The objective of the National Solar Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible. The immediate aim of the Mission is to focus on setting up an enabling environment for solar technology penetration in the country both at a centralized and decentralized level. The first phase (up to 2013) will focus on capturing of the low hanging options in solar thermal; on promoting off-grid systems to serve populations without access to commercial energy and modest capacity addition in grid-based systems. In the second phase, after taking into account the experience of the initial years, capacity will be aggressively ramped up to create conditions for up scaled and competitive solar energy penetration in the country.
Anything tangible or intangible, that costs money is evaluated very carefully and used equally carefully in India. This means expenses are controlled and kept as low as possible. The scenario in energy consumption in India is no different. It is not surprising that the per capita energy consumption figures are very low inspite of high rate of development now taking place. The per capita consumption in India is in the region of 400 KWH per annum.
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.
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.
The National Solar Mission is a major initiative of the Government of India and State Governments to promote ecologically sustainable growth while addressing India's energy security challenge. It will also constitute a major contribution by India to the global effort to meet the challenges of climate change.
Importance and relevance of solar energy for India
1. Cost: Solar is currently high on absolute costs compared to other sources of power such as coal. The objective of the Solar Mission is to create conditions, through rapid scale-up of capacity and technological innovation to drive down costs towards grid parity. The Mission anticipates achieving grid parity by 2022 and parity with coal-based thermal power by 2030, but recognizes that this cost trajectory will depend upon the scale of global deployment and technology development and transfer. The cost projections vary - from 22% for every doubling of capacity to a reduction of only 60% with global deployment increasing 16 times the current level. The Mission recognizes that there are a number of off-grid solar applications particularly for meeting rural energy needs, which are already cost-effective and provides for their rapid expansion.
2. Scalability: India is endowed with vast solar energy potential. About 5,000 trillion kWh per year energy is incident over India's land area with most parts receiving 4-7 kWh per sq. m per day. Hence both technology routes for conversion of solar radiation into heat and electricity, namely, solar thermal and solar photovoltaics, can effectively be harnessed providing huge scalability for solar in India. Solar also provides the ability to generate power on a distributed basis and enables rapid capacity addition with short lead times. Off-grid decentralized and low-temperature applications will be advantageous from a rural electrification perspective and meeting other energy needs for power and heating and cooling in both rural and urban areas. The constraint on scalability will be the availability of space, since in all current applications, solar power is space intensive. In addition, without effective storage, solar power is characterized by a high degree of variability.
3. Environmental impact: Solar energy is environmentally friendly as it has zero emissions while generating electricity or heat.
4. Security of source: From an energy security perspective, solar is the most secure of all sources, since it is abundantly available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can meet the entire country's power requirements. It is also clear that given the large proportion of poor and energy un-served population in the country, every effort needs to be made to exploit the relatively abundant sources of energy available to the country. While, today, domestic coal based power generation is the cheapest electricity source, future scenarios suggest that this could well change. Already, faced with crippling electricity shortages, price of electricity traded internally, touched Rs 7 per unit for base loads and around Rs 8.50 per unit during peak periods. The situation will also change, as the country moves towards imported coal to meet its energy demand. The price of power will have to factor in the availability of coal in international markets and the cost of developing import infrastructure. It is also evident that as the cost of environmental degradation is factored into the mining of coal, as it must, the price of this raw material will increase. In the situation of energy shortages, the country is increasing the use of diesel-based electricity, which is both expensive - costs as high as Rs 15 per unit - and polluting. It is in this situation the solar imperative is both urgent and feasible to enable the country to meet long-term energy needs.
Objectives and Targets
The objective of the National Solar Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible.
The Mission will adopt a 3-phase approach, spanning the remaining period of the 11 th Plan and first year of the 12th Plan (up to 2012-13) as Phase 1, the remaining 4 years of the 12th Plan (2013-17) as Phase 2 and the 13th Plan (2017-22) as Phase 3. At the end of each plan, and mid-term during the 12th and 13th Plans, there will be an evaluation of progress, review of capacity and targets for subsequent phases, based on emerging cost and technology trends, both domestic and global. The aim would be to protect Government from subsidy exposure in case expected cost reduction does not materialize or is more rapid than expected.
The immediate aim of the Mission is to focus on setting up an enabling environment for solar technology penetration in the country both at a centralized and decentralized level. The first phase (up to 2013) will focus on capturing of the low hanging options in solar thermal; on promoting off-grid systems to serve populations without access to commercial energy and modest capacity addition in grid-based systems. In the second phase, after taking into account the experience of the initial years, capacity will be aggressively ramped up to create conditions for up scaled and competitive solar energy penetration in the country.
To achieve this, the Mission targets are:
To create an enabling policy framework for the deployment of 20,000 MW of solar power by 2022. To ramp up capacity of grid-connected solar power generation to 1000 MW within three years - by 2013; an additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff. This capacity can be more than doubled - reaching 10,000MW installed power by 2017 or more, based on the enhanced and enabled international finance and technology transfer. The ambitious target for 2022 of 20,000 MW or more, will be dependent on the 'learning' of the first two phases, which if successful, could lead to conditions of grid-competitive solar power. The transition could be appropriately up scaled, based on availability of international finance and technology.
To create favourable conditions for solar manufacturing capability, particularly solar thermal for indigenous production and market leadership. To promote programmes for off grid applications, reaching 1000 MW by 2017 and 2000 MW by 2022 .To achieve 15 million sq. meters solar thermal collector area by 2017 and 20 million by 2022. To deploy 20 million solar lighting systems for rural areas by 2022.
Government Authorities
Development of alternate energy has been part of India's strategy for expanding energy supply and meeting decentralized energy needs of the rural sector. The strategy is administered through India's Ministry of New Renewable Energy (MNRE), Energy development agencies in the various States, and the Indian Renewable Energy Development Agency Limited (IREDA).
MNRE - Ministry of New Renewable Energy is the nodal Ministry of the Government of India for all matters relating to new and renewable energy. In 1982 Department of Non-conventional Energy Sources (DNES) was created to develop and deploy new and renewable energy for supplementing the energy requirements of the country. In 1992, DNES became the Ministry of Non-conventional Energy Sources. In October 2006, the Ministry was re-christened as the Ministry of New and Renewable Energy. The Ministry has been facilitating the implementation of broad spectrum programmes including harnessing renewable power, renewable energy to rural areas for lighting, cooking and motive power, use of renewable energy in urban, industrial and commercial applications and development of alternate fuels and applications. In addition, it supports research, design and development of new and renewable energy technologies, products and services.
IREDA - Indian Renewable Energy Development Agency is a Public Limited Government Company established on 11th March, 1987, under the administrative control of Ministry of New and Renewable Energy (MNRE) to promote, develop and extend financial assistance for renewable energy and energy efficiency/conservation projects. IREDA has been notified as a “Public Financial Institution” under section 4 ‘A’ of the Companies Act, 1956 and registered as Non-Banking Financial Company (NFBC) with Reserve Bank of India (RBI).
Present Status
As a result of the efforts made during the past quarter century, a number of devices have been developed and have become commercially viable. These include Solar Water Heaters, Solar Cookers, Solar Lanterns, Solar Street Lights, Solar Water Pumps.
India has started wide Solar Photovoltaic Program for about 2 decades and has installed an aggregate 1.3 million systems. However, now the focus of the 11th year plan is on the grid connected power generation. India's Integrated Rural Energy Program using Solar energy had served 300 districts and around 2,300 villages.
The production during 2007-08 (till December 2007) is estimated to be over 40 MWp of Solar cells and 60 MWp of PV modules.
Research & Development
The Research and Development (R&D) efforts in the Solar Photovoltaic technology have been aimed at development of materials used in fabrication of Solar cells and modules, different types of Solar cell device structures, module designs, components, sub-systems and systems, with a view to reduce the cost and improve the overall efficiency at different stages. The Ministry has been sponsoring Research and Development projects on different aspects of the PV technology in academic and research institutions, national laboratories, IITs and industry, for development of new materials, processes, systems, production and testing equipment for Solar cells and modules and electronics used in the PV systems.
High Capital Cost
The hunt for better, cheaper Solar cells is due in India. Despite the fact that the price of Solar Photovoltaic technology has been coming down over the years it still remains economically unviable for power generation purposes. The average cost of Solar PV modules was around Rs. 2 lakhs per kW. However, the estimated unit cost of generation of electricity from Solar Photovoltaic and Solar thermal route is in the range of Rs. 12 -20 per kWh and Rs. 10 - 15 per kWh respectively in India. With present level of technology, Solar electricity produced through the Photovoltaic conversion route is 4-5 times costlier than the electricity obtained from conventional fossil fuels.
Manufacturing Process
Solar PV cell manufacturing is a technology-intensive process requiring high expertise and know-how. Besides, the technology landscape in the Solar industry PV space is changing quite rapidly with innovations and R&D. It is challenging for new entrants to replicate the success of companies having a long standing in the Solar PV market.
Raw Material and Waste Products
Some of the materials (like Cadmium) used for producing Solar PV cells are hazardous and other raw materials like plastics used for the packaging of the cells are non-biodegradable, thereby impacting the environment. Although some of the wastage generated during the manufacturing process is recyclable (silicon), not all other materials are recyclable and disposal of the same is a challenging process.
Environmental Costs:
Another concern area is installing Solar cells on the land area. The large amount of land required for utility-scale Solar power plants - approximately one square kilometer for every 20-60 MW generated - poses an additional problem in India. Instead, Solar energy in particular requires unique, massive applications in the agricultural sector, where farmers need electricity exclusively in the daytime. This could be the primary demand driver for Solar energy in India.
In the very near future, breakthroughs in nanotechnologies promise significant increase in Solar cell efficiencies from current 15% values to over 50% levels. These would in turn reduce the cost of Solar energy production. However, capital costs have substantially declined over the past two decades, with Solar PV costs declining by a factor of two. PV is projected to continue its current rapid cost reductions for the next decades to compete with fossil fuel. However, the realization of cost reductions is naturally closely linked to market development, government policies, and support for research and development.
Solar- The centre stage of renewable energy:
The radiant heat and light energy from the Sun is called as solar energy. This is the most readily and abundantly available source of energy. Since ancient times this energy has been harnessed by humans using a range of innovations and ever-evolving technologies. The earth receives more energy in just one hour from the sun than what is consumed in the whole world for one year. This energy comes from within the sun itself through process called nuclear fusion reaction. In this reaction four atoms of hydrogen combine to form one helium atom with loss of matter. This matter is emitted as radiant energy.
India is a tropical country with sunshine in plenty and long days. About 301 clear sunny days are available in a year. Theoretically, India receives solar power of about 5000 trillion kWh/yr (600 TW approx.) on its land area. On an average, daily solar energy incident over India ranges from 4 to 7 kWh/m
Solar energy
This is the energy that we receive from sun. This energy is converted into heat and electricity. The photovoltaic sector has reached manufacturing output of about 6,850 MW per year in 2008 (according to SEIA-solar energy industries association). Germany is the largest market for PV in the world. Solar thermal power stations are dominant in the Spain and the USA. The largest power station is in the Mojave Desert (354 MW SEGS). India receives a solar energy equivalent of more than 5000 trillion KWh per year, which is far more than its total annual consumption. The daily global radiation is around 5KWh per sq.m per day with sunshine ranging between 2300 and 3200 hours per year in most parts of India. Though the energy density is low and availability is not continuous, it has now become possible to harness this abundantly available energy very reliably for many purposes by converting it to usable heat or through direct generation of electricity. The conversion systems are modular in nature and can be appropriately used for decentralised application.
Solar projects likely to face funding problems
Developers of solar-po projects in India may be unable to obtain loans to complete the plants because the government's proposed stations are too small and tariffs may be too low, an Asian Development Bank (ADB) official said. "Banks are very uncomfortable financing solar in India," Don Purka , senior investment specialist for the Manila-based bank, said in an interview at the Clean Energy Forum in Singapore. "The power purchase agreements must be modified for bank to lend."
India's National Solar Mission seeks to increase grid-connected solar capacity to 1,000 megawatts by 2013 and 20,000 megawatts by 2022 from 12 megawatts currently to help battle a power deficit that could constrain economic growth. State distribution companies would buy the power that will be generated from the solar projects.
Initially, the government may have to guarantee payments for the full lifetime of the projects in order to get banks to lend, Singh said. Such a guarantee could be reduced or removed once the projects start, he said. The government is currently collecting revised bids for the first round of projects for 150 megawatts of solar photovoltaic plants and 470 megawatts of solar thermal plants. The minimum size is set at 5 megawatts a project.
There are no benefits in building 5 megawatt-sized solar photovoltaic projects, the standard size of plants to be awarded by December under the first round, said Manila-based Purka, who advised the government on the bidding process. "You need to consider 30-50 megawatts and scale up. It's going to be very challenging for India to meet their targets." India received bids to develop 5,126 megawatts of solar projects under the first round of the National Solar Mission, said AK Maggu, additional general manager of NTPC Vidyut Vyapar Nigam . Under the programme, power trading company NTPC Vidyut will buy the output of the solar plants and bundle it with cheaper coal-fired electricity from parent NTPC that is sold to distribution companies.
Developers may bid "aggressively," as low as `12 ($0.27) a kilowatt-hour compared with the government's offer of about `18, to win the bid, Purka said. According to the Solar Mission programme guidelines, project developers offering the lowest tariffs would be chosen if the applications received exceeded the capacity to be awarded.
India has "good" potential to harness the sun's rays to produce power because one can use barren or non-arable land for such ventures, Purka said. It may cost about $3 million a megawatt to set up a solar plant, about three times higher than thermal plants, he said. The ADB plans to lend or provide guarantees to 3,000 megawatts of sun-powered electricity by 2013 in India.
ENVIRONMENT APPRAISAL
Environmental friendly
Solar Energy is renewable, clean, and sustainable form of energy which helps in protecting our environment.
It does not create pollution by releasing gases like nitrogen oxide, carbon dioxide, mercury and sulphur dioxide into the atmosphere as many conventional forms of energy do.
Solar Energy, therefore, does not contribute to global warming, acid rain or smog.
It actively contributes to the decrease of harmful green house gas emissions.
Since solar energy does not use any fuel, it neither increases the cost nor does it add to the problems of the transportation and recovery of fuel or the storage and disposal of radioactive waste.
SOCIAL COST BENEFIT ANALYSIS
Saves money
After the recovery of initial investment, the Sun‟s energy is practically FREE.
The payback period for the investment can be short depending on electricity usages of household.
The government provides financial incentives so as to reduce the cost incurred.
Your utility company can buy the additional energy that your system produces, building up a credit on your account. This is called net metering.
It's not affected by the supply and demand of fuel and is therefore not subjected to the ever-increasing price of gasoline.
Solar Photovoltaic
Solar photovoltaic (SPV) is the process of converting solar radiation (sunlight) into electricity using a device called solar cell. A solar cell is a semi-conducting device made of silicon or other materials, which, when exposed to sunlight, generates electricity. The magnitude of the electric current generated depends on the intensity of the solar radiation, exposed area of the solar cell, the type of material used in fabricating the solar cell, and ambient temperature. Solar cells are connected in series and parallel combinations to form modules that provide the required power.
Crystalline solar cells
Most solar cells are made of a single crystal or multi-crystalline silicon material. Silicon ingots are made by the process of crystal growth, or by casting in specially designed furnaces. The ingots are then sliced into thin wafers. Single crystal wafers are usually of 125 Ã- 125 mm or larger sizes with „pseudo-square‟ shape; multi-crystalline wafers are typically square-shaped with a dimension of 100 Ã- 100 mm or larger. Using high temperature diffusion furnaces, impurities like boron or phosphorous are introduced into the silicon wafers to form a p-n junction. The silicon wafers are thus converted into solar cells. When exposed to sunlight, a current is generated in each cell. Contacts are attached to the top and bottom of each solar cell to enable inter-connections and drawing of the current.
FINANCIAL APPRAISAL
Let‟s understand how to calculate the household power capacity required.
Step-1: Calculate daily power used:
Method 1:
To do this, take the last 12 monthly power bills and calculate the average kilowatt hour (kWh) usage per month. The reason we use 12 is because our power consumption fluctuates with the seasons.
Then divide the monthly usage by 30 (the average number of days in a month, to get the daily power used.So for example: If the monthly power consumption of 800 kWh (which is generally in a double story upper class 4 bhk house), then the daily consumption is 800/30= 26.7 kWh per day.
Now if we want to halve the power bill then you need to produce 26.7 / 2 = 13.4 kWh of solar panel watt power per day.
Step 2 - Calculate total solar panel watt needs:
To do this, first determine how many usable hours of sunlight the area receives per day.
This is taken from a solar insulation map.
For example sunshine hour per year in India = from 2300 to 3200 = 2750 (average)
Thus average sunshine hours per day = 2750/365= 7.5 hours per day
Step 3 - Calculate solar panel watt costs
This step will help to work out the cost of the solar panels needed to make 2234 Watts of power. At the moment the lowest cost for solar panels based on multi-crystalline technology is Rs. 180 from the Indian manufacturer.
Since PV modules participate generally around 68% of the total cost of the BIPV system thus we can arrive at a rough estimate of the total BIPV cost that we are going to install. The detailed analysis of all these components and their financial part is described in the further part of the report - In our example: It will cost us at the most 2234 x Rs.180 = Rs. 4, 02,120 to install solar panels to halve our power bill
Financial Appraisal of the Project
The financial appraisal of the project would review the estimated cost of the project, proposed
means of financing, cash flow projections, viability parameters and sensitivity as well as scenario
analysis.
Cost of Project
Cost of project consists of broadly following components:
1. Cost of construction.
2. Project management consultancy cost
3. Preliminary expenses
4. Preoperative expenses like Administration and establishment, legal and audit fees etc.
5. Bank commission and appraisal charges
6. Interest During construction
Cost of construction:
As elaborated in the previous chapter the cost of construction for Solar photovoltaic comes out to be Rs. 270/ watt.A contingency of 1% has considered in the cost of construction. Hence the cost of construction of the project of 144.45 MW comes out to be Rs. 3919.26 Crore.
Project management consultancy Fees:
The PMC fees considered under the total project cost is 1% of the cost of construction.
Preliminary expenses:
The preliminary expenses in form of market survey and preparation of feasibility report are considered Rs. 5 crore.
Preoperative expenses:
Preoperative expenses like Administration and establishment , legal and audit fees reconsidered at Rs. 4 crore approximately.
Bank commission and appraisal charges:
Bank commission charges for providing bank guarantee is considered at the rate of 1% per annum of Bank guarantee provided. Bank appraisal fees of Rs. 50 lacs is considered which be initially paid to the bank.
Interest during construction:
Interest during construction in case of our project has two components viz., Interest for Long term loan @ 12% p.a. and Interest for bridge loan @ 14% p.a. After taking all the components of cost into consideration the total project cost comes out to be Rs. 4177.08 crore.
COST OF CONSTRUCTION
PV modules 941.18 383.60 336.38 1661.15
Inverter 154.35 62.91 55.17 272.43
Battery 677.65 276.19 242.19 1196.03
Charge controller 135.53 55.24 48.44 239.21
Support Structure 97.88 39.89 34.98 172.76
mechanical Work 82.82 33.76 29.60 146.18
Electrical Work 67.76 27.62 24.22 119.60
Quality Control, System
Design Miscellaneous 41.41 16.88 14.80 73.09
Contingency 21.99 8.96 7.86 38.80
TOTAL 2220.58 905.06 793.63 3919.26
OTHER COST
PMC Fees 22.21 9.05 7.94 39.19
Admin & establishment
expenses 3.90 3.90
Legal & Audit Fees 0.01 0.01
Insurance 4.44 1.81 1.59 7.84
TOTAL OTHERS 30.56 10.86 9.52 50.94
Interest during construction 74.96
126.39 201.35
Total Capitalized cost 2326.10 915.92 929.55 4171.56
BASE CASE COST 2251.13 915.92 803.15 3970.20
COST TO BE WRITTEN OFF
Bank Commission charges 0.001 0.001
Bank Appraisal charges 0.50 0.5
Market survey and Preparation of
Feasibility reports (Preliminary Exp) 5 5
TOTAL 5.501 5.501
BANK GUARANTEE MARGIN 0.02 0.02
TOTAL PROJECT COST 2331.616 915.916 929.545 4177.08
Cost of Project
Means of finance:
To meet the cost of project the following means of finance are considered:
1. State financial assistance.
2. Central financial assistance.
3. Equity.
4. Long term debt
5. Bridge loan.
State financial assistance:
A state financial assistance up to 10% of total capital cost (i.e. Rs 391.926 crore) will be provided by the state government (Karnataka government) during the initial stage of project.
Central financial assistance:
Central Financial Assistance (CFA) in form of capital subsidy will be available from the Ministry for installation of the SPV systems. Stand-alone SPower plants more than 1 kWp the subsidy given is Rs.125/Wp. 50% of CFA will be released in advance along with sanction of project.
Equity:
Effective equity required for the project under consideration comes out to be 25% of total project cost. A major of the equity would be used in paying the interest for both long term debt and Bridge loan.
Long term debt: The Effective long term debt component is 24% of total project cost.The normative interest rate considered is 12%. The repayment of loan begins from the first year of commercial year of operation.
The TA team assessed 106 projects and visited 23 project sites and held stakeholders' workshops to identify reasons for project failure or success. Most projects were unsuccessful due to non-adherence to standards and specifications in equipment installation; weak management structure and ineffective after sales service; and lack of ownership and interest in the project due to negligible monetary or non-monetary benefits. The TA demonstrated the physical rehabilitation, community preparation and facilitation for livelihood linkages for one Solar Battery Charging Station (SBCS) in barangay Bunog in Palawan, and for the twin Micro-Hydro Plants (MHP) in b. Main components of the rehabilitation program were:
(i) system redesign, retrofitting, and reinstallation;
(ii) leveraging TA funds with that of local governments, entrepreneur and communities to ensure stakeholder commitment and ownerships;
(iii) developing local capacity to manage the projects by selecting, training, and contracting women
entrepreneurs in case of SBCS and the local rural energy service company for the MHP to operate and
maintain the rehabilitated facilities; and
(iv) identifying and facilitating livelihood options linked with the provision of electricity to ensure that NRE projects bring direct benefit to the community.
SUCCESS IF THE PROJECT
The preset software FINANCIAL, TECHNOLOGY, 'DESIGN AND ECONOMIC APPRAISAL OF PLANTS ' was prepared keeping in view the current pace of development of this rural technology.
The lack of data regarding the performance of existing solar energy has been felt by the R & D community all over the country which hinders the further development work. Much more work on the qualification of techno-economic parameters (of output and input) is required. This would further encourage the government to grant subsides to promote adoption of Biogas technology. Promotion of solar energy Plants will help in solving the energy problems of our country. It is hoped that utilization of this software would assist the scientists and researchers working in this field and help the weaker sections of the society in reaping the benefits of this viable technology. Further, it would help in proper planning and management so that the project development Programme is a success.
