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Why’s Maharashtra shy of opening the rooftop sun tap?

The Maharashtra government remains uncomfortable with the idea of harnessing solar power from residential rooftops even as Delhi is raring to go.

The Delhi government on June 5 announced that it would unveil a detailed plan in 3-4 months for harnessing solar power from residential rooftops, in partnership with the Ministry of New and Renewable Energy.

Under the proposed policy, residents can get solar power plants installed on their rooftops by signing a power purchase agreement with the company supplying power to their area. For a rooftop of around 200 square metres, the cost is estimated to be Rs8-9 lakh. Residents can either lease out their roofs to a developer, who will then set up the unit, or pay 30% of the cost of installation. The remaining 70% will be financed through banks. The price payable per unit of such power will be Rs17.50, which the owner of the rooftop can sell to any power supply company. Details on the manner in which connectivity will take place are not yet available.

So what explains Maharashtra’s hesitation?
Part of it has to do with the reimbursement limit set under the otherwise-laudable Jawaharlal Nehru National Solar Mission (JNNSM). The Mission requires the states to generate 0.25% of the power purchased by them to come from solar power by 2012. The price fixed by the Mission is Rs17.90 per kWh, which is slated to come down to Rs15 per kWh next year. This is the price reimbursed to the states under the JNNSM —- anything over the 0.25% limit will not be reimbursed.

Somewhat expectedly, Maharashtra identified degraded government-owned land, lying idle around places like Dhule and Osmanabad, and got them transferred to its power generation company. It then floated a reverse bidding tender and aggressively brought down the purchase of solar price to under Rs14 per kWh and identified two players — Lanco Solar and Megaprojects — who would collectively supply the state 125 mw of solar power.

“We now have a problem,” said Ajoy Mehta, managing director of Mahavitaran (Maharashtra State Electricity Distribution Co Ltd). We would like to generate more solar power, but with the sanctioning of this 125 mw capacity, we have more than met the requirement of 0.25% of our total power purchase through the solar route. This is the power for which we are reimbursed Rs17.90 per kWh costs by the JNNSM (the difference between Rs14 per kWh and Rs17.90 will be kept aside to subsidise additional power generation).

If we now announce a rooftop solar policy today, who will pay for the additional high cost solar power?”

This is because the basket cost for Maharashtra’ power purchase is around Rs2.93/kWh, though the system marginal cost is a lot higher at Rs4.10. Solar power, Mehta believes, is unlikely to cost less than Rs13 per unit, which means the additional power costs will have to be pooled in the basket, pushing up its costs further. Since the JNNSM has added an incentive tariff of Re1 per unit for rooftop solar, the cost of purchase will go up further.

“Already, thanks to cross subsidisation of cheap power to agriculture and marginal users, commercial users are paying a price of around Rs9 a unit. Purchasing more solar power that cannot be subsidised by the Centre will require us to load commercial tariffs even beyond this unbearable level,” said another government official.

But couldn’t there be another way out? After all, the central government has mandated that all states increase solar power purchase from 0.25 to 0.5% of total power purchased by 2013. Shouldn’t the states then plan their future procurement in a way that all solar power is via rooftops?

This is precise what Germany did when it decided to popularise solar power. In ten years, it has seen solar power production swell to over 17,000 mw and counting.

To its credit, the rooftop route encourages every resident to participate in solar power production. Power generation is thus distributed, rather than a privilege enjoyed by a few producers.

By announcing a fixed purchase tariff, which would be constant for say 25 years, and by allowing agents to set up rooftop panels on the one hand, and act as power aggregators on the other, Germany saw most agents introducing innovations to bring down their cost of production and increase profits.

Increased volumes caused the solar panel costs to crash from $5 a watt to just around $1 a watt a month ago. And they continue to fall at least 10-20% a year, says a senior official at Wipro, which has just embarked on promoting solar power installations.

Maharashtra government officials are uncomfortable about this strategy.

“What if we announce a solar rooftop policy and the total offerings through this route go beyond 300-500 mw (which could be the case)? Who will bear the higher cost of solar power procurement?” asked an official.

But one area where the state is willing to look at solar power quite aggressively is rural communities where the cost of supplying power is very high, subsidies even higher, and collections quite poor.

For instance, the average cost of electricity supply comes to around Rs4.34 a unit, whereas it is supplied to agriculture at Rs1.50 a unit. Even so, the farmer pays just around 20 paise, while the remaining Rs1.30 is subsidised by the state government.

Thus, the total agriculture subsidy on account of power is in excess of Rs5,000 crore annually. More unfortunately, even at 20 paise per unit, only 20-30% of the farmers pay their bills, leaving some Rs500 crore uncollected.

That is why Maharashtra is looking quite favourably at providing a subsidy to solar powered pumps (manufactured primarily by Kirloskar) so that this subsidy can be reduced.

Another way could be to identify small villages where the cost of transmission causes the cost of supplying power to exceed Rs14 per unit. There, rooftop solar power could be extremely attractive and viable, reducing the pressure (and cost) on transmission grids and the temptation to steal power.

But will Maharashtra bite the bullet and announce such a policy? That remains to be seen.

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Solar’s Outlook Dazzles

At the end of last year, the global photovoltaic market hit a cumulative installed capacity of 40 GW, of which 16.6 GW was added during 2010. A year of unprecedented growth saw new capacity more than double from 7.2 GW in 2009. Worldwide, solar PV already produces some 50 TWh each year. By 2015, though, capacity could climb to range from 131 GW to 196 GW.

These figures come from the European Photovoltaic Industry Association (EPIA), which recently presented its Global Market Outlook for Photovoltaics until 2015. The trade group linked last year’s surge to soaring German and Italian markets. Germany continued to lead the PV market worldwide, with 7.4 GW installed over the year, while Italy added a substantial 2.3 GW.

Other countries with significant growth included the Czech Republic, which saw a 1.5 GW expansion in 2010, a rise unlikely to be sustained in 2011. Japan gained 990 MW, the United States 900 MW, and France 700 MW. Spain regained some ground by installing 370 MW after two years of strongly adverse conditions. Belgium connected more than 420 MW of PV.

Europe Leads the Way

In terms of global installed capacity, the EU leads with almost 30 GW installed as of 2010 — about 75% of global PV capacity, up from 70% in 2009. Japan (3.6 GW) and the USA (2.5 GW) are some way behind, while China has already entered the Top 10 of the world’s PV markets and should reach its first GW this year.

Across Europe, installations last year totalled 13.3 GW, outstripping 9.3 GW for wind to lead all renewable generation technologies in added capacity. In its expansion PV was second only to gas power plants, for which new capacity reached between 15.7 GW and 28 GW, depending on the source. EPIA, in fact, links global investment in gas — rather than nuclear and coal — with the growth in variable renewable generation sources such as PV and wind.

At its current pace of expansion, Europe could increase the percentage of its electricity generated from PV by one percentage point every two years, says EPIA. The continent’s annual increase in capacity has grown from less than 1 GW in 2003 to over 13 GW last year. Despite difficult financial and economic circumstances, 2010 was expected to show a major acceleration. But a 130% Compound Annual Growth Rate (CAGR) exceeded all expectations and almost matched the 145% from 2007 to 2008.

Global Growth Opportunities

While the EU has dominated the world market for years, and may continue to do so, the rest of the world clearly offers greater growth potential. PV can provide a sustainable solution to the energy needs of the ‘sunbelt’ countries around the equator. In this region PV can already compete with diesel generators for peak power generation without policy support

Driven by local and global energy demand, the fastest PV growth is expected to continue in China and India, followed by Southeast Asia, Latin America and the MENA countries. The PV potential of the sunbelt countries could range from 60 GW to 250 GW by 2020, and from 260 GW to 1100 GW in 2030, representing 27% to 58% of the forecast global installed PV capacity by then.

Currently, though, among countries outside Europe only Japan and the USA have more than 1 GW of installed PV capacity. China could reach that threshold quickly but medium-sized markets will need several years to reach the same level of development.

A global analysis reveals three leading zones that are developing PV in contrasting ways. The Asia-Pacific (APEC) region, reflecting its wealth and economic growth, is the second-placed region behind Europe. In addition to Japan and China, the APEC region covers: South Korea, where the market has slipped since 2008; Australia, with more than 300 MW installed in one year; Taiwan; and Thailand, where more than 2.5 GW may be installed in coming years. North America is the third region, with Canada developing steadily alongside the US to form a huge market with tremendous potential for growth.

Outside these three regions, the MENA (Middle East and North Africa) region represents an untapped opportunity for the medium term. PV also shows great potential in South America and Africa, where electricity demand is expected to rise fast.

Forecasts to 2015

While growth in the EU in coming years could be low, or even negative, non-EU countries should more than pick up the slack from 2011 and 2012 onwards, ensuring continuous global PV market growth until 2015 and beyond.

In 2011, though, a market stagnation or even a small dip is not impossible. The speed of political decisions over 2010 and the start of 2011 acts as a reminder that PV will be incentive driven until competitiveness is reached in all of a country’s market segments. Yet EPIA believes market developments could raise global installed capacity in 2015 to between 131 GW and 196 GW, with 100 GW hit as soon as 2013.

A rapid global rebalancing could also be imminent, with the EU accounting for less than 40% of the world market by 2015 in the EPIA’s ‘Moderate’ scenario and about 45% in its ‘Policy-Driven’ scenario. While 2010 showed no sign of such a change, the rest of the world, and especially Asia, could prove a fertile market, even if the EU is likely to stay ahead in installed capacity over the next decade.

Production, which was once balanced between the EU and the rest of the world, is already growing faster in Asia, and particularly China. Modules are still mainly shipped to the EU, reflecting the smaller size of Asia’s market, although about half of the value of a PV system is currently created further downstream and closer to the consumers.

Anticipated growth in markets outside the EU would tend to reduce the mismatch between supply and demand. A current overcapacity should also further reduce module prices over coming years and thereby trigger more demand.

The disparity in installations between the EU and the rest of the world should decrease over the next five years. On the supply side, a rise in the relative share of transport in the cost of PV modules as module prices decrease should address the imbalance and encourage production closer to the end market. A continuing slide in PV module prices will also further erode the share of modules in the overall value of a PV system.

Production Overview

Unquestionably, global PV production capacity in 2010 considerably outstripped demand. Even so, several manufacturers announced plans to accelerate their capacity expansion.

This apparent contradiction extends from module manufacturers further upstream in the PV value chain. EPIA estimates that global production capacity for silicon could reach 370,000 tonnes next year, up from about 350,000 tonnes in 2010. Huge expansions have taken place since the 2005 and 2008 shortages, and many only came on-line last year. Various small Chinese players are being forced to shut down production while the largest established companies are announcing capacity increases of as much as 40,000 to 60,000 tonnes by 2012.

For wafers, global production capacity totalled 30-35 GW in 2010, of which more than 55% was in China. Germany accounts for more than 10% of global capacity, followed by Japan, Taiwan, Norway and the US.

Crystalline-silicon (c-Si) cell and module capacity is now mainly based in Asia. EPIA estimated global c-Si cell production at 27-28 GW in 2010. Almost half this capacity was in China, while Taiwan produced more than 15%, the EU more than 10%, Japan slightly less than 10%, and the US less than 5%. Module production capacities for c-Si were estimated slightly higher at 30-32 GW.

Global production of thin-film modules reached 3.5 GW in 2010. This is likely to increase to more than 5 GW in 2011 and might reach 6-8.5 GW in 2012.

Scaled Down Incentives

Three main factors have driven PV’s spectacular recent growth. Firstly, renewable energy is no longer a curiosity; PV has proven itself to be a viable energy source in all regions of the world. Secondly, price falls have brought PV close to grid parity in several countries, encouraging new investors. Finally, policymakers in key countries have introduced FiTs and other incentives that have helped develop markets, cut prices and raise investors’ awareness.

Over the last decade, global installed capacity has multiplied by 27, from 1.5 GW in 2000 to 39.5 GW in 2010 – an annual growth rate of 40%. Furthermore, that growth has proved to be sustainable, allowing the industry to develop at a stable rate.

The EU, having overtaken Japan, is now the clear leader in both market and installed capacity, thanks largely to German initiatives, which have also fed global expansion. In the rest of the world, the leading countries continue to be those that started installing PV even before the EU.

The market is expanding every year. In sunbelt countries, falling prices are bringing PV closer to grid parity and helping spread awareness of its potential. But the financial crisis and competition from other energy sources put pressure on policymakers to streamline incentives.

‘The currently installed global PV capacity produces power equivalent to the entire electricity consumption of countries like Greece, Romania or Switzerland,’ said Ingmar Wilhelm, EPIA’s president.

‘The evolution of the PV market in recent years has been heavily linked to the confidence and vision of… policymakers in supporting the development of the technology. Adequate support policies that have been driving the markets so far, such as the feed-in tariffs, must continue and be ever brought in tune with the declining cost curve of PV.’

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solar power potential mapped OF iNDIA

The Energy and Wetland Research Group (EWRG), Centre for Ecological Sciences (CES), Indian Institute of Science (IISc) have jointly mapped the solar hotspots of the country.
Investment in solar power generation will now be less risky and eco-friendly as scientists from IISc have come out with priority regions to deploy solar energy devices across the country.

“By mapping the solar hotspots, we hope to facilitate commercial exploitation of energy with favourable techno-economic prospects and organisational infrastructure support to augment solar power generation in the country,” said Dr T V Ramachandra, senior scientist, EWRG, CES, IISc.

The detailed, three-month-long study provides access to solar potentiality by documenting the solar insolation, the much required parameter to generate solar energy. Trans-gangetic and Gujarat plains are among regions deemed to hold high potential.

The solar hotspots, found based on the exploitable potential using high resolution global isolation data from the US National Aeronautics and Space Administration (NASA), has found that the country’s favourable geographical location has made it one of the best locations for solar energy. However, the nation suffers in installation of solar applications with just 66 megawatt peak (mwp). This includes 12.28 mwp grid-connected solar power and 2.92 mwp off-grid solar power plants (SPP).

Though the national solar mission (NSM) launched in January 2010 has boosted the solar power scenario in the country, investment has suffered due to lack of details on the energy potential.

The researchers had collected data for more than 900 grids covering the entire topography of India and found that the nation has a vast potential for solar power generation – about 58 per cent of total land area (1.89 million km sq). “It receives an annual average global insolation above 5 kWh per metre sq per day (m sq),” Ramachandra said.

The study, conducted along with two more researchers, Rishabh Jain and Gautham Krishnadas, has also documented the data of insolation for every month.

According to the monthwise data findings, during January, major parts of the southern peninsula receive insolation above 4.5 kWh per metre sq per day, while western coastal plains and ghats region receive 5.5 kWh per m sq and western Himalayas and North India receive the minimum of 2.5 kWh m sq.

During February, a major expanse of the Indian landscape receives above 5 kWh  per m sq, while states like Himachal Pradesh, Uttarakhand, Jammu and Kashmir and the north-eastern region receive an insolation in the range of 3-4 kWh  m per sq.

During April and May, more than 90 per cent of the country receives minimum insolation up to 5 kWh m sq  which rises up to 7.5 kWh m sq, while the eastern Himalayas receive 4.7 kWh m per sq.

During the monsoon, the global insolation drops drastically in the south (with the exception of Tamil Nadu) and north-eastern regions to about 3.9 kWh m sq and it continues until September.

“The country receives annual sunshine of 2,600- 3,200 hours. Direct insolation with a minimum threshold value of 1,800 kWh m sq per year or 5 kWh m sq per day is reccomended to achieve levelised electricity costs (LEC),” the report said.

CSP and barren land

Suggesting that the concentrated solar power (CSP) – the technology that use lenses or mirrors to concentrate a large area of sunlight – is best suited for arid and semi arid regions, Ramachandra said that the transgangetic, western dry, plateau and Gujarat plains were best suited for this purpose.

The study said 4.89 million ha of barren and uncultivable land is available in Gujarat and Rajasthan. Even a small fraction of this land can support 1,222 MW capacity.

Despite being densely populated several states have barren and dry land with great power generation potential. Rajasthan has the most barren land with 2,595 ha, followed by Gujarat with 2,295 ha and Andhra Pradesh (2,056 ha). Maharashtra, Madhya Pradesh and Karnataka have 1,718 ha, 1,351 ha and 788 ha respectively.

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