During her day’s sojourn in India earlier this month on the invitation of the Indian Prime Minister Angela Merkel, Chancellor of Germany, held inter-governmental consultations, quite unusually, at the cabinet level. Such cabinet-level discussions are held with very few countries. India is the first Asian country with which such discussions have been held. About half a dozen ministers accompanied her with the intentions of further expanding and intensifying economic cooperation between the two countries. Germany is the largest trading partner of India in the European Union.
The Institute of Electrical and Electronics Engineers (IEEE), the organization behind standards such as WiFi, Wimax and hundreds of others, sees Solar energy as becoming the cheapest power source in ten years.
The organization, which is increasing its focus on Solar this year through the setting up of a journal and experts groups, is one of the few international bodies to throw its weight behind a single source of energy and hold it up as the definite candidate to bet on. Most other experts and bodies tend to see a combination of sources, such as Wind, geothermal and nuclear as the solution to getting out of the hydrocarbon problem.
The IEEE, after which many standards are named, is considered the world’s largest association of professionals — encompassing experts in nearly all fields from electronics to aviation.
The forecast, if it comes true, will also pose a challenge to countries such as Saudi Arabia which derive a lot of its income from its deposits of fossil fuel. Many such countries actively limit their production so that that the reserves last for 20-40 years more. If Solar is sure to become cheaper than fossil fuels, such countries would be better of producing as much as possible when there is still demand for such products.
IEEE says Solar has the potential to more than meet the entire energy requirement of the planet.
“The rate of energy from sunlight hitting the earth is of the order of 100,000 terawatts. Just a fraction is needed to meet the power needs of the entire globe, as it takes approximately 15 terawatts to power the earth,” it pointed out. “No other alternative source has the same potential,” says James Prendergast IEEE’s Executive Director
Currently, power produced from solar photovoltaic plants costs around 4 US cents (Rs 18) per unit, while coal powered plants produce a unit of power at around Rs 3 or 4, without including cost of pollution. Many governments, such as India’s, provide purchase guarantees for solar powered electricity production. India, for example, is offering around Rs 17 per unit of such electricity, under its massive Solar Mission.
However, global solar PV production is still minuscule — around 20-30 Gigawatt per year, not enough to even meet the incremental power demand for a country like India. India has a total of around 155 GW of capacity most of which is able to run 24-hours a day, compared to solar which runs effectively only for around 6 hours.
The production capacity, however, has been increasing at an average annual growth rate of more than 40 percent since 2000. At current trends, by 2050, it is expected that solar PV will provide 11 percent of global electricity production, corresponding to 3,000 gigawatts of cumulative installed capacity.
India is on track to produce 700 megawatts of solar power at a cost of $2.2 billion by December, ahead of an initial target for an ambitious plan that seeks to boost green power generation from near zero to 20 gigawatts (GW) by 2022.
Under India’s Solar Mission , investors bid to build solar power plants and the winning bids are determined by the electricity tariff that they accept as viable. Such has been the interest that the government has been flooded with investment pledges for the first batch of projects rolling out in December.
India’s 20 GW solar plan is likely to attract overall investment of about $70 billion, the government has estimates. Issued in 2009, the plan envisages India producing 1,300 megawatts (MW) by 2013, another up to 10 GW by 2017 and the rest by 2022.
“The entire solar industry is no longer worried about the upheavals that are taking place in the European markets because they find a very new and very promising market is developing in India,” said Debashish Majumdar, chairman and managing director of Indian Renewable Energy Development Agency.
IREDA, a state-run agency, is the leader in the country’s solar energy financing.
“So far, every year the general mood was that nobody knew what would happen to the German policy or what would happen to Spanish policy,” said Majumdar, who attended a global summit on clean technologies in Munich last week.
Germany , the world’s top solar power producer with about 17 GW installed by end-2010, is considering cutting incentives for photovoltaic energy by an additional six percentage points in another step on March 1, 2012.
Germany, Spain , Italy, Japan and the United States are the leading producers of solar power in the world. While India’s solar sector remains a risky venture because of a shortage of data and trained manpower, such deficiencies also open up a huge market for expertise and technology such as Colorado-based Juwi Solar, Schneider , Schott Solar.
“The (Solar Mission’s) second phase would create a very large market for service providers, especially EPC contractors and people who can analyse data to ascertain how much resources like sunlight are available and how much (solar energy) is going to be produced,” Majumdar said.
“These agencies would get lots of business,” he told the Reuters Global Energy and Climate Summit in New Delhi, adding it was still not possible to determine the size of such a market.
EPC contractors handle the engineering, procurement and construction of solar power plants.
If everything goes to plan, and the rollout of the first projects in December should be an indicator, solar would contribute the equivalent to one-eighth of India’s current installed power base by 2022.
A recent report titled ‘The Rising Sun’, published by KPMG, indicates that the solar power in India is anticipated to fulfill around 5% to 7% of its power needs by 2021-2022 and will enable the country to cut down its coal imports by more than 30%.
However, the government regulatory structure in the country is yet to acquire a solid shape. The report indicates that governments and utility companies are finding it a challenge to buy expensive solar power at nearly Rs.12 a unit when the normal power is available for Rs.3 or Rs.4.
The report indicates that clean energy producers were earlier encouraged by the 15% clean energy mix spelled out by the National Action Plan on Climate Change (NAPCC), but the ministry had subsequently brought it down to 6% and the current production hovers around 3.5% to 4%. This has created mixed opinions and confusion among solar stake holders. The new proposed plan has set an overall target of achieving 21,700 MW in the ensuing six years, thus making the total share of renewables to 41,400 MW.
The government estimates that the solar power generation will ultimately go up in India due to the anticipated reduction in power production costs. The government expects that solar power will come down to Rs.11.80 per unit in 2013-2014 and ultimately reach a level of Rs.9 per unit in 2016-2017.
The report estimates that the solar power production will cut down carbon dioxide emissions in India by 2.5%, which is only a tenth of the 20%-25% reduction the country has agreed at the international summit on climate change held at Copenhagen. The report indicates that solar power producers in India are concerned about the slow implementation of a scheme that makes it compulsory for utility firms to buy certain amount of renewable power.
The Solar Energy Company to adopt parent Company Name
SunTechnics Energy Systems, one of India’s largest companies dedicated to solar energy today announced that it would adopt its parent company name “Conergy” and be recognized going forward as Conergy Energy Systems. SunTechnics began its Indian operations in 2005 and the name change is in line with the company’s strategy to be recognized as “Conergy” worldwide.
Further to this announcement, the Indian entity will now focus largely on small and large scale solar photovoltaic projects. The company operates two core businesses: grid-connect systems (large scale solar parks) and off grid systems (Stand alone SPV Systems). The company’s product portfolio will continue to include Conergy grid-connect components, sourced from its European and North American factories and off-grid systems produced from its Bangalore facility which for the time being will continue to be promoted under the SunTechnics brand.
Conergy’s customers in India include giants in the telecom, oil and gas, government nodal agencies and manufacturing sectors, as well as the state and national government units.
Speaking on the development Mr. Prakash Shetty, CEO and Director of SunTechnics said, “The initiative to adopt our parent company’s name coupled with Conergy’s continued expansion and active participation in this market is a clear indication of Conergy’s long-term commitment to the strategic Indian market. The Indian market is strongly driven by a high need for electricity. Off-grid is one of Conergy’s pillars for success and growth in India, with booming sectors like rural electrification, rooftop systems, BIPV, telecommunications, railways – of which we own a significant market share. The Year 2011 started with a well planned expansion of the company’s SPV module manufacturing capacity from 4 MW to 25 MW which was followed by several significant orders that has helped Conergy develop a formidable business backlog. Our EPC business has developed very encouragingly due to the support from the National Solar Mission and incentives from individual states. India’s National Solar Mission calls for the installation of 20 GW by 2020.”
Strong growth expected
Solar energy has gained considerable importance in Asia over the past year – and the market will continue to grow rapidly. Industry experts at Bank Sarasin Asia estimate that in 2010 solar PV installations grew by 87% percent globally.
In 2010, the most promising market was India, which grew by 166 percent. Bank Sarasin estimates that India recorded 80 MW of newly installed solar capacity last year. Furthermore, they anticipate that the Indian PV market will grow by 76% annually in the period from 2009 to 2015.
About the Conergy Group
Conergy is the only solar company worldwide that delivers synchronised solar systems. The system manufacturer produces all components needed for solar installation under one roof. Furthermore, all necessary services related to the solar plants come from one single source.
The Conergy System Services deliver the “Total Sleep-easy Package” for the Conergy System Technology. From the planning and financing to the engineering, installation and all the way to the monitoring, maintenance, operational and commercial management and insurance, Conergy offers a service package to cover all possible services for one’s own solar plant.
The Conergy System Sales takes Conergy’s premium products and services directly to the customer in nearly 40 different countries. With 24 subsidiaries in 14 countries on four continents, the solar group operates closer to the customer than any other solar company. This way, the solar experts have generated more than half of their sales outside of Germany.
The company today employs more than 1,700 people. Since Conergy was founded, it has produced and sold more than 1.5 GW of clean solar energy. More energy than two average nuclear reactors or coal-fuelled power stations can produce.
India‘s federal cabinet Thursday approved the allocation of 4.86 billion rupees ($108 million) toward a scheme to guarantee payments for electricity bought from solar power producers, as part of the government’s efforts to encourage development of renewable energy.
The funds will be used as guarantee in case state-run power utilities and distribution companies default on payments for solar power, which currently costs much more than coal-based electricity.
The payment security scheme aims to help solar power producers arrange finances for their projects, the government said in a statement issued after a cabinet meeting.
The scheme will help the federal government meet targets under its National Solar Mission, which aims to build 1,000 megawatt of solar power capacity by 2013 in the first phase. India aims to add 20,000 MW of solar power by 2022 under the solar mission.
The scheme will be implemented by the Ministry of New and Renewable Energy and NTPC Vidyut Vyapar Nigam Ltd. will be able to draw funds from the account as per the scheme’s provisions, the statement said.
NTPC Vidyut, a unit of India’s largest power generator NTPC Ltd., buys solar power from the producers and sells it to utilities bundled with coal-based power.
But most state-run distribution companies are cash-strapped with weak finances. This has elevated the risk of solar power producers not being paid for the electricity produced. That has affected solar companies building these new plants as lenders aren’t willing to give loans to projects where returns are risky.
Solar companies that have been awarded projects under the mission’s first phase in particular are facing hurdles in arranging finances. For the projects awarded so far, companies have to raise funds by the end of June.
India currently has 20,000 MW of renewable energy capacity, constituting more than 11% of the country’s total power generation capacity of around 174 gigawatts.
Research into new materials and structures is under way. Innovative technologies are being tried out. But it has to result in large-scale manufacturing applications. DR. MADHUSUDAN V ATRE, PRESIDENT AND M.D., APPLIED MATERIALS, INDIA
The Jawaharlal Nehru National Solar Mission (NSM) and its guidelines have created significant excitement in the industry with the announcement of new projects, setting up of assembly units and States vying with one another to offer incentives. With critical mass coming in, several large players are looking at backward integration, possibly manufacture of wafers.
Dr. Madhusudan V Atre, President and Managing Director, Applied Materials, India that is among the top suppliers of equipment and technology for solar industry and semiconductor segments, provides insights into the way forward.
Applied Materials and IIT-Bombay have joined to set up National Centre for PV Research and Education and a Clean Lab to work on new materials. Dr. Atre, who has been appointed a member of the advisory committee to drive the sector’s growth, touches upon prospects and challenges in an interview to Business Line. Excerpts from the interview:
What is happening in the solar industry? How do you perceive some of the changes and challenges?
A lot of developments have taken place since the Solar Mission. Various projects have been finalised. On the photo-voltaic side, projects ranging from 1MW to 5MW and on the solar thermo lighting, 50 MW to 70 MW have been finalised.
Many projects approved under the NSM have achieved financial closure and completed land acquisitions.
Apparently things are moving. From the Government’s perspective, it must be reasonably satisfying.
Apart from solar cell manufacturing and utilities, backward integration into wafering and polysilicon is also under way. All this will lead to the creation of a very vibrant solar ecosystem in India.
There have been developments at the Central and State Governments. Gujarat continues to drive a lot of solar-related projects.
What about the semiconductor business?
The Government wants to pitch in $5 billion on setting up infrastructure. The modifications in the Semiconductor policy in 2007 will be reviewed. Many changes are proposed in the policy. It is good the Government is thinking seriously about fabs.
That would be good from a manufacturing perspective but depends upon the local market. Areas of healthcare, automotive, and industries will need them.
These are big guzzlers of semiconductor chips. The changes recommended in the policy can probably make it a little more practical with the perspective of helping set up a fab.
Many companies are getting into an implementation mode. Some of them are raising finances and setting up units, such as Lanco and Moser Baer. What stage are they in capabilities?
Many have attained financial closure and acquired land, approved either by the State or Central Government and started their projects. The manufacturing technology is not a widely prevalent expertise. They have to depend on established technology and Applied Materials is one of the players.
Besides just the cell and module manufacturing which is usually thought of in the solar arena, some want to go a few steps aheadin terms of either manufacturing polysilicon itself or taking polysilicon blocks and making wafers out of them. Till now wafers needed for the crystalline silicon solar cell manufacturing are imported. Some are considering why not bring the silicon and do wafering.
Why should we bring the silicon and do the wafering , why not manufacture the polysilicon here is another line of thinking.
If you look at the chain which essentially comprises silicon, wafers, cells and various utilities, there are players who are now looking across the chain, and not just at a cell or a module. That is important.Through vertical integration, you can bring down costs. If you import a wafer, you are not only paying the guy from whom you are buying the wafer for his manufacturing cost but you are also paying for imports, logistics and transport. Internally, there is an inherent nailing down of costs.
This will be a domain only for serious players with deep financial resources. Backward integration brings about a cost and investment escalation. In the long run, serious and non serious players will get segregated.
Two years ago we were talking of Rs 19 crore for 1MW of installation; now they are saying Rs 15 crore and some of them a little lower than that. What is your assessment of ground reality?
They are talking of Rs 15 crore per MW, the figure has been arrived at after extensive study and with industry inputs. The cost will go down as a function of time, technology escalation, efficiency escalation. That is why now the tariff stands at Rs 12 per kilo-watt. That will decrease year on year as the technology goes up and cost goes down.
Do you see some new technology challenging usage of solar devices? What is your assessment from a research perspective?
Huge amount of research on technologies and devices is under way into new materials and structures.
Some are doing the corrugation of a solar cell on a certain dimension to capture more sunlight, so as to increase the efficiency. Innovative technologies are being tried. But it has to result in large-scale manufacturing applications. R&D to manufacturing process is a significant step.
For instance, flexible solar cell is something that can be used to wrap around objects. This will increase the mobility of solar units. Many new technologies and applications can come up. At the end of the day, it depends on how much of it can be scaled up in terms of size, manufacturing and scaling down of the cost.
We are talking about large installations, what about small units?
Power plant utilities are as important as standalone distributed solar applications. The policy lays a lot of effort on rooftop, lighting applications and other commercial applications.
The higher the utility, the cost and investment is that much more. There is a lot of focus on this by distributors and small scale plants.
The Solar Mission had taken out a directive that out of the 1 Gigawatt generated 100MW has to be diverted towards roof-top applications.
US-based Astonfield Renewable Resources today announced that it has entered into a strategic partnership with Grupo T-Solar Global S.A., a Spanish-based solar power producer with an installed generation capacity of 168 megawatts (MW) in Spain and Italy, as well as a large pipeline in Southern Europe, Latin America and the US. The partnership has been initiated with Astonfield’s 5MW solar PV project in Osiyan Rajasthan, India, which is expected to be the first in a long-term strategic collaboration between Astonfield and T-Solar.
Astonfield will deploy T-Solar’s latest generation 5.7 square metre (m2), hydrogenated amorphous silicon (a-Si:H), thin-film modules in Osiyan Rajasthan. This project will be one of the first utility-scale solar power plants commissioned under the Jawaharlal Nehru National Solar Mission (JNNSM) and is expected to be commissioned by October 2011. Construction on the Osiyan Rajasthan project has begun and, once operational, it is expected to generate at least 8500 megawatt hours (MWh) per year, enough to power the equivalent of more than 13,000 Indian households.
With T-Solar’s strategic investment and project debt financing in place from leading Indian banking institutions, such as the State Bank of India and the Export-Import Bank of India, Astonfield has confirmed that site construction is well under way and the Osiyan Rajasthan project is set for on-time commissioning. Schneider Electric, an engineering, procurement and construction (EPC) provider based in France, has been retained as the project’s (EPC) manager.
While India’s solar mission to generate at least 1,100 megawatt of power by 2013 is on track now, private players feel the government needs to accelerate the pace of growth in the coming years to meet the eventual goal of generating 7% of the nation’s power needs.
Amit Dave/ReutersWorkers clean solar concentrator panels at a solar food processing unit in Gujarat.
India’s Ministry of New and Renewable Energy launched the Jawaharlal Nehru National Solar Mission in January 2010 with a stated goal of developing 20,000 megawatt of solar energy in three phases by 2022 and to reach cost parity so that generating solar power costs the same as conventional power by that time.
Farooq Abdullah, India’s Minister of State for New and Renewable Energy, said he’s satisfied with the progress so far on its various projects. In the first phase of the mission, the government hopes to build capacity to generate 1,100 MW by 2013.
However, “this is not the main objective because 1,000 MW is nothing as far as India is concerned,” said Santosh Kamath, executive director of advisory firm KPMG. “Ultimately, the objective is to make solar energy a very significant contributor to India’s power and energy needs.”
The government held a transparent bidding process to allocate projects to developers and sign agreements for about 70% of the capacity it aims to achieve in the first phase. These projects are at the development stage, working on securing financing to starting construction, before they become operational. The Ministry noted that the bidding process itself has helped reduce the cost of solar power by almost 30%, as competition in the bidding process lowered prices.
“What is really good about what has happened so far is that it has kick-started an eco-system in the country,” Mr. Kamath said.
The federal government’s involvement and active interest in projects has spurred the start of new companies, expansion of existing operations, and addition of labor and new technology.
Each state also has an obligation buy a minimum level of solar power and they can substitute this with renewable energy certificates if they are short of the required amount. Gujarat, Rajasthan and a few other states also have their own separate initiatives to develop solar power.
“Our policies in the first phase have facilitated a declining trend in costs and induction of various technology options in the first phase of the Mission,” Minister Mr. Abdullah said.
“I am confident that project developers will be able to commission their solar plants well in time and that we will be able to move ahead for a scale expansion in the next phase of the Mission,” he said.
Last week, a KPMG report predicted that India’s solar energy sector needs up to $110 billion in capital over the next 10 years to meet its energy goals. However, the last three years the sector has seen only eight investments worth $100 million.
Many of the projects are small without a proven track record making it difficult for investors to put their money. It makes it even more risky when India’s banks themselves are hesitant to take on these projects. The KPMG report recommends that the fund, set up with fees levied on imported fossil fuel, be used to promote new solar projects.
Some solar energy start-ups like SuRe Energy Systems Pvt. Ltd. have resorted to raising money from friends.
Also, the KPMG study found that the state electricity boards, which are expected to buy power from renewable energy sources, doesn’t have the financial capacity to do so, and suggests that the government sponsor this as well.
KPMG recommends another focal change in the way power is consumed. Instead of power from a grid, the firm recommends that users can generate and use their own power and advocates decentralizing of solar power, especially when it comes to uses such as rural lighting systems, agricultural pumps, and telecom towers. The government is expected to spend 2 billion rupees on subsidies to such off-grid projects annually.
Lanco Solar, a subsidiary of Lanco Infratech Limited, in consortium with Juwi Renewable India Ltd, has received a letter of award, or LoA, from Maharashtra State Power GenerationCo Ltd, or Mahagenco, for building a 75MW Crystalline technology based photovoltaic, or PV, solar power project in Dhule district in Maharashtra. The project value is INR8.84 billion.
The project would be fully commissioned by mid February 2012.
Madhusudhan Rao, Chairman, Lanco Group, said, “India’s solar power generation capacity will reach 68,000 megawatts (MW) by 2021-22, triple the government’s target. To pursue the same, we at Lanco has given utmost importance to build on capacities on solar power generation which is also the need of the hour and aims to have 300 MW in generation next two years & in EPC aims to have 300-500 MW of solar thermal and solar PV plants over the next couple of years.
“What we are trying to create today is a small portion of the opportunity we have in the future and for the same Lanco Infratech has been developing a number of solar projects and has been at the forefront in its commitment to develop and promote renewable energy in India.”