving the lives of millions of Indians and meeting critical agricultural, education and industrial needs.
Current Situation in India:
India is already a major contributor to the global technology market. According to ISA/ Frost & Sullivan report, semiconductor and embedded design revenues are expected to grow from $3.2 billion in 2005 to $43 billion by 201 5. The India semiconductor market is expected to grow from $2.82 billion in 2005 to $ 36.3 billion in 201 5. Electronics manufacturing is estimated to reach $1 55 billion in 201 5, creating a $1 5.5 billion semiconductor market opportunity. With recent government and industry actions, India can also be expected to join the leaders in the global photovoltaic market. India will pool all their scientific, technical and managerial talents, with financial sources, to develop solar energy as a source of abundant energy to power their economy and to transform the lives of their people. Their success in this endeavor will change the face of India." To accomplish these goals, the India government has instituted programs on both the demand and supply side for solar industry. On the supply side, 'ast year the India cabinet approved incentives to attract foreign investment to the semiconductor sector, including manufacturers of semiconductors, displays and solar technologies. The government announced it will bear 20 per cent of capital expenditures in the first 10 years if a unit is located within Special Economic Zones (SEZs), including major economic zone in Hyderabad called "Fab City". The minimum investment was set at 25 billion rupees (—$500 million) for semiconductor manufacturers and 10 billion rupees for other micro- and nanotechnology makers. With theses recent announcements, the solar industry has been the chief beneficiary of this incentive-based economic policy. In August, as a follow up to its semiconductor policy (the Special Incentive Package Scheme, or SIPS), the government of India received 12 proposals amounting to a total investment of Rs. 92,915.38 crore. 10 of these proposals were for solar PV, from: KSurya (Rs. 3,211 crore), Lanco Solar (Rs. 12,938 crore), PV Technologies India (Rs. 6,000 crore), Phoenix Solar India (Rs.1, 200 crore), Reliance Industries (Rs.11, 631 crore) Signet Solar (Rs. 9,672 crore), Solar Semiconductor (Rs.11, 821 crore), TF Solar Power (Rs. 2,348 crore), Tata BP Solar India (Rs. 1,692.80 crore), and Titan Energy System (Rs. 5,880.58 crore).
In late September, there were three further announcements, concerning: Vavasi Telegence, which plans to invest Rs. 39,000 crore for a solar PV and polysilicon unit; EPV Solar, which will invest Rs. 4,000 crore for a solar PV unit; and Lanco Solar, which will invest Rs I 2, 938 crore for a solar PV and polysilicon unit. In 2009, approximately I 30MW of shipments in 2009 are projected, compared with approximately 30MW in 2008. On the demand side, India has a long term goal of generating I 0% of the country's electricity from renewable sources by 2032. In early 2008 India instituted a feed-in tariff for solar PV and/or thermal electricity generation (i.e. —$0.30!kWhr for up to 75% of solar PV output) at the national level as a supplement to more modest local incentive programs. The feed-in tariff is subject to annual digressions and is slated to be in force for ten years. Regional caps will limit total installations in a given year, but should drive solid percentage growth in 2008, with accelerating growth through 201 0. The new incentive scheme for solar power plants in January 2008 could further enable rapid market growth in the coming years. For power producers, a generation-based subsidy is available up to Rs. I 2/kWh from the Ministry of New and Renewable Energy, in addition to the price paid by a state utility for I 0 years. With state utilities mandated to buy energy from solar power plants, several state electricity regulatory boards are setting up preferential tariff structures. Among the states that already have proposals in place are Rajasthan (Rs. I 5.6 per kWhr proposed), West Bengal (Rs. I 2.5 per kWhr proposed), Punjab (Rs. 8.93 per kWhr), with several other states exploring such a possibility. Aside from the feed-in tariffs, the Indian Renewable Energy Development Agency (IREDA) provides revolving fund to financing and leasing companies offering affordable credit for the purchase of solar PV systems in India. Additional incentives include, 80% accelerated depreciation, lower import duties on raw materials, and excise duty exemption on certain devices.
The role of SEMI PV Group:
SEMI is the global industry association serving the manufacturing supply chains for the microelectronic, display and photovoltaic industries. Since its inception in 1970, SEMI has been helping members explore and develop new markets for their products and services. SEMI has helped facilitate the creation of new manufacturing regions by providing advice and council, facilitating collaborations, organizing trade missions and trade events, and other activities necessary to integrate market forces, governmental economic policy, education and human capital programs, and financial support. As the semiconductor industry expanded globally and new manufacturing centers were established throughout the world, SEMI successively opened offices in Japan, Europe, Korea, Taiwan, Singapore and China to support introduction to these vital new market regions. In each of these regions, SEMI has organized SEMICON expositions, to bring buyers, suppliers and other industry constituents together, and facilitate industry growth.
The SEMI PV Group was established in January 2008 to enhance support to members serving the crystalline and thin film photovoltaic (PV) supply chains. Members of the PV Group provide the essential equipment, materials and services necessary to produce clean, renewable energy from photovoltaic technologies. The PV Group is committed to lowering costs for PV energy and for expanding the growth and profitability of SEMI members serving this essential industry. With the input and guidance of the SEMI
Board of Directors and Global and Regional PV Advisory Committees in North America, Asia and Europe, the PV Group has prepared a White Paper, "The Perfect Industry-- The Race to Excellence in PV Manufacturing," that describes the ideal industry characteristics for the high-growth PV industry and describes both current and potential SEMI policies, program and initiatives designed to achieve them. By defining and communicating ideal or perfect industry end-states, equipment and materials suppliers along with cell and module manufacturers can more effectively prioritize industry-wide initiatives. The White Paper outlines four attributes of the perfect industry: long term growth; sustained profitability; environmental excellence, and global scope. Each of these attributes is examined to explain and understand their role in the industry's formation, and to help understand and describe the necessary industry actions required to achieve the greatest impact. The SEMI PV Group beUeves that hepng grow and facilitate the global market for PV is essential to its mission and that India will play a vital role. Following a path that proved successful in the semiconductor and display industries, the SEMI PV Group believes that for the industry to achieve long-term growth, open markets and a global supply chain supported by global standards will be required. A sustainable industry committed to long term, profitable growth industry will also be one with harmonized standards for environmental, health and safety standards and guidelines that yield high-quality, low- cost products from any manufacturing location in the world. Unlike semiconductors— and virtually any other industrial segment-- the importance of PV industry goes beyond the economic well-being of its participants. The production of clean, renewable energy is of vital importance to every human being on the planet.
Renewable Energy sector in India:
India has the world's largest programme for renewable energy. Government created the Department of Non-conventional Energy Sources (DNES) in 1982. In 1992 a full fledged Ministry of Non-conventional Energy Sources was established under the overall charge of the Prime Minister. India is blessed with an abundance of sunlight, water and biomass. Vigorous efforts during the past two decades are now bearing fruit as people in all walks of life are more aware of the benefits of renewable energy, especially decentralized energy where required in villages and in urban or semi-urban centers.
The range of its activities cover:
- Production of biogas units, solar thermal devices, solar photovoltaics, cookstoves, wind energy and small hydropower units.
- Create an environment conducive to promote renewable energy technologies,
- Promotion of renewable energy technologies,
- Create an environment conducive for their commercialization,
- Renewable energy resource assessment,
- Research and development,
Solar water heaters have proved the most popular so far and solar photovoltaic for decentralized power supply are fast becoming popular in rural and remote areas. More than 700000 PV systems generating 44 MW have been installed all over India. Under the water pumping programme more than 3000 systems have been installed so far and the market for solar lighting and solar pumping is far from saturated. Solar drying is one area which offers very good prospects in food, agricultural and chemical products drying applications.
More than 700000 PV systems of capacity over 44MW for different applications are installed all over India. The market segment and usage is mainly for home lighting, street lighting, solar lanterns and water pumping for irrigation. Over 17 grid interactive solar photovoltaic generating more than 1400 KW are in operation in 8 states of India. As the demand for power grows exponentially and conventional fuel based power generating capacity grows arithmetically, SPV based power generation can be a source to meet the expected shortfall. Especially in rural, far-flung where the likelihood of conventional electric lines is remote, SPV power generation is the best alternative.
India now ranks as a "wind superpower" with an installed wind power capacity of 1167 MW and about 5 billion units of electricity have been fed to the national grid so far. In progress are wind resource assessment programme, wind monitoring, wind mapping, covering 800 stations in 24 states with 193 wind monitoring stations in operations. Altogether 13 states of India have a net potential of about 45000 MW.
Government has been promoting box type solar cookers with subsidies since a long time in the hope of saving fuel and meeting the needs of the rural and urban populace. There are community cookers and large parabolic reflector based systems in operation in some places but solar cookers, as a whole, have not found the widespread acceptance and popularity as hoped for. A lot of educating and pushing will have to be put in before solar cookers are made an indispensable part of each household (at least in rural and semi-urban areas). Solar cookers using parabolic reflectors or multiple mirrors which result in faster cooking of food would be more welcome than the single reflector box design is what some observers and users of the box cookers feel.
Solar Water Heaters:
A conservative estimate of solar water heating systems installed in the country is estimated at over 475000 sq. mtrs of the conventional flat plate collectors. Noticeable beneficiaries of the programme of installation of solar water heaters so far have been cooperative dairies, guest houses, hotels, charitable institutions, chemical and process units, hostels, hospitals, textile mills, process houses and individuals. In fact in India solar water heaters are the most popular of all renewable energy devices.
Solar Heating and Cooling:
Most solar water heater research is currently focused on reducing costs rather than increasing efficiency. Current work involves replacing standard parts with less expensive polymers. Examples include polymer absorbers with selective coatings, UV resistant polymer glazing, and polymer heat exchangers. The main types are glazed and unglazed flat plate types and the evacuated tube types with about 100 million units deployed worldwide with evacuated tubes making up about 25% of the market. Asian growth is predicted to continue.
Forms of Renewable Energy: Solar
Each day more energy reaches the earth from the sun than would be consumed by the globe in 27 years. Solar energy is renewable as long as the sun keeps burning the massive amount of hydrogen it has in its core. Even with the sun expending 700 billion tons of hydrogen every second, it is expected to keep burning for another 4.5 billion years. Solar energy comes from processes called solar heating, solar water heating, photovoltaic energy and solar thermal electric power.
Solar Heating - An example of solar heating is the heat that gets trapped inside a closed car on a sunny day. Today, more than 200,000 houses in the United States have been designed to use features that take advantage of the sun's energy. These homes use passive solar designs, which do not normally require pumps, fans and other mechanical equipment to store and distribute the sun's energy; in contrast to the active solar designs which need the support of mechanical components. A passive solar home or building naturally collects the sun's heat through large south facing windows, which are just one aspect of passive design. Once the heat is inside, it is captured and needs to be absorbed. A "sun spot" on the floor of a house on a cold day holds the sun's heat and is perhaps, the simplest form of an absorber. In solar buildings, 'sunspaces' are built onto the southern side of the structure, which act as large absorbers. The floors of these 'sunspaces' are usually made of tiles or bricks that release air. Passive solar homes need to be designed to let the heat in during cold months and keep the sun out in the hot months. Using deciduous trees or bushes in front of the south-facing windows can do this. These plants lose their leaves in the winter and allow most of the sun in, while in summer, the leaves will block out a lot of the sunshine and heat.
Solar Water Heating - The sun can also heat water for bathing and laundry. Most solar water-heating systems have two main parts: the solar collector and the storage tank. The collector heats the water, which then flows to the storage tank. The storage tank can be just a modified water heater, but ideally, it should be a large well-insulated tank. The water stays in the storage tank until it is needed for something, say a shower or to run the dishwasher. Like solar-designed buildings, solar water-heating systems can be either active or passive. While a solar waterheating system can work well, it cannot heat water when the sun is not shining and for this reason, homes have conventional backup systems that use fossil fuels.
Photovoltaic Energy - The sun's energy can also be made directly into electricity using photovoltaic (PV) cells, sometimes called 'solar cells'. PV cells make electricity without noise or pollution. They are used in calculators and watches. They also provide power to satellites, electric lights and small electrical appliances such as radios. PV cells are now even being used to provide electricity for homes, villages and businesses. Usually, PV systems are used for water pumping, highway lighting, weather stations and other electrical systems located away from power lines. As PV systems can be expensive, they are not used in areas that have electricity nearby. However, for those who need electricity in remote places, this system is economical. However, PV power is "intermittent", that is, the system cannot make electricity if the sun is not shining. These systems therefore need batteries to store the electricity.
Concentrating Solar Power - Solar thermal systems can also change sunlight into electricity by concentrating the sun's rays towards a set of mirrors. This heat is then used to boil water to make steam. This steam rotates a turbine that is attached to the generator that produces electricity. Solar thermal power, however, is intermittent. To avoid this problem, natural gas is used to heat the water. Solar thermal systems should ideally be located in areas that receive a lot of sunshine all through the year.
Global Warming and Climate Change:
The past few decades have seen a host of treaties, conventions, and protocols in the field of environmental protection. The Indian scientist had predicted that human activities would interfere with the way the sun interacts with the earth, resulting in global warming and climate change. His prediction was borne out and climate change is disrupting global environmental stability. Land degradation, air and water pollution, sea-level rise, and loss of biodiversity are only a few examples of the now familiar issue of environmental degradation due to climate change. One of the most important characteristics of this environmental degradation is that it affects all mankind on a global scale - without regard to any particular country, race, or region. This makes the whole world a stakeholder and raises issues on how resources can be allocated and responsibilities be shared to combat environmental degradation. One of the main human activities that releases huge amounts of carbon dioxide into the atmosphere is the conventional use of fossil fuels to produce energy. Scientists and environmentalists have studied, over the past few years, the impact of conventional energy systems on the global environment. The enhanced greenhouse effect from the use of fossil fuels has resulted in the phenomena of acid rain and accentuated the problem of ozone depletion and global warming, resulting in climate change. Due to the increased use of technology and mechanization in human activities, the delicate ecological and environmental balances are being disturbed. For instance, carbon dioxide is being pumped into the atmosphere faster than the oceans and flora can remove it and the rate of extinction of animal and plant species far exceeds the rate of their evolution. The reason that global warming and climate change are considered serious global threats is that they have very damaging and disastrous consequences. These are in the form of:
- Increased frequency and intensity of storms, hurricanes, floods and droughts;
- Permanent flooding of vast areas of heavily populated lands and the creation of hundreds of millions of environmental refugees due to the melting glaciers and polar ice that causes rising sea levels;
- Increased frequency of forest fires;
- Increased sea temperatures causing coral bleaching and the destruction of coral reefs around the world;
- Eradication of entire ecosystems
The Intergovernmental Panel on Climate Change (IPCC) was set up by the United Nations Environment Program (UNEP) and the World Meteorological Organization (WMO) in 1988 to assess scientific, technical, and socioeconomic information needed for the understanding of the risk of human induced climate change. According to the IPCC assessments, if the present rate of emissions continues, the global mean temperature will increase by 1°Celsius to 3.5°Celsius compared to 1990 levels by the year 2100. The best estimate is at 2°Celsius. Moreover, the impacts of global warming and climate change could become a source of increased tension between nations and regions. For instance, in many countries, a severe disruption of the world's food supplies through floods, droughts, crop failures and diseases brought about by climate change would trigger famine, wars and civil disorder. Historically, it is the developed world that is responsible for most of the emissions into the atmosphere. However, it is the underdeveloped parts of the world that will suffer its worst effects. For example, as sea levels rise, a country like Bangladesh will suffer much more from the loss of valuable arable and populated lands than North American or European countries, even though, in comparison to the latter, the former would have much less emissions.
Chapter 2: Literature Review
Solar energy industry is at an inflection point with developments in technology driving down costs as fossil fuel prices head northwards. In this changing environment, those who will proactively seize opportunities through innovative business models across the solar energy value chain will emerge as winners. The threat to energy security is greater than ever perceived before. With the sub-prime crisis hitting the US and global economies and the dollar depreciating against all major currencies, crude oil prices have crossed the US$140/barrel mark on sustained demand and supply concerns. Not just oil, but other important fuels like coal and gas, has also charted the same path. Since 2002, the increase in fuel prices has been incredible: oil and coal have jumped by more than 500% and gas by more than 300%. A classic demand-supply theory may not provide enough justification for this sudden surge and it is becoming increasingly difficult to forecast fuel prices in the long term (EIA forecasts US$70/Bbl for oil and US$6.6/MMBTU for gas by 2030 in its 2008 Annual Energy Outlook report). While fossil fuel prices are sky rocketing, alternate energy sources like solar and wind look more attractive by the day. Solar industry is at the crossroads of technological developments and operational improvements bringing down its costs and of market forces that shape its demand potential.
Solar energy economics:
Solar PV (photovoltaic) and CSP (concentrated solar power) electricity generation currently costs around 15-30 US cents per kWh (depending on geographical location) against grid prices of 5-20 US cents across the world for different users. So far, governments across the world have supported solar power with subsidies and feed-in tariff incentives, which would be done away with in a gradual manner. The delivered cost per unit is a function of three important parameters: solar system capex and its financing cost; solar isolations received by the system; and PV cell efficiency. Solar module cost forms about 60% of the total solar system capex. Solar module costs have dropped significantly from about US$25/W in early 1980s to US$3.5/W now, registering a year-on-year drop of 7%. Constraints in silicon supply have restricted this trend to some extent for the last 2-3 years. If module costs drops below US$2/W, 'grid parity' could be achieved. The capacity of silicon production is expected to double in the next 2-3 years as more than US$6-bn would be invested by major firms through 2010. This could lead to a potential oversupplied market, putting pressure on silicon prices. Also economies of scale will lead to cost savings. Cambridge Energy Research Institute reports that the doubling of capacity would reduce production costs by 20%. Cell efficiency is expected to improve from about 15% to 20%, which will further reduce the capex per watt. Thin film and CSP technologies are reducing silicon usage in solar systems. With the combined effect of process improvements and technology developments, the cost of solar module could achieve the threshold limit of US$2/W in the next four to five years, ahead of the 2015 target for solar grid parity power set by India. A leading solar company in India is confident of bringing total solar capex below US$2.5/W. If we consider the cost of carbon emissions from fossil fuels, grid power will become more costly (about 3 US cents/unit additional cost for coal based generation). Sustained high fuel prices, accompanied by carbon emission costs, will further accelerate grid-parity time for solar power. While solar power is approaching grid parity, the solar energy industry is witnessing a changing competitive scenario. Structural changes in the industry are visible, along with shifts across the value chain by companies to capture the future value.
Solar industry's changing dynamics:
The solar PV industry value chain consists of the following segments:
There are two clear groupings in the value chain:
- Silicon to module manufacturing group; and
- Product and system integration.
Silicon manufacturing (solar grade) is close to a US$1bn industry, while the size of the installation industry is about US$6-bn. Silicon module segment is capital intensive and technology driven. It captures most of the value in the solar value chain, as a handful of large companies are present in this segment. The fragmentation increases subsequently across the value chain. Silicon and wafer manufacturing companies enjoy about 40% profit margins, while installers typically work with about 10-15% margins. Recent activities in the solar PV value chain indicate major shifts in the industry structure:
- Companies aiming to create an integrated presence across the value chain: Sun Power, a US based solar cell and module manufacturer, recently acquired Power light, a system integrator present in US and Europe.
- Companies developing alternate technology options: Applied Materials, a semiconductor company, acquired Applied Films, a producer of thin film deposition equipment.
- Module manufacturers tying up the silicon end: Moser Baer, an Indian solar company, recently completed a series of strategic tie-ups in the silicon-cell segment to secure silicon supply and technology access.
On the application side as more and more off-grid solutions are emerging, customer interface management would become crucial. Concentrated solar power (CSP) also holds promise with ability to generate electricity on a large scale (10 to 80 MW per plant), compared to a PV system (few kWs to few MWs). CSP will be particularly suited for industrial, as well as grid connected applications.
The CSP industry value chain consists of the above segments: CSP plant consists of solar ray collectors (parabolic trough is dominant technology), which generate steam to run the steam turbines. Like a power plant, it will require significant investment into plant, machinery and land. Power thus generated can be connected to the grid or supplied to retail/ bulk consumers.
Huge investments are pouring into the solar energy industry. Funds to the tune of few billion dollars were raised from the capital markets in 2007. Venture capitalists are also incorporating solar energy in their portfolios. UAE has recently announced investments to the tune of US$15-bn to build a carbon free city - Masdar - using solar power. It has already earmarked US$2-bn for thin films. Recently, India announced its semiconductor policy, which has attracted more than US$7-bn in investments. India has also announced plans to develop 60 solar cities.
Solar electricity market:
The solar electricity market can be segmented into two phases. The first phase would see limited applications of solar electricity, driven by subsidies and remote installations. As more and more countries consider incentivising solar electricity with feed-in tariff-like policies, the market would grow significantly in phase II. The large scale adoption of solar electricity systems in the long run would be mainly driven by competitive economics of solar electricity (grid-parity).
Implications and opportunities:
Solar industry presents ample challenges, as well as opportunities. The silicon-module segment will require large capacities and investments to achieve cost leadership. Differentiated technology offerings - increased cell efficiency, decrease in silicon usage, solar-hydrogen combination etc. - will play a vital role too. Installers/ system integrators would consolidate their position to increase their bargaining power. Penetrating the under-developed market (both in heat and electricity) would require customer side innovation (innovative distribution model, product offerings, solution selling etc). India, with more than 300 days of sunshine annually and potential customer base (both urban and rural), offers a great market opportunity. This, combined with investor friendly policies and solar energy promotion, will provide the right platform for growth. As per the 11th New and Renewable Energy Five Year Plan, the Government estimates the solar energy market in India to reach about US$2.5-bn from 2008 to 2012. Some Indian companies like Moser Baer, which are pursuing a differentiated strategy through thin film solar photovoltaics, have placed bets on the solar market opportunity, forecasting revenues of US$1.5-bn by 2009.
Innovations in the industry will consist of various combinations of technology, scale and value chain presence. Tomorrow's winners would emerge from companies, which will create differentiated technological offerings with unique cost advantage and an integrated/semi-integrated presence across the value chain.
Business opportunity for solar energy in India:
BPSolar, previously Solarex, is one of the first large companies to start catering to the need for electricity in developing areas. They have recently completed two $30 million projects, one in Philippines and another in Indonesia. Solar power is a good energy option in developing countries. With a third of the world's population still without electricity (mostly living in developing countries), the usage of solar panels will be increasing greatly as the demand for electricity spreads throughout the world. Examples of large-scale solar power applications are not limited to developing countries alone. For example, in Murcia, Spain, AstroSolar is planning to supply a Spanish power plant with 13 MW of solar cells. This power plant will be four times larger than any other PV plant and will cover an area the size of 57 soccer fields. The Japanese are currently spending 10-20 times more than the U.S. to commercialize PV, hoping to install 4,600 MW of Solar power by 2010. The energy consumption in Japanese homes has doubled over the past 20 years by the growing demand for better amenities and is expected to increase at high annual rates of 4 to 5%. A leading Japanese housing industry, Misawa Homes Co. Ltd., has completed its first photovoltaic (PV) lowenergy house in Asahikawa, Hokkaido, the coldest place in Japan. Based on an original wooden panel bonding method developed by Misawa, this two-storied house has a total floor area of 220.7 m2 including the basement of 57.2 m2, with advanced heat insulation and airtight properties for cold climates. This is further reinforced by outside insulation which is comprised of 80 mm glass wool boards, low-emissive double glazing which encloses argon between panes of low-emissive glass, and other measures for heat insulation and air-tightness. In order to mitigate the increased heat gain from the outside during the summer features like deep overhanging roof edges, a balcony, and windows with awnings were added. In order to provide a comfortable indoor climate, heating and cooling by the natural convection of air circulating through open gaps in the ceilings and stairwell has been facilitated. All these measures result in a highly energy efficient house with high standards of comfort and reduced energy consumption. Its 12.5 kwp PV system of solar cell roof panels and the solar hot water system with a 5-m² collector can produce enough energy to meet the annual energy consumption. From February 1997, the zero-energy house has been occupied by a family of four and is still being monitored. This house is already on the market. Increasing their target to include "zero-loads on environment" Misawa has started the development of "zero energy" houses, which produce as much energy as they consume. This initiative has resulted in the reduction of energy consumption to 1/5 of the equivalent consumption in ordinary houses in Asahikawa, and has also met the demand of its consumers by providing then with better amenities. Not only did the energy produced by these houses fully meet the consumption needs, but also the surplus in sales of PV power helped earn 150,000 Yen of net income. Based in New ersey, this company manufactures healthcare products, serving consumer, pharmaceutical, diagnostics, and professional markets. It has taken a systematic approach to improving the energy efficiency of its buildings. All aspects of the buildings were taken into consideration - lighting, fans, motors, boilers, chillers, windows, and doors. Because of its efforts to increase energy efficiency, the company received the 1995 Green Lights Partner of the Year Award for large corporations, and the 1996 Sustained Excellence Award for completing and maintaining lighting upgrades for more than 94% of its workspace. Fetzer Vineyards in Hopland (a partner in EPA's Climate Wise Program) California has committed to reduce its greenhouse gas emissions. As part of this commitment, Fetzer has adopted solar energy to meet a portion of its electricity needs. A 32-kilowatt photovoltaic array, generating approximately 62,000 kwh per year, supplies electricity to the company's administration building. Fetzer's photovoltaic project is the largest known solar project among all wineries in the world. A national non-profit organization headquartered in Butte, The National Center for Appropriate Technologies (NCAT), promotes sustainable technologies and community-based approaches that protect natural resources and assist people in becoming more self-reliant. The Montana Solar Initiative is said to be the cornerstone of NCAT's renewable energy project area. NCAT has successfully obtained a Million Solar Roofs planning grant for Montana from the U.S. Department of Energy. Through this, the NCAT and its partners wish to develop a statewide implementation plan to remove barriers and strengthen local demand for solar energy technologies. The plan will help encourage the installation of at least 1,000 solar energy systems in Montana by 2010. Montana has an abundant solar resource that can be used to save energy in residential and commercial construction, and farming, ranching, recreation and other industries. Using solar energy to supply a million homes with energy would reduce CO2 emissions by 4.3 million tons per year, the equivalent of removing 850,000 cars from the road. The Council for Advancement of People's Action and Rural Technology (CAPART) encouraged community initiatives to harness non-conventional sources and provide employment opportunities. It sanctioned the use of solar energy to electrify 30 non-formal night schools. A 10-kilowatt solar energy unit was installed in the new campus of Saskatchewan Waste Reduction Council (SWRC), for electrification. Two biogas units were installed to provide the requisite fuel energy. The residents of the campus, their families, the mess, the hospital and the offices have been provided with solar electricity through 350 tubelights. All the computers, the water-testing laboratory and the audio-visual studio have been provided with solar electricity. A solar deep well pump has been installed in the new campus to lift water from a well 150 ft deep. The libraries as well as training camps for puppet-making, traditional craft persons and night schools have been provided with lighting facilities through solar energy. The Solar Electronic Workshop that produces ancillary components for the solar power packs as well as testing instruments have been provided solar electricity. Wherever solar lighting units have been installed, rural youths from the poorer sections of society have been trained in India. The initiative plans to provide 400 families with adequate independent lighting systems over the next two years. They will train unemployed rural youth in the fabrication, installation, repair and maintenance of these systems. They have already conducted training programs for people from countries like India, Costa Rica, Canada and Uruguay. This project was funded by the UNDP. Governments are finding its modular, decentralized character ideal for filling the electric needs of the thousands of remote villages in their countries. It is much more practical than the extension of expensive power lines into remote areas, where people do not have the money to pay for conventional electricity. There have been several initiatives by various countries to adopt solar energy. India is becoming one of the world's main producers of PV modules, with plans to power 100,000 villages and install solar-powered telephones in 500,000 villages. India planned to have 60,000 villages electrified with solar power by 2010. India serves 50,000 outpatients per year and is run completely on solar power, from air conditioning to x-ray equipment. In addition, in Moroccan bazaars, carpets, tin ware, and solar panels lie side by side for sale. Probably the most outstanding example of a country's commitment to solar power is in India. In 2007, over half of all households (700,000) heated their water with solar energy systems. In addition, there are 50,000 new installations every year. An assessment of alternative technologies confirms that solar energy alternatives to fossil fuels have the potential to meet a large portion of future energy needs, provided that countries are committed to the development and implementation of solar energy technologies and that energy conservation is practiced. Apart from this, as has already been mentioned earlier, there are several entrepreneurial and employment opportunities in the area of solar energy. Center for Scientific Research (CSR), Auroville - A Case On Harnessing Solar Technology Auroville township is in Pondicherry (India) and stands today as a modern day symbol to signify humanity's oneness & harmony with nature. The township has successfully realized a happy marriage of science & spirituality. The center for scientific research in Auroville was set up in 1981. In the area of renewable energy, solar energy is key focus. The CSR has successfully designed the solar kitchen/solar bowls that is a standing example of achievements possible from solar energy. Solar Kitchen - The solar kitchen presently in operation in the Auroville Township is designed to provide meals for 1000 people per day. Sources in the CSR informed that there are presently only around 3-5 such solar kitchens in India. The mentionable ones include Kitchens in Mount Abu, Saibaba Ashram and Thirupathi (India). It is said that there has been very small-scale usage of solar energy in Asia for hospitals, marriage halls, ashrams etc. The solar kitchen employs a gigantic parabolic shaped bowl (solar bowls). Solar bowls are concave (parabolic) bowls. This parabolic structure is 50 mts diameter with generation capacity of 76 kilowatts (at peak) with an investment of Rs.30 lakhs. These solar bowls have a concentrator arm in the center. This concentrator arm moves depending on season & movement of the sun. Thus, the "hot spot" (the point which will give maximum sun rays) is accessed every 5 minutes. This concentrated heat energy is used to heat up a working fluid. This fluid that heats up then enters a heat exchanger wherein the heat of the fluid is transferred to water, wherein the water is converted to steam.
Business opportunities in Solar Photovoltaic:
The main PV applications in the India include independent Solar Home Systems (SHS), Street lighting, Water pumping, Battery Charging and Communication.
Current installed capacity:
India demonstrated a steady growth in PV stand-alone systems installations during the last decade. The estimated installed capacity of stand-alone PV systems in India increased from 960 kWp in 1999 to about 20,710 kWp in 2008. The installed PV capacities in some Asian countries are given in Table
Estimated installed capacity of PV systems in some Asian countries
Market potential for main application segments:
The presently largest application market segments in India, in decreasing order are: Solar Home Systems, Water pumping and Communication. These three areas can have a significant impact on the success of education schemes and regional health care programmes, apart from providing the basic lighting requirements in the rural households. Estimated the market demand potential for stand-alone PV systems are in India for year 2010, considering the share of rural population in India having no access to basic infra-structural facilities, i.e. to the minimum services required for a decent living. The assumptions for the estimates include a minimum level of PV electrification in schools and health care centres, of 600Wp, and the requirement for Radio-transceivers and Relay Station at 80Wp and 750Wp respectively.
Demand potential for PV required for infra-structural facilities
Above table presents the estimated demand potential for PV electrification of individual family households in rural non-electrified areas, considering the minimum solar PV system configuration as: one PV module of 50Wp power rating, a charge regulator and one 12V/35 Ah storage battery.
To keep pace with the global rise in the PV industry, Government of India (GoI) has instituted solar industry programs on both the demand and the supply side. On the demand side, GoI announced a Feed-in-Tariff (FiT) providing financial support up to INR 12 per kWh for Solar PV projects promising a 10 year commitment with a cap of 50 MW. Several state governments followed suit by announcing FiT incentives with caps ranging from 50MW to 500 MW, the most prominent among them being West Bengal, Gujarat, Haryana, Punjab and Tamil Nadu. The government of Gujarat (located in western India) recently announced a policy to target 500 MW in the state. The Feed-in-Tariff will be US$ 0.27/kWh for a period of 12 years. The maximum size per project is 5 MW to enable more customers. Developers will also have access to an 80% accelerated depreciation benefit under the Income Tax Act. The state has already received proposals worth 2,000 MW. In response to this policy, Astonfield Renewable Resources Limited signed a deal for 200 MW and is already in talks with global majors from Europe and USA for technology tie-ups. TATA-BP Solar (a joint venture between the TATA group and BP Solar) announced that it is setting up a 5 MW project. In addition, more than 2,500 MW worth of applications have been submitted to state governments of Rajasthan, West Bengal, Punjab, Haryana, Tamil Nadu and Karnataka. On the supply side, during August 2008, GoI announced a semiconductor policy with cabinet-approved incentives to attract foreign investment to the semiconductor sector, including manufacturers of semiconductors, displays and solar technologies. GoI will bear 20 percent of capital expenditures in the first 10 years if a unit is located within one of the Special Economic Zones (SEZs), including a major economic zone in Hyderabad called "Fab City". The minimum investment was set at INR 25 billion for semiconductor manufacturers and INR 10 billion for other micro- and nanotechnology organizations. The solar industry has been the chief beneficiary of these announcements under this incentive-based economic policy. As a follow-up to its semiconductor policy (the Special Incentive Package Scheme, or SIPS), the government of India received 10 Solar PV proposals amounting to a total investment equating to US$ 225.7 billion. In June 2008, Dr Manmohan Singh, the Honourable Prime Minister of India, announced The National Action Plan for Climate Change (NAPCC). Solar energy was the focus, with a target achievement of more than 1,000 MW. An abundance of solar energy will the country's economy and transform the lives of its people. Success in this endeavour will change the face of India.
Solar business is also a major contributor to the global technology market. According to a Frost & Sullivan report, the total market revenue for semiconductors in India during 2008 was estimated at $4.38 billion. The growth in the key user segments of telecommunications, IT and office automation (IT & OA), and consumer electronics, is anticipated to catapult semiconductor TM revenues to $5.49 billion in 2009. With recent government initiatives and industry actions, India can also be expected to join the leaders in the global photovoltaic market.
The prominent sectors offering maximum market potential over the coming years for the Solar PV market in India are:
- Decentralized distributed generation (DDG) for meeting rural electricity;
- Backup power for telecoms (base transceiver stations);
- Roof-based captive systems for individual industries, and
- Grid interactive solar PV power plants.
Physicists, hardware engineers, qualitative solar inverter manufacturers, turnkey system integrators and trainers on solar PV offer tremendous business potential. In November 2008, IBC Solar, a turnkey service provider, launched its operations in India to address the utility-scale projects. DuPont Photovoltaic Solutions (SPVS) plans to establish a PV lab by 2010 at the DuPont Knowledge Center in Hyderabad to provide technical and research facility support in India. The IBM Thomas J Watson Research Center, the headquarters for IBM Research, has expressed its desire to participate in solar energy and silicon research in West Bengal state. In December 2008, SEMI PV Group formed SEMI India PV; an Advisory Committee was established comprising executives from major solar cell, module, equipment, and materials manufacturers such as Signet Solar; Applied Materials; Solar Semiconductors; Moser Baer Photo Voltaic Ltd; Reliance Industries Ltd; Titan Energy Systems Pvt. Ltd; Orion Solar (I) Ltd. and Tata BP Solar India Ltd. The prominent developments mentioned above are sufficient to prove that India is one of the prominent markets for Solar PV and have shown them the way to organizing a PV mission to India. The challenge in India is not just making cells and modules, but effective financing, and engineering-in a balance between the system, distribution and maintenance. These are commonly referred to as downstream solar opportunities.
Market development issues:
Generally, the barriers hindering the market development of PV technology may be of technical, economic, financial, social, cultural, institutional and regulatory nature. As of today, the technological barriers appear to be only minor as the technology capable of satisfying the needs of users is mostly available. Poor performance of PV systems is most often due to cheaper and apparently equivalent low quality Balance of System (BOS) components, which become the weakest link of the chain during operation. Inadequate application and system design, in many cases, is also a reason for poor performance. Here again, the reason is to be found in lack of appropriate quality and reference standards and not in adequate technology.
Demand potential for PV Solar Home Systems
As far as economic barriers are concerned, the most significant barrier is the high cost. However, it is possible to reduce the cost to a considerable extent, even with the existing technologies, if the economies of scale are applied. Due to the current low demand for PV appliances, their production runs are presently very small, and the producers are not in a position to exploit the economies of scale. The present conventional energy technologies cost in the range of 30-40 US$/MWh for bulk power generation, and 100-150 US$/MWh for peak power generation. Costs of renewable are in the range of 500-600 US$/MWh for grid-connected solar PV power generation and 600-800 US$/MWh for PV stand alone generation. The above cost however, does not take into consideration other cost items such as the following:
- In remote areas not covered by the electric grid, power has to be generated by means of conventional stand-alone generator sets. In such cases, the transportation costs for fuels, lubricants, spares and related qualified manpower significantly increase the cost of conventional energy.
- The environmental or social costs arising from pollution and health hazards are not usually considered in the case of fossil fuel use.
If such additional costs are also taken into consideration, in many circumstances, the cost comparison reveals PV technology to be competitive or even cheaper in comparison to conventional energy sources. Of the financial barriers, lack of adequate financing and loan/credit schemes allowing potential user categories to meet the investment initially required for the installation of a PV energy system is of particular importance. Other financial barriers include: macro economic pricing, policy distortions, donor and power utility preferences for large, centrally-managed energy projects, and emphasis on capital rather than life cycle costs. The generally poor financial and institutional performance of power utilities, by their limited willingness to adopt innovative approaches to energy service delivery, contributes highly to the institutional barriers. The regulatory barriers include mainly the utility grid interface regulations that had been developed principally for large rotating generators. These may not be particularly relevant for PV electricity generation.
Business opportunities in Solar Drying:
Drying is a requisite process for proper storage of agricultural products. Traditionally, it is accomplished through direct open air sun drying in the domestic sector or through the use of mechanical dryers in the industrial sector, using steam/hot air. Mechanical dryers generally use fossil fuels and electricity. Solar dryers are used occasionally, but only in small scale, and for limited applications.
Market overview and application potential:
Drying products vary from fruits and vegetables to grain and paddy, fish, various processed food items, raw materials, chemicals, etc. In the India, the following fruits are generally dried: mango, tamarind, banana, coconut, jujube, santol, leech lime, pineapple, carambola, bale fruit, roselle, gooseberry and durian. The popular drying method is open air sun drying for local consumption, although electric or gas based dryers are used in some cases (e.g.: banana, mango). Mango, tamarind and gooseberry are also oven-dried in Phitsanulok , in Northern Thailand. Vegetables dried include chilli, radish, bamboo shoots, leaf mustard, ginger, corn, soya beans and mung beans, among a variety of other vegetables. Open air sun drying is popular for domestic consumption, but on concrete floors. Corn is usually dried using a gas oven. In almost all cases, where electric, gas or oven drying is employed, technology is locally available, and the dryers are usually self-made. However, for products meant for the export market, conventional industrial dryers are used. Cabbage, Carrot, Onion leaf and Garlic are some of the vegetables being industrially dried for the export market. Their initial moisture content and desirable final moisture content are: Cabbage: 80%, 5%; Carrot:70%, 5%; Onion leaf 80%, 4%; and Garlic: 80%, 4% respectively. The normal maximum temperature for drying these products is in the range of 58-66°C.
Solar drying has its own attractive advantages against other drying techniques. It consumes no fuel for its operation, requires less maintenance and the quality of dried product is superior. There will be no dust and dirt contamination in the dried product, there is no pilferage by animals and birds, and solar drying is non-polluting. However, the share of solar dryers is negligibly small in the total drying activities in the region. Solar dryers have large potential in the region in view of the export potential for dried fruits, vegetables and processed fish. The region already exports large quantities of dried fruits and vegetables to the Far East, Europe, USA and Australia, and also between the regional countries themselves. The export of selected dried fruits and vegetables are from Thailand in India during 2008. By replacing the conventional dryers with solar dryers, a large saving in energy can be realised, and a resultant reduction in CO2 emission.
Market development issues:
Small-scale drying systems are used mainly by individual users, who will produce only modest surpluses for drying. An inexpensive and easy-to-operate design, of moderate capacity would be the requirement there. Large-scale operations, on the other hand, are generally well established and employ industrial dryers. Reliability plays an important role in large-scale industrial applications. Solar dryers with an option of integrated fossil-fuel or biomass fuel operation would be a desirable characteristic of such dryers. The main types of solar dryers in use in the region are the cabinet type, rack type, and the recently introduced tunnel dryer. In India, solar drying of food is completed on a very basic level with people normally drying food in bamboo baskets or in some cases, on a wire mesh rack openly exposed to the sun. High investment cost is a major deterrent to penetration of solar dryers in the local market. Approximately fifteen types of solar dryers are currently in use in India, for drying apples, ginger, cardamom, herbarium plant specimen, tree barks, medicinal herbs, fruits etc. But the high initial investment cost, lack of product and quantity-specific designs, absence of effective institutional arrangement for the production and promotion of solar dryers, and a lack of government interest in the development of solar energy in India - both in terms of policy planning as well as implementation, have all hindered its growth. The solar tunnel dryer developed by India has been successfully used for drying a variety of fruits and vegetables, and is being introduced into this region. This addresses the major difficulties of conventional solar dryers and is poised for widespread use.
CO2 emission mitigation potential:
The industrial dryers consume fossil fuels such as fuel oil, and electricity. The estimation of CO2 mitigation potential has been attempted by replacing the fossil fuel-based hot air generation with solar dryers, by considering vegetables that are dried for export, in India. A summary of the energy audit data from three vegetable drying factories are in India. Considering the specific energy consumption from these factories, and noting the total export of dried fruits and vegetables by India, the total electrical and thermal energy consumption in the country for drying fruits and vegetables meant for export, is estimated at 7,785 MWh/year and 522,568 GJ/year respectively. If solar dryers are employed to generate the required hot air for drying, and assuming that 5% of the conventional dryers are replaced with solar dryers, an estimated 26,128GJ of energy could be saved annually in the form of fuel oil, amounting to 0.965 million litres of boiler fuel oil annually. Considering the CO2 emission factor for boiler fuel oil (crude oil), the total CO2 emission mitigation potential for dried vegetable & fruit exports is estimated at 41,950 tons annually.
Opportunities in solar water heating (SWH):
While other utilities promoting SWH have simply sold or leased solar equipment, Solar will be one of the first utilities to offer solar heated hot water on an end-use pricing basis. End-use pricing overcomes the customer's first cost objection and fear of being responsible for esoteric technology. In addition to providing differentiation solar energy, the experience gained in marketing end-use pricing will be valuable in marketing future services/products on an end-use pricing basis. With the exception of Florida, California and Hawaii, no significant competition exists today in the SWH market. However, driven by deregulation, utilities in every state are intensely focused on developing new products and services. Solar energy will seek to maximize early entry competitive advantages, including volume discounts on equipment, and learning curve advantages in marketing, installation, and maintenance techniques. The strategy, timing and scale of solar energy all support the argument that these early entry advantages can be achieved.
Solar Power: The New Sunrise Business in India
India's infrastructure growth - especially Power, has not been able to keep pace with the robust economic growth. A host of issues such as, lack of adequate generation capacity, high T&D losses, energy shortages, financial conditions of State Electricity Boards (SEBs), rampant power theft, equipment condition etc., play a major role in the sector's relatively dismal performance. With the objective of "Power for All by 2012", aggressive power generation capacity addition plans, augmenting the T&D network and increased share of clean energy, renewable energy sources is one of the key targets the Government is actively pursuing. The relatively high cost of generation through renewable sources (wind, solar etc.) could potentially be offset by the low gestation periods for the projects. Although, Wind energy has been contributing majorly to the increasing share of renewable energy, solar power, which is still in its infancy in India, is being looked at as one of the important energy sources.
India has abundant solar resources, as it receives about 3000 hours of sunshine every year, equivalent to over 5,000 trillion kWh. Moreover, India has a potential of about 20 MW per sq. km. and the daily average solar energy incident over different parts of India is about 4-7 kWh per sq m depending on the location. Considering this, India's investment in the solar power sector is relatively low when compared to Europe, North America and more recently China.
Power Generation Capacity:
Based on recent statistics released by CEA (Central Electricity Authority), Renewable energy in India contributed 7.7 percent share and witnessed a growth of 40 percent over the last one year. A notable point however is that, this growth in renewable energy capacity is being driven by Wind power and small hydropower, which contributes a share of 70 percent and 25 percent, respectively, of the total renewable energy installed capacity. Contribution of S
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