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Business Intelligence Report on Replacing Diesel with Solar 

A complete guide to installing solar PV for backup power

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Pages :189 Updated : January 2014

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The Replacing Diesel with Solar report is the outcome of EAI’s extensive interaction with clients who are looking for a solar solution to abate diesel consumption. The need for a diesel abating solution is obvious: not only does diesel power cause a lot of pollution, but it is also very expensive

  • Power from diesel costs anywhere between Rs. 16-40/kWh, depending on the application
  • The price of diesel has increased 300% since 2002 and 46% since 2010

Diesel Prices from 2002 to 2013

Captive solar power costs just Rs. 7-8.5/kWh, and once the plant is installed the cost of power is fixed for the next 25 years unlike diesel where the cost keeps increasing!

Despite the obvious advantages of using captive solar power there is a lot of uncertainty, both amongst energy consumers and solar solution providers, on how to implement a solar solution that provides the maximum value at the minimum of cost. The Replacing Diesel with Solar report is designed to provide a clear and objective assessment of captive solar as a diesel abating solution.

Replacing Diesel with Solar

Key Take-aways from the Report

  • While solar PV based captive power generation is in its infancy, there are specific market segments which have clean pain points that could be addressed well by solar PV. As a result, these segments are likely to have a much higher adoption of solar PV for captive power generation
  • Solar PV is most cost competitive as a replacement for diesel-based power production. India has about 7,000 MW of diesel based power production in MW scales alone, with hundreds of thousands of diesel gensets used in diverse commercial locations from over 2,50,000 mobile telecom towers to over 5 million diesel based agricultural pump sets, and with tens of thousands of companies and industries using it for power generation from small kW to hundreds of kWs
  • Grid-tied solar PV systems are the most common systems used in captive power production in India. The use of diesel solar hybrids is growing; however, the growth in use of wind-solar hybrid systems has much slower than expected, owing primarily to performance issues with micro wind turbines
  • It costs about Rs. 80,000-1,00,000 per kW for setting up a captive solar PV system without battery storage and about 30-50% more for a system with batteries depending on the hours of autonomy
  • There are a number of established companies that can take up turnkey implementation of captive solar PV systems; in addition, there are dozens of small players operating in this market, with this number expected to increase dramatically in the near future
  • The National Solar Mission has a special section of incentives for offgrid solar power production, with incentives in the form of capital subsidies. In addition, captive solar power plants can also avail accelerated depreciation benefits
  • Set as a replacement for diesel power generation, captive solar PV power plants provide attractive equity IRRs and equity payback periods, under typical financing patterns
  • Until now, the most preferred route for captive solar PV has been the corporate financing route. However, with the expected large scale adoption of captive solar PV power plants, it can be expected that both project finance and asset finance routes to come into vogue as well
  • There are over a hundred installations of small scale solar PV based captive power generation, adding to about 2.4 MW of total capacity. Learnings from the existing power plants are only emerging and one can expect significant insights from these as their numbers increase within the next few years

Industrial or Commercial energy consumer looking for rooftop solar? EAI’s Solar Mango can help you. Read more

Frequent unavailability of power from the grid is a critical problem faced by Indian industries, and with the Indian industry growing at a hectic pace, this deficit is even more harmful.

According to a recent study carried out by the Manufacturers' Association for Information Technology (MAIT) and US-based power distribution solutions provider Emerson Network Power, India Inc lost Rs 43,205 crores (about $10 billion) in 2008-09 due to power outages. The revenue loss due to power failure grew at an aveerage of 11.9% in the past five years.

Other industries facing a similar problem include textiles, cement, paper, sugar mills, ceramic industries etc. These industries are energy intensive in nature and thus power costs form the most critical cost component.

Many large companies have resorted to having their own captive power plants. At present, there are about 2,759 industrial units using captive generation power plants (both renewable and non-renewable) with a capacity of 1 MW and above. Many smaller businesses and commercial institutions rely to a large extent on diesel for backup power. To the latter and to some extent to the former, solar PV based power production could be an attractive option. This report will help you set up a captive solar PV power plant for your business or company.

The Replacing Diesel with Solar report is a comprehensive guide to setting up solar based captive power plants for industries and commercial buildings. Apart from providing details on setting up captive power, the report also provides inputs on how solar based captive power can be segmented according to the needs: back up type; solar captives for quality power; solar captives for multiple benefits and captives for reducing costs of production of electricity.

Presenting the Replacing Diesel with Solar Report

The Replacing Diesel with Solar Report was prepared by EAI ( as a response to the need in the market for a detailed report that provides a detailed picture on solar based captive power generation.

For industries and companies both large and small keen on setting up captive power for their power consumption, the report will provide insights on the following:

  • Steps involved in setting up an offgrid solar PV power plant
  •  Key pre-requirements for setting up a captive solar power for your premises
  • Capital and operating costs
  • Returns - especially when compared to diesel - IRR, RoI, payback period, scenario analysis
  • Financing options
  • Land requirements
  • The complete value chain for setting up a solar PV for offgrid, captive consumption
  • Companies and entities involved in the setting up of a captive solar power plant
  • Case studies of existing off grid, captive solar installations in India and key takeaways

What will you know after reading this report?

  • Why should I go for solar based captive power?
  • What are the key advantages of using solar PV as a replacement for diesel?
  • How much solar PV capacity do I need for my electricity requirements?
  • How much will it cost to install a solar PV captive system?
  • What are the operational and maintenance costs for a solar PV power system for my premises?
  • What are the key things I should look out for before installaing a solar PV system?
  • What are the mistakes I should avoid?
  • How much space will I need for the captive PV installation?
  • Should I use solar as a backup power or as a mainstream power source?
  • Will I be able to depend completely on solar energy for my day time operations?
  •  If I operate night shifts, will I need a storage system (battery) for my energy needs?
  • Can I sell my excess energy to the grid?
  • What are the components of the solar PV system?
  • What is the lifetime of the system and its components?
  • Am I eligible for availing government incentives?
  • Can I install a hybrid captive system (mix of solar and wind OR solar and diesel)?
  • When should I consider using a diesel generator along with my solar PV system?
  • What are the disadvantages and bottlenecks in using solar PV for offgrid power?

Who Will Most Benefit from this Report?

  • Companies with unreliable grid supply having significant dependence on diesel for backup power, and are keen on setting up a reliable power system with attractive long term cost benefits
  • Industries and commercial buildings that have enough roof top or ground space
  • Companies and businesses that are keen to show their green credentials while at the same time solving a critical problem of backup power source

Insights and Intelligence, Not Just Information

Compiled by a diverse team of experts, with experience in industrial fields, the Replacing Diesel with Solar is the first report that provides in-depth analysis and insights on this important field. It uses innumerable data and information from a wide variety of expert sources and market studies, and distills these inputs and data into intelligence and a roadmap that you can use.

The price of the report is Rs.10,000 /-

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Our Clients and Customers

EAIs research has been bought by prestigious companies from India and worldwide. Customers for our research services include:

    Top Consulting Firms

  • A.T. Kearney, Germany
  • Boston Consulting Group, Germany
  • Accenture, India
  • Mott MacDonald

    Fortune 500 Companies

  • Exxon Mobil, USA
  • Lafarge, France
  • Total, France
  • Reliance Industries Limited, India
  • Emerson Electric
  • Shell, Netherlands
  • Marubeni, Japan
  • Mitsubishi, Japan


  • Saudi Aramco
  • iPLON GmbH, Germany
  • Association of Biotechnology Lead Enterprises
  • National Renewable Energy Laboratory, USA
  • US Army Indian Railways
  • Ministry of Foreign Affairs of Denmark

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Pages : 189
Updated : January 2014

The price of the report is Rs.10,000 /-

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EAI is a catalyst for the Indian renewable energy. As a key component of this catalysis, we are keen on having constant and regular interactions with professionals like you to take this industry further.

List of Contents

1. Captive Power in India
1.1 Introduction
1.2 Captive Power Plants in India
1.3 Diesel in India
1.4 Why Solar for Captive Power
1.4.1 The Business case for CPP Using SPV
1.5 Attractive Market Segments
1.5.1 Large Industrial Facilities
1.5.2 Large Commercial Buildings/Facilities
1.5.3 Communication Sector
1.5.4 Water Pumping
1.5.5 On-shore and Off-shore Oil & Gas
1.5.6 Desalination
1.5.7 Remote Monitoring Stations
1.5.8 Warning Signals
1.5.9 Lighting
1.5.10 Refrigeration
1.6 Solar Power Vs Diesel Generator
1.7 Key Bottlenecks

2. Technology Options for Captive Solar PV
2.1 Introduction
2.2 Stand Alone PV systems
2.3 Grid-tied Captive Power Plant
2.3.1 Grid-tied Systems With No Battery Backup
2.3.2 Grid-Interactive With Battery Backup
2.4 Hybrid Systems
2.4.1 Solar Photovoltaic-Diesel Generator Hybrid System
2.4.2 Solar Photovoltaic-Wind Hybrid System
2.5 Summary of Solar PV Technology Options

3. Setting up Solar Captive Power Plant in India
3.1 Steps involved in setting a Captive PV Power Plant
3.2 Steps Involved in Setting up Hybrid System
3.3 Key Requirements to Set Up a Captive Power Plant
3.3.1 Essential Components
3.3.2 Optional Components
3.4 Setting up PV Captive Power Plants - Key Factors to Consider
3.5 Indian Companies and Entities Involved in Setting up of a Captive Power Plant
3.5.1 Moser Baer
3.5.2 Sharp
3.5.3 Reliance Solar
3.5.4 Tata Power Solar Systems Limited
3.5.5 Photon Energy Systems Limited
3.5.6 Vimal Electronics
3.5.7 BHEL
3.5.8 Conergy
3.5.9 Vikram solar
3.5.10 Titan Energy Systems (TITAN)
3.5.11 Solar Semiconductor
3.5.12 Topsun Energy Limited
3.5.13 L&T Solar Limited
3.5.14 Wipro EcoEnergy
3.5.15 Solarsis
3.5.16 Refex Energy
3.5.17 Chemtrols Solar Pvt. Ltd
3.5.18 Aspiration Energy
3.5.19 Headway Solar
3.5.20 Solar - Apps
3.5.21 Eco-Save India Pvt. Ltd
3.5.22 Swelect Energy Systems Limited
3.5.23 SunEdison
3.5.24 Zynergy
3.5.25 Su-Kam
3.5.26 Mahindra Solar
3.5.27 Juwi
3.5.28 Lanco solar
3.5.29 EverSun Energy Private Limited
3.5.30 Ravano Green Power
3.5.31 ILIOS Power Pvt Ltd
3.5.32 Sterling and Wilson Ltd.
3.5.33 Enfinity Solar Solutions Pvt Ltd - India
3.5.34 Gensol Solar
3.5.35 Enerparc Energy Pvt Limited

4. Policies, Regulations & Incentives
4.1 Introduction
4.2 Government Incentives and Policies
4.2.1 Captive SPV and the NSM
4.2.2 Electricity Act
4.3 Frequently Asked Questions

5. Economics of Captive Power Plants
5.1 Introduction
5.2 Capital Costs and Breakups
5.2.1 Inputs Used in the Financial Model
5.2.2 Performance of Solar PV System
5.3 Results of the Financial Model
5.4 The BOO(T) Model

6. Financing of CPPs
6.1 Introduction
6.2 Project Finance Characteristics
6.3 Asset Finance Characteristics
6.4 Corporate Finance
6.5 Most Likely Routes for Financing of Solar PV CPP
6.6 Nodal Agencies that Support Renewable Energy Financing in India
6.6.1 IREDA
6.6.2 Power Finance Corporation Ltd
6.7 Financial Institutions that Fund RE Projects in India

7. Next Steps to be taken by a Solar PV Captive Power Developer
7.1 Introduction
7.2 Preparing Prefeasibility and Detailed Project Reports
7.3 Meeting Government Departments
7.3.1 Lists and Contact Details of Government Departments (SNA) in Various States
7.3.2 Central Government Relevant Department Details and Contacts
7.4 List of System Integrators of Solar PV Captive Power System

8. Solar PV in India – Industry Status and Trends
8.1 Introduction
8.1.1 Introduction to Alternative Energy Sources
8.2 Solar PV Technology
8.2.1 Solar PV – Crystalline Solar Cells
8.2.2 Solar PV – Thin Film Solar Cells
8.2.3 Solar PV - Concentrating Photovoltaic
8.2.4 Photo-electrochemical, Polymer, Nano-crystal and Hybrid cells
8.3 Solar PV Market Status and Trends
8.3.1 Market Share of Thin Film Photovoltaics
8.3.2 Solar Photovoltaic in India – A Snapshot
8.4 Solar Energy Potential in India
8.4.1 Regional Potential for Solar Power
8.4.2 Current Solar PV Scenario in India
8.4.3 Future Solar PV Scenario
8.4.4 Solar PV Future Contribution in Indian Electricity Supply
8.5 Status of Solar PV Technology in India
8.5.1 Solar Cells and Solar PV Production
8.5.2 Foreign Trade of Solar PV
8.6 Prominent Solar PV Power Projects & Companies in India
8.6.1 Solar PV Power Projects Installed
8.6.2 Solar PV Power Projects Approved by the Central Government under Phase I of JNNSM Scheme
8.6.3 Solar PV State Projects
8.7. Key Challenges to Growth of Solar PV in India

9. Case Studies of Indian Use of Captive Solar PV
9.1 Captive Solar PV Systems – Experience of L&T, Chennai
9.2 Captive Solar PV Systems – Experience of SSN Research Center, Chennai
9.3 MW Hybrid Energy Supply for a Cotton Mill, Tirupur, TN, India
9.4 Captive Solar PV Systems – Experience of Omax Auto Ltd, Gurgaon, Haryana
9.5 Captive Solar PV Systems at Daimler India, Chennai
9.6 Solar PV Captive Power Installations in India

10 Highlights and Key Takeaways from this Report

11 Useful Resources
11.1 Useful Government Links
11.1.1 MNRE Accredited Manufacturers, Suppliers and Channel Partners
11.1.2 Subsidies and Incentives
11.1.3 Policies and Regulations
11.1.4 FAQ Links
11.2 Other Useful Links
11.3 Free PV Books!

12 Annexure
12.1 Details of Solar PV Power Projects Commissioned in India
12.2 SECI – Grid Connected Rooftop Solar PV Phase II
12.3 Procedure for the issuance of Renewable Energy Certificates

About EAI

Energy Alternatives India (EAI) is India’s leading Research & Consulting firm in the Renewable Energy and Cleantech sectors. Our work is sought by Fortune 100 firms and thought leaders from around the world. Our clients include the World Bank, Reliance, Bill & Melinda Gates Foundation, State Government of Tamil Nadu, Exxon Mobil, Mitsubishi, and many more.

Started by a team of professionals from IITs and IIMs having prior experience in the alternative energy industry, our team comprises biotechnology, energy engineering, economics, and finance specialists.

Our acquaintance with the Indian renewable energy industry, along with our deep understanding of the technology, industry dynamics and emerging trends in renewable energy sources worldwide, make EAI the most effective partner for those keen on getting an exceptional understanding of the Indian renewable energy industry, along its entire business value chain.

Address: Energy Alternatives India (c/o Clixoo Solutions) -A5C, Anugraha Apartments, No 41, Nungambakkam High Road,Nungambakkam. Chennai-600034, Tamilnadu, India.

The EAI Expertise

The EAI team has a dedicated focus on the Indian alternative and renewable energy industry. This focus, combined with its experienced team of professionals and deep relationships across the renewable value chain, makes EAI an ideal partner to help your company in benefiting from the opportunities in this industry. Our services include (but are not restricted to)

  • Developer/IPP Assistance – Clarity on regulations, state-wise opportunities, identifying offtakers and due diligence of vendors

  • Assisting Industrial Consumers Go Green – Techno-commercial feasibility, RFPs, RFQs, vendor selection, and clarity on regulations

  • Diversification into/within Renewable Energy – Market potential, financial feasibility, competitor analysis, evaluation of policies, and identifying success drivers, sales strategies, and marketing partners

  • Market Entry for International Renewable Energy Firms – Understanding of the Indian market, market potential, competitor analysis, developing and implementing marketing and sales strategies, identifying joint venture partners, and recruitment of key personnel

  • Research and Publications – We publish acclaimed research and industry reports for many sectors of renewable energy and cleantech, from mainstream sectors like solar power to niche domains like algae fuels

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