SOLAR

ENERGY
INDUSTRY
ANALYSIS

CHAPTER 1
OVERVIEW
India with a production of 1,006 terawatt hours (TWh), is the fifth largest
producer and consumer of electricity in the world. In India sources for
power generation range from commercial sources such as coal, lignite,
natural gas, oil, hydro and nuclear power to other viable non-conventional
sources such as wind, solar, and agriculture and domestic waste.
The key components of Power sector include Renewable Energy, Wind
Energy and Solar Power.
Market Size
The Planning Commissions 12th Plan expects total domestic energy
production to reach 669.6 million tonnes of oil equivalent (MTOE) by
201617 and 844 MTOE by 202122.
Indian solar installations are forecast to be approximately 1,000 megawatt
(MW) in 2014, as per Mercom Capital Group, a global clean energy
communications and consulting firm.
By 2030 35, energy demand in India is projected to be the highest
among all countries according to the 2014 energy outlook report by British
oil giant BP.
Investments
With policy liberalisation, the sector has witnessed high investment flows.
The power ministry has set a target for adding 76,000 MW of electricity
generation capacity in the 12th Plan (201217) and 93,000 MW in the
13th Plan (20172022).

The Working group on power for formulation of the 12th Five Year Plan has
estimated total fund requirement of Rs 1,372,580 crore (US$ 227.98
billion) for the power sector. The industry attracted foreign direct
investment (FDI) worth Rs 40,417.6 crore (US$ 6.72 billion) during April
2000 to January 2014.
Road Ahead
Wind energy is the largest renewable energy source in India; projects like
the Jawaharlal Nehru National Solar Mission (aims to generate 20,000 MW
of solar power by 2022). They also help build a positive environment to
attract investors to India.
India has vast potential for solar energy and is quickly developing itself as
a major manufacturing hub for solar power plants. Besides, it is expected
that the annual PV-installed capacity will grow at a CAGR of around 49.5
per cent during 20102014 to reach 1,500 MW.

GLOBAL SCENARIO

Solar Energy demand globally has been growing at about

30% per annum over the past 15 years.
In comparison, the hydrocarbon demand growth rate is 02% per annum.
This high growth rate in solar energy is due to many reasons increasing
cost of petroleum products and the parallel decreasing cost of producing
power from solar, and a concern world over on the harmful effects of using
fossil fuels.

INDIAN SCENARIO
India is in the sunny regions of the world with most parts of
the country receiving 47 kwh (kilowatthour) of solar radiation
per square meter per day, 250300 sunny days in a year. Even
though Solar energy constitutes a miniscule part in Indias
installed power generation capacity (with grid connected solar
PV generation at a mere 6 MW as of March 2010), in the
medium and long run, it is expected that solar energy,
especially solar PV will form a vital component of the country's
energy mix .

HISTORY
Jawaharlal Nehru National Solar Mission
The Jawaharlal Nehru National Solar Mission (also known as the
National Solar Mission) is a major initiative of the Government of India and
State Governments to promote ecologically sustainable growth while
addressing Indias energy security challenges. It will also constitute a
major contribution by India to the global effort to meet the challenges of
climate change. Named for Jawaharlal Nehru, the Mission is one of the
several initiatives that are part of National Action Plan on Climate Change.
The program was officially inaugurated by Prime Minister of India,
Manmohan Singh
The Jawaharlal Nehru National Solar Mission (also known as the
National Solar Mission) is a major initiative of the Government of India and
State Governments to promote ecologically sustainable growth while
addressing Indias energy security challenges. It will also constitute a
major contribution by India to the global effort to meet the challenges of
climate change. Named for Jawaharlal Nehru, the Mission is one of the
several initiatives that are part of National Action Plan on Climate Change.

The program was officially inaugurated by Prime Minister of India,

Manmohan Singh.

SWOT ANALYSIS
STRENGTH

Create electricity in huge quantity

Benefit for the people who live in isolated and rural area
Solar power plant can be placed anywhere

WEAKNESS

Vast amount of surface is required

Installation cost is very high
Solar panels can come off as buying to bulky

OPPORTUNITY

Ability to harness a cheap, longlasting power energy house

Lower cost than petrol
Can preserve solar energy

THREATS

Sunlight may be limited in some areas which cause an external

threat within the solar panel

Land is not easily available

OBJECTIVES
It is clear from the above discussion that solar energy is becoming an
important
source of energy all over the World and especially in India. Very few solar
plants
have been installed in India so far, and therefore no historical experience
available. It
is important to investigate the performance of solar power plants. Knowledge
about
the performance of solar power plants will result in correct investment
decisions, a
better regulatory framework and favorable government policies. In this
report, we
examine the various factors contributing to the performance of solar power
plants,
such as radiation, temperature and other climatic conditions, design, inverter
efficiency and degradation due to aging. The objectives of this study are
summarized
below:
To estimate the performance of solar power plants at different locations in
the
country
To assess the degradation of module output associated with aging as per
current technology trends
To recommend future work in the field of solar energy
To review existing radiation data sources and softwares
To review design criteria for better performance of power

CHAPTER 2
PERFORMANCE
The performance of solar power plants is best defined by the Capacity
Utilization
Factor (CUF) , which is the ratio of the actual electricity output from the plant,
to the
maximum possible output during the year. The estimated output from the
solar
power plant depends on the design parameters and can be calculated , using
standard softwares. But since there are several variables which contribute to
the final
output from a plant, the CUF varies over a wide range. These could be on
account of
poor selection /quality of panels, derating of modules at higher temperatures,
other
design parameters like ohmic loss, atmospheric factors such as prolonged
cloud
cover and mist.
It is essential therefore to list the various factors that contribute to plant
output
variation. The performance of the power plant however depends on several
parameters including the site location, solar insolation levels, climatic
conditions
specially temperature, technical losses in cabling, module mismatch , soiling
losses,
MPPT losses, transformer losses and the inverter losses. There could also be
losses
due to grid unavailability and the module degradation through aging.

Some of these are specified by the manufacturer, such as the dependence of

power
output on temperature, known as temperature coefficient. The following
factors are
considered key performance indicators:
1. Radiation at the site
2. Losses in PV systems
3. Temperature and climatic conditions
4. Design parameters of the plant
5. Inverter efficiency
6. Module Degradation due to aging

SUSIDIES GIVEN BY THE GOVERNMENT

The Ministry of New and Renewable Energy (MNRE) provides 70 percent
subsidy on the installation cost of a solar photovoltaic power plant in
NorthEast states and 30 percentage subsidy on other regions. The
detailed outlay of the National Solar Mission highlights various targets set
by the government to increase solar energy in the country's energy
portfolio.
In the budget for 2010/11, the government has announced an
allocation of US $ 220 million towards the Jawaharlal Nehru
National Solar Mission.
They encouraged private solar companies by reducing customs
duty on solar panels by 5% and exempting excise duty on solar
photovoltaic panels.
The budget also proposed a coal tax of US$1 per metric ton on
domestic and imported coal used for power generation.

The government has initiated a Renewable Energy Certificate (REC)

scheme, which is designed to drive investment in low carbon energy
projects.

SOLAR PLANT IN GUJRAT

Gujarat is witnessing a large market for the resale of PPAs by developers who often
took up projects with the intent to sell them at a higher price to international
developers. This has increased the project development costs and is threatening to
make many projects unviable. As a result, only a limited number of projects under
the Gujarat solar policy are currently moving forward successfully. As of 31st
December, 175 MW of the 968.5 MW worth of projects with signed PPAs have been
commissioned. Many projects are finding it difficult to attain financial closure and are
facing significant delays.
Land acquisition is proving to be a challenge for projects in Gujarat. There are a
limited number of land-banks (large areas of land acquired and consolidated by the
government for the use of developers), thereby pushing developers to purchase
private land, which is usually a burdensome and slow process. Developers have to
engage directly with multiple land owners, facing issues with prices, location, land
transfer procedures and right-of-way, amongst others. With the increasing interest
from developers, there is a nexus developing between brokers and land owners
impacting the price of land in Gujarat. The limited availability is leading to multiple
brokers offering the same pieces of land to different developers. Realizing this, the
owners have started quoting higher prices for the land. The brokers in turn have

begun promising them a higher price in order to secure their clientele. This is
significantly escalating land prices for potential sites in the state.
The solar park at Charanka is meant to solve many of these problems. So far,
however, land has only been demarcated. The majority of the area remains
undeveloped. The solar park policy by the Gujarat Power Corporation Limited
(GPCL) provides not more than 50 acres of land for a 10MW PV plant. While this is
practicable for plants working with crystalline modules, it is a limitation for thin film
plants, which typically require more land for a 10MW plant. Another challenge is that
the park is required to provide under-ground transmission lines but the transmission
utility in Gujarat, the Gujarat Energy Transmission Corporation Limited (GETCO),
does not currently have the expertise to execute this. Such issues, while they will not
necessarily derail the solar park, will create further delays for developers who are
with a 20MW project in the park, has secured a guarantee by the government
against possible penalties for delays in executing their project.
COST STRUCTURE
Land area :About 1200acre (485 hec.)
Location : 60 km from Ahmedabad (Capital of
Gujarat)
20 km from Sanand (Plant of Tata Nano Car).
Expected Price : $ 12,000/ per acre
Primary
Use:
POWER PLANT

SOLAR

Secondary Use : Storage/ Warehousing

COST OF THE PROJECT
Land Cost :
Cost of Approvals/Coversion/Devlopment :
1
PV Power Panels @ 4m:
Thus total initial investment for 120 Mw :

1.4
0.28(20% of land cost)
480.00
48168

Less Subsidy 30%:

Net Investment :

150.00
350.00

EXPECTED REVENUE
Expected Revenue from the Selling of Electricity @ Rs. 12/ per kWh for
first 12 years:
= 2,102,400,000/ or USD $ 42 mn/ year

Return of Investment
Payback period of 8 years includes land also With that other benefits like
Carbon Credits and other subsidies, moreover appreciation in the land
value.
KARNATAKA
Karnataka, a south-western state of India, announced its solar policy on July 1, 2011.
Under the solar policy 2011-16, the Karnataka Government proposes to promote
solar power as part of renewable energy generation policy in the state.
Operative Period: July 1, 2011 to March 31, 2016.
It targets 350 MW worth of projects till 2016.

200 MW is to be developed for direct sale to the distribution companies in

the state (40 MW to be added each year)

100 MW under REC Mechanism

50 MW for bundling of power with thermal power from outside the state at
rates to be determined by the State Government subject to approval of KERC.
The minimum capacity of solar PV projects is 3 MW and maximum capacity of 10
MW, while for Solar Thermal the minimum is 5MW with no cap on maximum. The
quantum of power to be procured by ESCOMs from solar resources under purchase
obligation is 0.25% of the total consumption and the shortfall in procurement of solar
energy by the ESCOMs can be made good by purchase of solar specific RECs.
Though the state has come up with its own policy, it will continue to support

programs like the NSM. The state has set a combined target of 126 MW of solar power to be
developed by 2013-14 through NSM and its own solar policy.
The Karnataka Renewable Energy Development Limited (KREDL)

is the nodal agency for

the policy. As part of its solar policy, KREDL has called for bids for 80 MW worth of
project and received 22 bids from potential developers. The winners are to be
selected through reverse bidding process. Under the REC Scheme of MNRE,
KREDL has received proposals to set up 350 MW worth of solar projects.
The policy also allows developers to inject power at 11KV and above, while under
NSM, the requirement is 33KV and above. Developing 11KV substation at power
plant is cheaper than a 33KV substation which requires high cost components, so
this will bring down the project development cost for the developers.