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Energy Alternatives India 6th Apr, 2010

Here's our next edition of EAI Newsletter. For more news items and updates, visit our blog @ http://www.eai.in/blog and our forum @ http://www.eai.in/forum


EAI India Solar PV Report

If you are an entrepreneur or investor exploring the fast growing solar energy opportunities in India, this report is for you. More from here - http://www.eai.in/ref/reports/solar.html

To receive a free preview of the report, send a note to narsi@clixoo.com

National Solar Mission Questions and Answers

The National Solar Mission, announced a few months back, aims at dramatically increasing the share of solar energy for electricity generation in India. It aims to increase the installed capacity of solar-based power production from practically nothing to 20,000 MW in about 12 years (by 2022). In order to do this, the Mission has proposed a host of incentives and policies.

The following are the list of frequently asked questions about the NSM and solar energy based power porduction in India. The EAI team has provided brief answers to the same.

1. Is the National Solar Mission only for power production using solar PV?

No, the NSM applies to power production from both solar PV and solar thermal.

2. What are the prerequisites for being a power producer under the NSM?

The “Net Worth” of the company should be equal to or greater than the value calculated at the rate of Rs 2 Crores or equivalent US$ per MW of the project capacity. For companies which are newly incorporated, the Net Worth criteria should be met seven days prior to the date of submission of EoI by the Project Developer.

3. Who should I get in touch with for participating in the National Solar Mission?

The application for setting up a solar power plant should be sent to NTPC Vidyut Vyapar Nigam (NVVN - http://nvvn.co.in ) which is owned by NTPC.

4. Is there a minimum amount of capacity that is required when I apply for NSM?

For solar PV, the minimum size of the plant is 5 MW and for solar thermal (CSP), the minimum size should be 20 MW.

5. What is the approximate capital cost for a solar PV power plant? For a solar CSP power plant?

The capital investment for solar PV ranges from Rs 14 cr to 16 cr per MW depending on the technology. CERC's norms specify Rs 17 cr per MW in general without mentioning the technology but solar module prices have come down significantly in the recent past.

The capital costs have come down significantly in the last few years, and this cost is expected to decrease further with technological advancements.

Capex for solar CSP is about Rs 12-13 crores MW, but this is an approximate number, as the estimate can differ widely based on the technology used.

6. What is the area required for a solar PV power plant, per MW? For solar CSP?

About 5 acres/ MW for solar PV (crystalline) and for 7-12 acres for solar CSP (depending on the type of technology used)

Within solar PV, it is assumed at 4-5 acres for crystalline silicon (c-Si) technology and 7-8 acres per MW for thin film solar (a-Si or CdTe) technology. In reality, it depends on other parameters like cost of land, Ground Coverage Ratio (GCR) (to avoid inter array shading, GCR can be 0.45 to 0.65 and generation will vary based on GCR) and choice of sun tracking systems (with sun trackers the land required will be about 6 acres per MW for crystalline solar modules).

7. Which of the two (PV and CSP) should I go for?

There is no single answer to this question, but we present some characteristics that might aid in your decision.

There are about 20,000 MW of solar PV installed worldwide; less than 700 MW of Solar CSP installed. Thus, one could say solar PV is a more established technology for power production than solar CSP.

Solar PV has higher capital costs (about 20% more) than solar CSP, but the operating costs are higher for solar CSP than for solar PV. The capacity factor for solar PV is about 17% while for solar CSP is about 22%. Owing to all these, electricity from solar CSP is likely to cost about Rs 2-3 lower than that for solar PV.

Under the NSM scheme operated by NVVN, the minimum size of the plant varies based on whether the technology is solar PV or solar CSP. For solar PV, the minimum plant size should be 5 MW while for solar CSP, it is 20 MW. This implies that the minimum required capital layout for solar PV is much lower than that for solar CSP under the NVVN scheme.

It is a well-established fact that the costs of solar PV systems have been coming down significantly in the past many years, but such a trend is not equally well-established in the case of solar CSP plants.

Overall, it is well known most power producers in India and abroad will opt for solar PV for the next few years at least.

8. How do I choose the right location for the solar PV power plant?

The main parameters to be considered while choosing the location for a solar PV power plant are solar irradiation of the location, the landscape of the site and distance of the location from the nearest sub station.

9. What are the approximate RoIs and payback periods for solar PV power plants under the NSM scheme?

The payback is dependent upon many financial parameters like cost of debt, depreciation, the Capacity Utilization Factor (CUF or PLF which are in turn dependent on solar resource at the site and the technology adopted c-Si or thin film solar), tariff etc. Using standard numbers and assuming the technology used will be crystalline silicon, under the National Solar Mission incentive structure, the payback period for solar PV power plant is approximately 6 years (i.e the cash flows will recover the equity capital in six years though the loans could take longer to clear). RoE pre-tax will be about 20%. Project IRR is about 15.5%.

10. What are the chances I will be allotted a solar PV project under the NSM? How much is the competition for that?

NSM has separate ceilings for solar PV and solar CSP based power generation. Competition is fierce for solar PV. As a result, you stand a better chance of being alloted under the solar CSP technology.

11. What are the methods of financing solar PV projects in India?

Most solar PV or CSP power plants will be funded through project finance (usually debt:equity of 70:30). There have been cases where private equity (and even venture funding) has played a role, but financing will be increasingly dominated by project finance.

12. How feasible is it for small entrepreneurs to participate in the NSM? Or in other state-based programs for solar PV?

Under the NVVN scheme, there has to be a minimum capital investment of about Rs 75 crores, at least 30% of which has to come from the promoters equity contribution. Thus, very small entrepreneurs with no prior business assets might not be able to take part in this scheme. However, outside of NVVN scheme, it is possible for entreprenuers to get incentivised for putting up solar PV power plants smaller than 5 MW, through generation based incentives (GBI) provided by MNRE.

13. How many grid-connected or grid-connectible solar PV power plants have already been implemented in India?

There are 5 solar PV power plants in India with capacities 1 MW or greater (3 in Karnataka, 1 in Punjab and 1 in West Bengal). Four of these projects have started running, namely two 3 MW projects in Karnataka, a 1.25 MW project in West Bengal and a 1 MW project in Punjab. The 1 MW project in Punjab is the first privately owned solar PV power plant in India.

14. Is there a minimum capacity for solar PV power plant for it to be economical? For solar CSP?
None for solar PV power plant; in the order of 20 MW for solar CSP.

15. Which are the ideal states for setting up solar power projects?
Hot destinations are Rajasthan, Gujarat and MH, MP, Andhra, Karnataka, Tamil Nadu as far as solar radiation is concerned. Presently, only Rajasthan and Gujarat have a clear policy and guidelines on the procedures for setting up solar power projects. Other states may also initiate the policy and procedures soon now that Jawaharlal Nehru National Solar Mission has been launched by Government of India.

16. How do you choose an ideal location within a particular state for setting up of a solar power project?

Many states have identified certain areas for setting up solar power projects. A project can be located in such designated areas (give the advantage of sharing common infrastructure that is available or will be made available) or a private land can also be used provided the land meets the required criteria for setting up solar power projects.

In addition, developers need to do prospecting using Geographical Information Systems (GIS) covering parameters like annual average solar radiation levels, protected areas like forests, water bodies, land use, highways, proximity of transmission lines. Based on this prospecting, physical survey can be done for site selection. Thereafter, detailed solar resource assessment studies have to done through satellite data and computer models to obtain the hourly solar radiation data to simulate the estimated generation. This process is a must for MW size power projects (even if a State has selected some area for Solar Farms) as otherwise the power projects' generation cannot be assured. If the estimate power generation calculations are not accurate, there could be problems for the project approval by the power purchasers (NVVN) besides problems with bankers for sanction of the loan, or even at post commissioning stage.

17. Are banks interested in financing solar power projects?

For solar PV power projects, the Debt Service Coverage Ratio (DSCR) works out to an average of 1.49 which is considered quite acceptable to commercial banks for sanction of loan. The maximum debt that is permitted as per CERC norms is 70% and most banks should be find this acceptable based on the financial strength and net worth of the company / promoters.

The present policy driven by the National Solar Mission and PPA for 25 years with a central PSU like NTPC's subsidiary should provide adequate confidence to banks to finance solar power projects.

Hope you are liking our EAI newsletter. You can send me your responses and feedback. My co-ordinates are provided below.

Have a nice day!

Narasimhan Santhanam
EAI - Energy Alternatives India @ www.eai.in
Mob: +91-98413-48117
Email : narsi@clixoo.com


EAI India Solar PV Report

If you are an entrepreneur or investor exploring the fast growing solar energy opportunities in India, this report is for you. More from here - http://www.eai.in/ref/reports/solar.html

To receive a free preview of the report, send a note to narsi@clixoo.com

Training Program on Renewable Energy Systems – Mumbai

Short Term Intensive Practical Training Program on Renewable Energy Systems
Dates: 10 to 22 May 2010, Mumbai
Organised by: Dept. of Mechanical Engineering, K.J. Somaiya College of Engineering, Vidyavihar (East), Mumbai- 400077 in Association with Maharashtra Energy Development Agency.

More from here - http://eai.in/blog/2010/04/training-program-on-renewable-energy-systems-mumbai.html
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