Select Page

Excerpt of a presentation from the EAI Solar PV Developer – EPC Meet, Chennai, Jan 22, 2013

Mr. Pramodh of SPI Group made a presentation on Drivers, Challenges, and Models in the Solar PV sector to the delegates at the Developer & Networking meet. He assessed the risks as seen by the developer and offered a comparison with wind energy to highlight the need for greater and better choices for the solar developer.

 

Mr. Pramodh spoke from the perspective of a developer and how they perceive the risks associated with solar power projects and the questions that need to be raised by them.

He first spoke on Drivers and Challenges, classifying them by risk as

  • High
    • Uncertainty In State/Central Solar Obligation Program – These obligations are based more on political will than strategic reasons. A lot of questions surround these programs, such as who will be the regulating authority and the extent to which they will ensure compliance, of which the second is a significant risk to the developer
    • Time delay between grid connectivity and power evacuation projects – In some states such as Gujarat the developer builds, operates, and transfers the plant to the stage government but the timeframe is not clear. In states like Tamil Nadu there are many constraints such as number of bays and transformer capacity. Since solar plants are typically connected to the distribution substation and not the pooling substation it is important to ensure capacity for further forwarding of power. These make choice of site very difficult
    • Lack of coordination among regulatory and implementation agencies – RECs are an example of how this lack of coordination has resulted in a lot of uncertainty on the market for RECs which affects investor interest
    • Nascent guidelines body – Unlike the Wind energy sector which has CWET, the solar sector does not have an equivalent organisation to provide guidelines
    • Medium
      • No standardisation of product and sizing requirements – Again unlike wind, the solar sector lacks standard product packages based on capacity, and is dependent on factors such as location
      • Lack of clarity on costing – EPCs do not provide detailed breakdown of costs. This prevents a developer from identifying areas where they can add value, such as identifying region-specific risk
      • Price per unit of generation – There is ambiguity on price of solar. Wind energy appears to be more competitive and the major differentiator being offered by solar energy is the distribution of generation with storage being a possible differentiator in future
      • Lack of technical clarity on entire plant – EPCs often provide only general details on the design of a plant, rather than something like a Single-line diagram
      • Operations and Maintenance – EPCs provide an estimate of O&M costs without details on how the estimate is arrived at. Warranties are also provided on component basis, without an estimation of the reliability of the plant as a whole
      • Component warranty and replacement – Data on failure history in local conditions would help investors assess the risk in the project
      • Low
        • Funding – Gaining funding for projects becomes a lot easier once the above points are addressed

Mr. Pramodh concluded his address by comparing the Solar sector with Wind to illustrate the greater number of options present in the more mature wind sector, and the need for solar to offer the options available to wind developers

  • Wind – OEMs offer
    • Component supply
    • Project design, supply, installation
    • Operations & Maintenance
    • Choice on which of the above stages is handled by the developer and by EPC
    • Solar – In contrast, solar offers very few options where developer only gets to own the project, and cannot operate and maintain it