Month: April 2012

The India Solar Investment & Technology Summit Day 1 saw 15,000 people gather to view the Gujarat Chief Minister Narendra Modi ‘dedicate 600MW of solar power to the nation’ at the inauguration of the Charanka Solar Park near Gandhinagar, Gujarat. The event was held amidst political fanfare in the middle of a 2,699 acre arid wasteland at a remote part of Gujarat.

He handed out certificates to projects that were deemed to be commissioned under the Gujarat solar policy (More details available in the April 2012 edition of the India Solar Compass).

Our team was present and tweeting live (follow) from the solar park as it was  inaugurated. 

4 key highlights

At the inauguration of the Charanka solar park, Chief Minister Modi handed out commissioning certificates to projects worth 604.89MW under the Gujarat solar policy. The park is located in the Patan district in northern Gujarat.

Naoki Sakai, Senior Energy Specialist from the Asian Development Bank offered funding support of $500million to the Gujarat Government for research and development of solar, vocational training with the Pandit Deen Dayal Petroleum University and development of smart grids and a second solar park in the state.

Peter Haas, Consul General from the US Consulate at Mumbai, committed to clean energy advancement in India by offering a total financing support $0.5 billion dollars for solar and clean energy development in the country.

CM Modi said “We [Gujarat]  are blessed with high solar irradiation. We are committed to green power”. He articulated plans to produce solar power on rooftops and agricultural farms, with a focus on the importance of decentralized power. He mentioned that people would be able to rent out their rooftops for smaller off-grid projects.  ”30,000 people will get jobs in solar” he said.

There was no mention of phase III of the Gujarat solar policy. However, he will be speaking at the India Solar Investment & Technology Summit Inaugural address again tomorrow. The solar park visit was part of this three day conference.

About the Charanka Solar Park : The Charanka Village has become a 200MW solar power hub in the middle of nowhere. There are rows upon rows of solar panels, dominated by PV thin film technology. The village has received high class grid and road connectivity infrastructure due to development of the solar park in Gujarat.

Karnataka Renewable Energy Development Ltd. allocates 20MW of solar thermal and 60MW of solar PV under the Karnataka solar policy

Lowest winning bid was submitted at a tariff of INR7.94/kWh

CSP loses out to PV on account of project size allocation by KREDL

The Karnataka Renewable Energy Development Ltd. (KREDL) has announced the ten winners of the solar bidding it held in November 2011 under the Karnataka solar policy.  The KREDL had floated tenders for 80MW worth of solar projects under the Karnataka solar policy on August 9th 2011. The bidding process for these projects was supposed to be closed on November 24th 2011.  The winning bids, out of a total of 22 submissions, were not announced due to a legal complication (refer to BRIDGE TO INDIA’s April 2012 edition of the India Solar Compass). Due to the delay in announcements, the developers were given a chance to re-submit their bids.

The original capacity to be allocated was 30MW of solar thermal and 50MW of solar PV, but as bids for only 20MW solar thermal capacity had been received, the excess 10MW has been allocated to solar PV.

The lowest bid, which stood at Rs. 7.94/KWh, was submitted by Helena Power Private Limited (allotted 10MW PV) and the highest successful bid at Rs. 8.50/KWh was submitted by Welspun Solar AP Private Limited (allotted 7MW PV).

Other successful companies are Sunborne Energy Services India Private Limited (10MW CSP), Atria Power Corporation Limited (10MW CSP), Jindal Aluminum Limited (10MW PV), ESSEL Infrastructure Limited- Gulbarga (5MW PV), ESSEL Infrastructure Limited- Badami (5MW PV), GKC Project Limited (10MW PV), United Telecoms Limited (3MW PV) and Sai Sudhir Energy Limited (10MW PV). The solar thermal projects need to be commissioned within 30 months of signing the PPA and solar PV projects will get a period of 18 months for commissioning.

Solar thermal allocations saw very limited interest and even the stipulated capacity of 30MW could not be allocated. This can be attributed to the project size that the KREDL was offering for solar thermal technology. A plant size of 10MW or less is not the best business model for CSP solar power. That is also the reason that the Indian National Solar Mission had offered a minimum plant size of 50MW for CSP.

The worldwide standard for measuring a solar plant’s performance is the Performance Ratio (P.R.). However, most project developers, investors and EPC contractors in India use the Capacity Utilization Factor (C.U.F.) as the standard of measuring the performance of a plant.

Our team sat down and attempted to demystify these differences. But soon enough, we realized that quite a few people in the industry really do not understand the difference. This is where I figured this is worth sharing with a wider audience.

Let us begin by understanding the definitions of C.U.F. and P.R.

P.R. is defined as:

Where,

C.U.F. is defined as:

Therefore the relationship between the two becomes:

Now that we have established the mathematical relationship between C.U.F. and P.F., what do they actually mean?

The P.R. is a measure of the performance of a PV plant at a given irradiation level. If you look closely at the denominator of the equation for P.R., we have normalized the ratio against the irradiance level for that specific location. Now, if the plant were to be moved to another location with a different irradiance level, then the equation would consider the irradiation level at that location. So in a way, the equation adjusts itself against the location of the plant. This proves to be extremely useful when comparing the quality of a plant (construction and operation) in different locations.

Another important aspect of the P.R. is that it only evaluates the plant performance against the energy available from the sun. That is, it automatically discounts night times, when the sun does not shine. We shall understand why this is important when we look into the C.U.F. formula.

The C.U.F. is a measure of ‘how well a plant is utilized’. This is important because a PV plant is an asset with a limited life and the investor would like to extract as much value from the plant as possible. This is helpful when comparing one or more energy technologies – thermal versus solar or wind, for example. If we take a look at the C.U.F. we see that the formula evaluates the energy generated from the solar plant against 100% of the existence of the plant i.e. 8,760 hours in a year in this case (including night times when it is impossible to generate any energy). This means that if we have a 20% C.U.F., the investment is ‘being usefully utilized’ for 20% of the maximum possible limit. Now, if we move the plant to another location, the CUF will change because the equation DOES NOT adjust itself against variations in locations (look at the denominator!). In that sense, the CUF is unfair because it ignores radiation specific to locations and it ignores night times when the plant really cannot do anything.

To sum up our understanding, the P.R. is a very useful tool to compare PV plants across the world and it directly reflects on the quality of construction and maintenance.  The C.U.F. on the other hand is very useful in comparing different technologies and is particularly important to an investor who would like to know which technology offers maximum value.

The India Solar Compass is a quarterly analysis report with the latest updates on India solar policy, projects, industry and financing.  The key question in the April 2012 edition: ” Is the telecom tower market viable in India?”

The report includes market outlook for the coming quarters with projections for addition to solar installed capacity and expected regulatory developments in India.

12 key findings from the report can be found here.

Fourteen projects have been penalized for missing the January 9th 2012 deadline for commissioning under the NSM. They have lost a cumulative amount of INR280m (EUR4.3m) in bank guarantees.

The Gujarat Electricity Regulatory Commission (GERC) has imposed penalties on 370MW worth of projects for missing the December 31st 2012 deadline for commissioning under the Gujarat solar policy.

Competitive bidding for projects is yet to take place under the Karnataka and Rajasthan solar policies.

Odisha has allotted five projects worth a cumulative 25MW through a competitive bidding process which has resulted in a tariff of INR7 (EUR0.10)/kWh, the lowest in India so far. These projects are outside of a comprehensive solar policy and are meant to help the state meet its RPO.

For batch one of phase one of the NSM, only nine projects (45MW) out of the allocated 30 projects (150MW) came online before the deadline of January 9th 2012.

As of January 28th 2012, the beginning of the new tariff regime, 600.5MW capacity was officially completed under the Gujarat solar policy. However, only 280MW had been actually commissioned before this date. The remaining projects have been categorized as ‘deemed to be commissioned’ and are exempt from the new tariff regime.

Andhra Pradesh signed a solar power agreement with Welspun Energy to set up a 100MW solar PV project in Anantapur district of the state.

At present, the US EXIM bank is the most popular source of funding. It has financed close to 65MW worth of projects in India and has close to 315MW in the pipeline.

Indian module manufacturers like Vikram Solar are investing in integrating along the value chain in order to improve their competitive position in the market.

Solar is competitive as a power solution for telecom towers, depending on their consumption and location.

A Renewable Energy Service Company (RESCO) business model appears to be the most viable to tackle the solar opportunity in the telecom tower segment.

The current quarter will see 320MW of PV installed capacity, led by the completion of projects under the NSM and the Gujarat solar policy.

For more detail on the Indian market, subscribe to the India Solar Compass April 2012.