Wind power bids seem unrealistic

To operate at a tariff of, say, ₹3.50 a unit, projects need to achieve a plant load factor of 35 per cent, which is a tall order

The recent bid by the Solar Energy Corporation of India (SECI) to set up 1000 MW wind power plants saw tariffs drop to ₹3.46 per unit. This has set a new benchmark for wind power in India, bringing the overall cost of power down in a rapidly growing economy.

Despite being India’s first wind power project tender, SECI was oversubscribed 2.6 times. Bids were concentrated in three States; with Tamil Nadu receiving the highest share of 1794 MW, followed by Gujarat with 700 MW and Karnataka with 100 MW.

The tender was floated by the SECI to help non-windy States access wind power by linking them to the inter-state transmission system. Project developers will sign a 25-year PPA with the Power Trading Corporation of India, which, in turn, shall sign back-to-back arrangements with discoms /bulk customers of non-windy States. Waiver of inter-State transmission charges and compensation for system losses till the interconnection point by allowing for construction of 5 per cent additional capacity were also provided as part of the tender.

Until now, wind energy in India followed the feed-in-tariff (FIT) route with tariffs for long-term PPAs with State discoms ranging from ₹4- 6 per unit. With the SECI tender mitigating key risks of off-take, evacuation and payment and going by the recent solar bidding process which witnessed tariffs fall below the ₹3 mark, the level of interest observed shouldn’t come as a surprise.

But, having lived through a situation where aggressive bidding in infrastructure projects has not worked in the industry’s favour, it does make us wonder about the strength of the underlying assumptions made in these bids.

A basic number crunching carried out with a tariff of ₹3.46 per unit at prevalent industry conditions – Central Electricity Regulatory Commission (CERC) estimated project cost of about ₹6.2 crore per MW, debt to equity of 70:30, financing at 9.5-10 per cent – indicates that Plant Load Factors (PLFs) of about 33-35 per cent may be required to fetch investors reasonable returns of 15-16 per cent.

Standing on shaky ground

Going by the historically available PLF data of wind power plants in India and limited availability of high wind density sites, achieving such PLFs consistently for the 25-year life of the plant seems far-fetched. Unlike solar energy, wind farms in India are concentrated in a few high wind States such as Tamil Nadu, Maharashtra, Karnataka, Andhra Pradesh, Gujarat and Rajasthan. Even within these States, only selective sites offer high wind energy potential.

The Indian market is moving towards adopting higher capacity wind energy generators (WTGs) with hub height of more than 100 metres. Global players such as GE have come out with advanced technology turbines designed to offer increased swept area, facilitating higher generation in low wind density sites. While this will improve the project economics for developers, implementation remains largely untested.

Alternatively, lower PLFs need to be compensated by either cutting down the project cost substantially, or by obtaining best deals for operation and maintenance (O&M) of the wind turbines, or by locking-in low cost funds, most often a combination of all of these. Clearly, higher capacity wind turbines are going to come at a cost and there are limitations to the concessions that can be obtained from O&M players.

Despite the interest rate cuts and falling MCLRs of banks, securing low cost funding in today’s market will largely depend on promoter strength and credit rating. Without a substantial database of PLFs of 35 per cent available in India today and given the first time deployment of next generation wind turbines, lenders, having burnt their fingers more than once, might choose to play it safe this time around.

Solar was a different story

Unlike Ultra Mega Solar Parks (UMSP), for the SECI wind projects, project land and evacuation infrastructure up to the point of interconnection at the ISTS need to be put up by the developers. In India, these things come at a cost. Right or wrong, these unstated costs need to be factored in the project cost estimates.

Further, the drop in prices of WTGs has been very different from what has been seen in solar power. Since 2009, solar PV module prices have fallen by 80 per cent as compared to a 30-40 per cent fall in wind turbine prices. Solar module costs fell by about 26 per cent in 2016 alone and are likely to fall further this year, due to oversupply in the Chinese and European markets. Considering the low lead time in procuring solar panels and low time required for commissioning, the bidders for Rewa UMSP would have had sufficient buffer to factor in another round of drop in solar module prices.

No such cushion is available for wind. Bidders would have had to rely upon pre-bid tie ups with WTG manufacturers to work out their project cost estimates. In a way, the aggressive bidding would have trickled backwards and caused a fair share of competition among turbine manufacturers.

More uncertainties loom

From April 1, 2017, the tax relaxation for infrastructure projects under 80IA shall cease. Further, wind power plants commissioned after this financial year will not be eligible for generation based incentives. Accelerated depreciation will reduce from 80 per cent to 40 per cent.

Also, the cloud of uncertainties that the implementation of GST poses needs to be factored for any reasonable viability assessment. Most wind turbines are domestically made. Currently, there is no excise duty to be paid for WTGs and renewable energy components attract a VAT of 0-5 per cent in most States. According to a report published by the Ministry of New and Renewable Energy, GST is likely to cause an increase of 11-15 per cent in project cost of wind power projects.

One can only hope that all these risks were adequately factored by the bidders. This kind of aggressive bidding is not new to us. Starting from BoT road projects awarded a decade back, to coal mining, telecom spectrum and more recently, solar power and hybrid annuity model (HAM) projects in the road sector, this issue has been ingrained in the system.

While it is good to see such investor interest in India’s infrastructure space, it is absolutely essential to tread carefully. Let us not forget all the BoT projects which became distressed assets in the books of lenders due to optimistic traffic projections or higher revenue shares promised during a competitive bidding war.

View original post on Hindu Business Line: http://www.thehindubusinessline.com/opinion/wind-power-bids-in-india-are-unrealistic/article9618027.ece

New material may double solar cell efficiency

Washington, Apr 9 (PTI) In a breakthrough, scientists have identified a new crystalline material that could replace silicon and double the efficiency of solar cells without a significant cost increase.

Conventional solar cells are at most one-third efficient, a limit known to scientists as the Shockley-Queisser Limit.

The new material, a crystalline structure that contains both inorganic materials (iodine and lead) and an organic material (methyl-ammonium), boosts the efficiency so that it can carry two-thirds of the energy from light without losing as much energy to heat.

This material identified by researchers at Purdue University and the National Renewable Energy Laboratory in the US could double the amount of electricity produced without a significant cost increase.

Enough solar energy reaches the Earth to supply all of the planets energy needs multiple times over, but capturing that energy has been difficult ? as of 2013, only about one per cent of the worlds grid electricity was produced from solar panels.

Libai Huang, assistant professor of chemistry at Purdue, said the new material, called a hybrid perovskites, would create solar cells thinner than conventional silicon solar cells, and is also flexible, cheap and easy to make.

The most common solar cells use silicon as a semiconductor, which can transmit only one-third of the energy because of the band gap, which is the amount of energy needed to boost an electron from a bound state to a conducting state, in which the electrons are able to move, creating electricity.

Incoming photons can have more energy than the band gap, and for a very short time ? so short it is difficult to imagine ? the electrons exist with extra energy.

These electrons are called “hot carriers,” and in silicon they exist for only one picosecond (which is 10-12 seconds) and only travel a maximum distance of 10 nanometres.

At this point the hot carrier electrons give up their energy as heat. This is one of the main reasons for the inefficiency of solar cells.

Huang and her colleagues have developed a new technique that can track the range of the motion and the speed of the hot carriers by using fast lasers and microscopes.

“The distance hot carriers need to migrate is at least the thickness of a solar cell, or about 200 nanometres, which this new perovskite material can achieve,” Huang said.

“Also these carriers can live for about 100 picoseconds, two orders of magnitude longer than silicon,” he said.

Kai Zhu, senior scientist at the National Renewable Energy Laboratory in Colorado, said that these are critical factors for creating a commercial hot-carrier solar cell.

“This study demonstrated that hot carriers in a standard polycrystalline perovskite thin film can travel for a distance that is similar to or longer than the film thickness required to build an efficient perovskite solar cell,” he said.

“This indicates that the potential for developing hot carrier perovskite solar cell is good,” Zhu added.

The research was published in the journal Science.

 

View original post on India Today: http://indiatoday.intoday.in/

The UK’s electrical grid is so overrun with renewable power, it may pay wind farms to stop producing it

Generating electricity from the sun and wind is great for the planet, but the infrastructure necessary to deal with these intermittent power sources is tricky. Too much or too little power can upset the balance of the grid, which has to be finely tuned to keep the voltage of the electricity it delivers to customers stable.

Without a means of storing renewable energy or handling huge variations in production, too much electricity surging into the grid can damage appliances or even cause outages. This is the problem that the UK may face this summer, the country’s grid operator says. When electricity demand naturally falls during the summer months, it is thinking about paying wind farms to stop generating so much power.

For the past few years, the UK has been ramping up renewable-energy production—especially wind power—in order to reduce its carbon emissions. Government subsidies have also encouraged homes and businesses to install rooftop solar panels, which can bypass the grid altogether.

Meanwhile, National Grid, which manages the UK’s electricity network, has been trying to update its aging infrastructure. Ofgem, the UK’s energy regulator, estimates that payments to balance electricity generation when it gets out of whack—either too much or too little to meet demand, from both renewable and (mostly) fossil-fuel generators—ran to about £354 million ($540 million) in 2015, or less than 1% of energy bills.

This summer, National Grid estimates that maximum and minimum energy demand from utilities is likely to fall to an all-time low (paywall). Peak demand is predicted to be 35.7 gigawatts, compared with 37.5 gigawatts in 2015, and minimum demand to be 18.1 gigawatts, compared with 18.4 gigawatts in 2015.

The UK’s electricity consumption has been falling in recent years. Some of the decline was down to the financial crisis, in addition to increased energy efficiency at homes and businesses, according to a National Grid spokesman.

Reduced energy demand and more prevalent renewable power is a good combination for the climate, but a headache for grid operators. These staid businesses are scrambling to balance their grids in response to a rapid energy transition. In the meantime, they may have to keep paying some power plants for, in effect, not doing their job.

 

View original post on: https://qz.com/952827/the-uks-electrical-grid-is-so-overrun-with-renewable-power-it-may-pay-wind-farms-to-stop-producing-it/

Opening up of coal sector may run into pricing hurdle

 

The government’s ambitious effort to open up coal mining to private and foreign players and end the virtual monopoly of Coal India Ltd (CIL) might come a cropper if some of the restrictive conditions put in the proposed guidelines are not reworked.

Private miners – Indian or foreign – would be allowed to sell coal mined by them only at a minimum price, which shouldn’t be less than 20% above the price that CIL currently charges, the draft rules now put out for discussion says.

The provision, which surreptitiously aims at protecting CIL’s interest, is being seen as restrictive defeating the very purpose of opening up the sector – to bring in greater efficiency and economy in mining through investment in state-of-the-art machinery, thereby bringing down costs leading to lowering of prices, feels industry experts.

 

“The condition of making the minimum selling price by a commercial miner fixed at 1.2 times the price at which CIL sells its coal is restrictive as it would discourage efficient mining. The whole purpose is to bring down costs and prices through higher mechanisation. Now that there is little scarcity of coal, why would anyone buy coal from a private miner if the same quality would be readily available from CIL at a lower price?” Partha Bhattacharya, former chairman of CIL and a key voice in the industry, told DNA Money.

“Making such a price the basis of a revenue sharing model makes the whole thing flawed,” he said.

“While the successful bidder would be free to decide its marketing and pricing strategy, the revenue sharing would be calculated on the basis of actual revenue or actual production multiplied by 1.2 times the CIL ROM price for the average grade of coal for the specific mine, whichever is higher,” the draft regulation says.

To begin with, the government plans to auction two to three large mines having peak-rated capacity of 30 million tonne a year and coal of grade-11 to grade 13 in the first phase, the discussion paper said.

“The minimum price fixed at 1.2 times is restrictive. Also, based on that, what would be the revenue sharing is still not clear,” V K Arora, chairman of mining and construction equipment committee of industry body CII and chairman of Indian Mining Federation, said.

While Bhattacharya believes a “tangible net worth” criteria of Rs 1,500 crore might keep away many experienced miners, Arora said it wouldn’t pose a problem as bidders can form joint venture even with foreign entities.

“You can have a joint venture with a partner, which could be a foreign entity having a combined mining experience of 25 million tonne. It is a reasonable condition and a welcome move,” Arora said of the minimum work experience criteria.

“We welcome this major move to open up the coal mining sector and believe some of the contentious provision might get amended after feedback of stakeholders are taken care of,” Subhasri Chaudhuri, Secretary General of Coal Consumers’ Association said.

WHAT THE DRAFT RULES STATE

  • Private miners’ selling price shouldn’t be less than 20% above Coal India’s
  • The Centre plans to auction 2-3 large mines having peak-rated capacity of 30 million tonne

 

View original post on DNA India: http://www.dnaindia.com/money/report-opening-up-of-coal-sector-may-run-into-pricing-hurdle-2397236

The Underachieved Solar Target Of FY17, What Went Wrong?

While the industry is cheering on the record-breaking wind capacity addition for the year for FY17, we still fall behind in our solar targets, which has been the government’s favourite child

 

While the industry is cheering on the record-breaking wind capacity addition for the year for FY17, we still fall behind in our solar targets, which has been the government’s favourite child.

As per the official data of the Union ministry of new and renewable energy (MNRE), against the targeted 12,000 MW (10,500 MW ground-mounted and 1500 MW rooftop solar) for grid-connected solar projects in 2016-17, 5,525.98 MW has been achieved. Cumulative solar capacity currently stands at 12,288.83 MW, against 6,762.85 MW as compared to the last fiscal, which is a great news for the solar industry overall and is impressive even if it falls short of the target.

However, let’s talk about what happened to this particular fiscal’s target. Was 12000 MW too ambitious for this fiscal or things didn’t go as planned by the officials.

According to Amit Kumar Kadam, Partner, Renewables, PwC, the target of 12000 MW for solar was made on certain assumptions, one of the biggest being the solar parks, which failed to get operational by 2016.

5000-6000 MW capacity addition was expected to come from solar parks. Two to three solar parks were already operational but the rest didn’t take off as per the desired target. The main issue was the infrastructure which was not ready”, says Kumar.

Outside the solar parks comes the Rooftop segment(1500 MW target) which didn’t get the desired push especially from the DISCOMs. “The single most important reason for the underachievement of the renewable targets in the last fiscal year is the dismal performance in the solar rooftop segment. Economic reasons such as no economies of scale in rooftop and non-economic reasons such as poor contract enforceability, poor implementation of net metering policies by state agencies etc. are some of the major reasons behind the shortfall in the rooftop targets”, says Manu Agarwal, Research Analyst, Centre for Energy, Environment and Water.

Kumar says the DISCOMs need financial incentives to encourage rooftop installations which would alleviate their concerns about loss of profitable customers and additional network investments.

The third major concern is the PPA signing and biddings which didn’t happen as anticipated. According to Girishkumar Kadam, VP, Corporate Sector Ratings, ICRA and Power Sector Lead, the 2016-17 target for solar faced shortfall owing to the delays in tendering and PPA signing process. “There was a temporary lull in the sector post-Rewa. The authorities would be re-evaluating the project structure and there is going to be a bidding delay in the next fiscal as well”.

“Post the tender, the winning developers should be awarded the LOA (Letter of Award) in 5 months and the PPA should be signed in the next 1 month, but that didn’t happen. The same scenario cannot be predicted for the next set of targets”, says Kadam.

There is now a downward concern, according to Kumar. The DISCOMs want a replication of what happened at the Rewa auction and are hesitant in signing the PPAs at tariffs higher that Rewa. All experts are of an opinion that Rewa was a result of unique conditions of land, payments, subsidies, created by the state which led to those record tariffs, a pure plug and play.
Raj Prabhu, CEO, Mercom Capital Group voices another hurdle of RPO Compliance and government policies which hindered this year’s solar target, “The 12,000 MW goal was pretty aggressive but the government agencies were not equipped to handle it. Power demand is lacking and some states have to curtail power as there is no demand. Every time there is a new low bid, tender activity freezes as all states want the bids to get down to those levels. I think the investors and renewable energy companies are ready to invest and execute projects but hurdles are in the government machinery.”

Going forward, Kumar says the sector could land into trouble post-2018 when we touch almost 20% of the installed capacity in solar. ” There are major challenges- Grid stabilisation, Spinning reserves and storage. Who will incur the cost of all three?. India is in no position for storage innovation as we are dependent on countries like Japan for technology breakthrough.”

“Getting to 175 GW by 2022 will be tough, it is a very aggressive target. The issue is, these targets are set to top-down from the central government without figuring out how states will be able to achieve this. DISCOM financials are in shambles and most would rather cut power than purchase and supply it to the customer”, says Prabhu who terms the next 2 years crucial to see if the states can handle higher renewable generation.

However, Sabyasachi Majumdar, Senior Vice President, ICRA is optimistic of the overall targets and set up the government and predicts 7-7.5 GW of capacity addition for solar in 2018, amidst a very strong project pipeline via NSM (National Solar Mission) route. “A lot is under implementation. We should look at these targets from year to year basis. All the capacities for FY17 should be commissioned and the shortfall in the target should be made up in the next fiscal”, says Sabhya.

Of the 5,526 MW added, only 2,803.77 MW had been commissioned till February end, but it was followed by a spurt of more than 2,700 MW in March 2017, which shows how the government is speeding up on its targets just in time to beat the year-end deadline.

Amidst all, the experts hail both centre and state specific policies giving momentum to the renewable energy, besides some unattended areas. “Under the national solar mission, the projects awarded via SECI have increased tremendously with amendments in the national tariff policy as well. The states have coined their own region-specific policies and targets showing active interests in bids and RPO targets”, says Girish.

The targets of the government might seem too ambitious but aiming for the moon will at least make you land on the stars. 12,288.83 MW of cumulative capacity against 6,762.85 MW compared to the last fiscal, being this FY17’s shining star.

 

View original post on Business World: http://businessworld.in/article/The-Underachieved-Solar-Target-Of-FY17-What-Went-Wrong-/11-04-2017-116155/

Solar tenders, auctions slowing down in India: Report

While solar installations in India have picked up speed, tenders and auctions have been slowing down over the past couple of quarters, according to a Mercom Capital report. About 1.9 GW of solar power was tendered in Q1 2017 (1 GW of this was a retender) compared to 3.4 GW in Q4 last year. There was 1.3 GW of solar projects auctioned in Q1 2017 compared to 255 MW in Q4 2016. The slowdown in activity has been disconcerting to developers and manufacturers who have been gearing up for more activity based on India’s solar installation goal of 100 GW by 2022.

As per the target set by the government, India needs to instal 18 GW of solar power every year till 2022. If the government wants to meet its solar installation goals, the pace of tenders and auctions must pick up quickly. Companies, who have invested hundreds of millions to expand to meet the demand and build projects, are anxiously waiting for the activity to pick up.

 

According to the report, “Some of the reasons for decline in tender and auction activity include poor financial condition of distribution companies (DISCOMs), transmission issues, weaker power demand and increases in captive generation by commercial and industrial companies. DISCOMs that are continuing to struggle financially are not taking on new generation that is more expensive than coal, which is leading to curtailment of solar and wind projects as well as payment delays to developers.”

The World Trade Organization (WTO) ruling against India’s domestic content requirement (DCR) has resulted in continuous cancellations and postponements of planned DCR tenders.

“In some states, weak power demand is removing the urgency to speed up the pace of solar tenders and auctions. Increases in captive generation by industrial customers have compounded the situation since they are requiring less power generation from DISCOMs,” the report adds.

The recent record low bid of Rs 3.30 (approximately $0.494)/kWh at the REWA solar park auction is playing a big role in the slowdown of auction activity as government agencies and states are stalling to renegotiate PPAs that are more expensive than the bids received at REWA.

For DISCOMs, coal is still the cheapest option available.  According to Mercom’s December Solar Quarterly Report, DISCOMs have resorted to sporadic curtailment from some solar projects in Rajasthan and Tamil Nadu because cheaper power is available on the power exchanges. Even when there is demand, several states have complained that the DISCOMs are resorting to power cuts instead of buying power on the exchanges to save on costs.

Several other developers told Mercom that as of now Bihar, Jharkhand, Tamil Nadu, Rajasthan and Maharashtra are the problem states. According to Mercom’s Solar Project Tracker, tendering activity has declined in these states with most of the old tenders being continually extended.

 

“We hope this is a short-term issue which, once resolved, will see tariffs get down to realistic levels and there will be a big spurt in activity. However, if some of these pressing issues are not resolved quickly, growth will stall,” said Raj Prabhu, CEO of Mercom Capital Group. “There needs to be a policy mechanism put in place to avoid the stop and start in tender activity every time there is an outlier in terms of a low bid. However, if states revise their tenders to include all of the positive aspects of the REWA tender, it can be a win-win for all,” he added.

View original post on Business Today: http://www.businesstoday.in/

India plans Renewable Energy Management Centres for Green Corridors

Existing control centres, known as state load dispatch centres (SLDCs) currently lack renewable energy forecasting systems. Flickr: Tapas GaneshExisting control centres, known as state load dispatch centres (SLDCs) currently lack renewable energy forecasting systems. Flickr: Tapas Ganesh

As part of India’s Green Energy Corridor scheme, the Ministry of Power has proposed setting up a host of Renewable Energy Management Centres (REMCs) across the country to help integrate renewables as their penetration increases. The centres will cost around INR4.09 billion (US$63.5 million).

With a 160GW target of solar and wind by 2022, the ministry is concerned about grid stability and security. It noted that seven states will account for 104GW (65%) of this capacity including: Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Madhya Pradesh, Gujarat and Rajasthan.

The newly proposed REMCs would therefore be separated into the Southern, Western and Northern regions across the seven major resource rich states and various projects of the Green Energy Corridor scheme.

Existing control centres, known as state load dispatch centres (SLDCs) currently lack renewable energy forecasting systems, scheduling, monitoring and reserve management abilities.

To alleviate this problem, India aims to emulate state-of-the-art renewables forecasting and monitoring systems already successfully operating in countries like Spain, Germany, US, Denmark, Belgium and Australia.

The REMCs’ functions include:

  • Forecast renewable energy generation at state and regional levels
  • Schedule renewable generation with real time tracking and SCADA systems
  • Coordinate with the relevant load dispatch centre

Power Grid Corporation of India Limited (PGCIL) has already worked on similar control centre projects and has therefore been assigned the implementation role. On completion, PGCIL will hand the REMCs over to the states.

The projects are to be implemented within 15 months of award and commissioned progressively through 2018/19.

PGCIL recently entered in to a loan agreement of up to US$500 million with the Asian Development Bank (ADB) partly for one of its Green Energy Corridor projects.

View original post on: https://www.pv-tech.org/news/india-plans-renewable-energy-management-centres-for-green-corridors

PM Narendra Modi may step in to resolve wrangling on NITI Aayog’s proposed National Energy Policy

ঘোষণা নীতি আয়োগ-এর

NEW DELHI: Prime Minister Narendra Modi is likely to intervene to resolve an inter-ministerial wrangling over NITI Aayog‘s proposed National Energy Policy to roll out the long-overdue power sector reforms.

Different stakeholder ministries, including those of power, coal, and new and renewable energy, have failed to come to a consensus on some points of the proposed policies, including freeing coal from price control, despite several rounds of consultations, said a senior government official who is aware of the deliberations on the matter.

“National Energy Policy is pending with PMO (prime minister’s office),” the official told ET. “The top office is now planning to convene a high-level meeting of all concerned ministers and secretaries to be chaired by the PM himself to suggest way forward to the policy,” the official said.

The first draft of the policy, framed by the Aayog after intense consultations over last one and a half year, was ready for seeking public comments by March. But that has been held back after concerned ministries raised objections with the PMO over certain proposals.

PM Narendra Modi may step in to resolve wrangling on NITI Aayog's proposed National Energy Policy



Coal ministry, for example, expressed reservations over the proposal to free up the commodity from any price control. Such a move would divest the ministry of its power to control coal prices and help maximise profit for Coal India.

However, NITI Aayog has largely stood by its reforms agenda. National Energy Policy has proposed comprehensive reforms to free sectors such as coal, electricity and fertilisers from subsidies and price controls, helping to produce more power by making electricity generation projects commercially viable for private companies.

The policy has outlined the need and measures to improve financial condition of power distribution companies (discoms), which are bogged down by debt, to make the sector profitable in the medium to long term.

Key suggestions being considered include overhauling the entire structural and functional capacity of discoms so that they operate more professionally.

In India, electricity and fertiliser sectors are heavily subsidised. The government feels there is a need to bring down subsides in such sectors and, hence, a clear roadmap for lowering subsidies and aligning their prices to that of the market has been laid out.

But this proposal hasn’t gone down well with concerned ministries.

National Energy Policy is aimed at curbing imports by increasing production of renewable energy in the country fivefold to 300 billion units by 2019 and tripling coal production to 1.5 billion tonnes. Coal imports are envisaged to come down by 10% by 2022 and by 50% by 2030.

NITI Aayog CEO Amitabh Kant had earlier told ET that differences are obvious as the policy proposes far reaching reforms to transform the power sector. “Wherever there are differences, we’ll pose them before the Prime Minister and let him take a call,” he had said earlier. Prime Minister is the chairman of the Aayog.

National Energy Policy will replace Integrated Energy Policy of the UPA regime that envisioned a roadmap for sustainable growth with energy security over a reasonable period of time.

Is solar sector truly achieving grid parity?

Amplus Energy Solutions won projects across ten states in the bids conducted by Solar Energy Corporation of India (SECI) for rooftop solar power. The tariff offered for projects in Uttarakhand, Himachal Pradesh, Puducherry and Chandigarh was the lowest in history—Rs 3 per unit of electricity. And in six other states, tariff rates between Rs 5 and 6 per unit were offered.

The bidding comes at a point where grid parity of renewable energy is being hailed as a turning point of electricity scenario in India. Grid parity is a situation when generating electricity from alternative sources of energy like renewables costs more or less the same as conventional sources.

This means renewable energy sources can generate electricity at the rate similar or equal to thermal power generation. Unfortunately, the Rs 3-per-unit-tariff is certainly not a step in that direction. The price can be achieved because the government is offering subsidies worth 70 percent of the capital cost, ranging from Rs 38,500 to Rs 52,500 in the capital expenditure model.

There is a direct infusion of subsidy for every kilowatt (kW) in the rooftop solar sector. But even the solar sector, in general, has witnessed tariff rates fall to an all time low. This is because of reverse bidding rather aggressive reverse bidding in central and state solar project auctions that has yielded tariff offer of around Rs 4.34 per unit in January by Fortum Finnsurya Energy, a Finland-based company operating out of Rajasthan.

It was beaten less than a month ago by tenders worth 750 MW of solar at Bhadla Solar Park in Rajasthan which benchmarked by the tariff at Rs 3.93 per unit of power generation. Again, this low benchmark cost is for a 750 MW that would receive viability gap funding (VGF) of 30 per cent. VGF is a capital subsidy to bridge the gap between the project cost dictated by the prevailing electricity rate and the price quoted by a developer. Can we deem this achievement as grid parity when the realisation of a low tariff is under the capital subsidy provided by the government when most of these projects have not seen a financial closure because banks do not consider these projects financially viable?

Not just direct capital subsidy

Apart from the capital subsidy for rooftop and VGF for larger solar projects, the government offers a tax benefit called accelerated depreciation (AD) to all the projects that are not entitled to a direct capital subsidy. AD is the depreciation of fixed assets at a fast rate early in their useful lives. This AD is tax rebate that the project enjoys for the first few years of operation.

This form of incentive is provided by the government to increase investment in any particular sector. One of the primary reasons for the development of wind sector in India is AD. Seventy percent of the 28,279.40 MW installed wind power is based on AD. The impact of AD was felt when the government discontinued the rebate in 2012, and the entire sector saw stagnation. By intense lobbying, it was reintroduced for the development of wind sector, and now the capacity installed has bounced back.

Subsidised grid parity versus unsubsidised grid parity

India has set a target to achieve 175 gigawatts (GW) renewable energy capacity by 2022. Out of this, 100 GW has been allocated to solar and 60 GW to wind. This ambition was raised in July 2015 when India announced its Intended Nationally Determined Contributions to United Nations to show the strides it is willing to make to reduce carbon emissions. To meet these targets and for the development of and to attract investment in wind and solar sectors in India, there have been various forms of subsidies and tax incentives available.

The question is with subsidies and other incentives involved, can the achievement of low tariffs be termed as achieving grid parity? Should India wait for a little for the sector to be deemed competitive when thermal power produces cheaper electricity without the backing up of subsidies? When banks do not consider most of these projects economically viable to fund, and they haven’t generated and supplied electricity at this rate, how can this be an achievement for the sector?

However, India still has 237 million people who do not have access to electricity. We need to provide these people with reliable and affordable power as soon as possible. And if we have decided that renewable energy is the future of electricity, then we need to accept that today renewable energy is a little more expensive than thermal power without subsidies. We have to pay more for this clean energy and people with better paying capacity would have to share a bigger portion of this burden.

 

View original post on: http://www.millenniumpost.in/NewsContent.aspx?NID=347247

The colossal African solar farm that could power Europe

The minibus crosses the vast plateau on a newly paved road. Cracked fields stretch away towards the Moroccan desert to the south. Yet the barren landscape is no longer quite as desolate as it once was. This year it became home to one of the world’s biggest solar power plants.

Hundreds of curved mirrors, each as big as a bus, are ranked in rows covering 1,400,000 sq m (15m sq ft) of desert, an area the size of 200 football fields. The massive complex sits on a sun-blasted site at the foot of the High Atlas mountains, 10km (6 miles) from Ouarzazate – a city nicknamed the door to the desert. With around 330 days of sunshine a year, it’s an ideal location.

As well as meeting domestic needs, Morocco hopes one day to export solar energy to Europe. This is a plant that could help define Africa’s – and the world’s – energy future.

(Credit: Getty Images)

Hundreds of curved mirrors, each as big as a bus, are ranked in rows covering 1,400,000 square metres of desert, an area the size of 200 football fields (Credit: Getty Images)

Of course, on the day I visit the sky is covered in clouds. “No electricity will be produced today,“ says Rachid Bayed at the Moroccan Agency for Solar Energy (Masen), which is responsible for implementing the flagship project.

An occasional off day is not a concern, however. After many years of false starts, solar power is coming of age as countries in the sun finally embrace their most abundant source of clean energy. The Moroccan site is one of several across Africa and similar plants are being built in the Middle East – in Jordan, Dubai and Saudi Arabia. The falling cost of solar power has made it a viable alternative to oil even in the most oil-rich parts of the world.

As well as meeting domestic needs, Morocco hopes one day to export solar energy to Europe.

Noor 1, the first phase of the Moroccan plant, has already surpassed expectations in terms of the amount of energy it has produced. It is an encouraging result in line with Morocco’s goal to reduce its fossil fuel bill by focusing on renewables while still meeting growing energy needs that are increasing by about 7% per year. Morocco’s stable government and economy has helped it secure funding: the European Union contributed 60% of the cost for the Ouarzazate project, for example.

(Credit: Sandrine Ceurstemont)

With around 330 days of sunshine a year, the region around Ouarzazate – a city nicknamed the door to the desert – is an ideal location (Credit: Sandrine Ceurstemont)

The country plans to generate 14% of its energy from solar by 2020 and by adding other renewable sources like wind and water into the mix, it is aiming to produce 52% of its own energy by 2030. This puts Morocco more or less in line with countries like the UK, which wants to generate 30% of its electricity from renewables by the end of the decade, and the US, where President Obama set a target of 20% by 2030. (Trump has threatened to dump renewables, but his actions may not have a huge impact. Many policies are controlled by individual states and big companies have already started to switch to cleaner and cheaper alternatives.)

Due to the lack sun on the day I visit, the hundreds of mirrors stand still and silent. The team keeps a close eye on weather forecasts to predict output for the following day, allowing other sources of energy to take over when it is overcast.

The reflectors can be heard as they move together to follow the sun like a giant field of sunflowers

But normally the reflectors can be heard as they move together to follow the Sun like a giant field of sunflowers. The mirrors focus the Sun’s energy onto a synthetic oil that flows through a network of pipes. Reaching temperatures up to 350C (662F), the hot oil is used to produce high-pressure water vapour that drives a turbine-powered generator. “It’s the same classic process used with fossil fuels, except that we are using the Sun’s heat as the source,” says Bayed.

The plant keeps generating energy after sunset, when electricity demands peak. Some of the day’s energy is stored in reservoirs of superhot molten salts made of sodium and potassium nitrates, which keeps production going for up to three hours. In the next phase of the plant, production will continue for up to eight hours after sunset.

(Credit: Sandrine Ceurstemont)

Once fully operational, the solar plant will only require about 50 to 100 employees (Credit: Sandrine Ceurstemont)

As well as boosting Morocco’s power production, the Ouarzazate project is helping the local economy. Around 2,000 workers were hired during the initial two years of construction, many of them Moroccan. Roads built to provide access to the plant have also connected nearby villages, helping children get to school. Water brought in for the site has been piped beyond the complex, hooking up 33 villages to the water grid.

Water brought in for the site has been piped beyond the complex, hooking up 33 villages to the water grid

Masen has also helped farmers in the area by teaching them sustainable practices. Heading towards the mountains, I visit the Berber village of Asseghmou, 30 miles (48 kilometres) north of Ouarzazate, where a small farm has now changed the way it raises ewes. Most farmers here rely on their intuition alone but they are being introduced to more reliable techniques -such as simply separating animals in their pens – which are improving yields. Masen also provided 25 farms with sheep for breeding purposes. “I now have better food security,” says Chaoui, who runs a local farm. And his almond tree is thriving thanks to cultivation tips.

Even so, some locals have concerns. Abdellatif, who lives in the city of Zagora about 75 miles (120 kilometres) further south, where there are high rates of unemployment, thinks that the plant should focus on creating permanent jobs. He has friends who were hired to work there but they were only on contract for a few months. Once fully operational, the station will only require about 50 to 100 employees so the job boom may end. “The components of the plant are manufactured abroad but it would be better to produce them locally to generate ongoing work for residents,” he says.

(Credit: Sandrine Ceurstemont)

The solar plant draws a massive amount of water from the local El Mansour Eddahbi dam. Water scarcity has been a problem in the semi-desert region (Credit: Sandrine Ceurstemont)

A bigger issue is that the solar plant draws a massive amount of water for cleaning and cooling from the local El Mansour Eddahbi dam. In recent years, water scarcity has been a problem in the semi-desert region and there are water cuts. Agricultural land further south in the Draa valley depends on water from the dam, which is occasionally released into the otherwise-dry river. But Mustapha Sellam, the site manager, claims that the water used by the complex amounts to 0.5% of the dam’s supply, which is negligible compared to its capacity.

Still, the plant’s consumption is enough to make a difference to struggling farmers. So the plant is making improvements to reduce the amount of water it uses. Instead of relying on water to clean the mirrors, pressurised air is used. And whereas Noor 1 uses water to cool the steam produced by the generators, so that it can be turned back into water and reused to produce more electricity, a dry cooling system that uses air will be installed.

The success of plants in places like Morocco and South Africa will encourage other African countries to turn to solar power

These new sections of the plant are currently being built. Noor 2 will be similar to the first phase, but Noor 3 will experiment with a different design. Instead of ranks of mirrors it will capture and store the Sun’s energy with a single large tower, which is thought to be more efficient.

Seven thousand flat mirrors surrounding the tower will all track and reflect the sun’s rays towards a receiver at the top, requiring much less space than existing arrangement of mirrors. Molten salts filling the interior of the tower will capture and store heat directly, doing away with the need for hot oil.

Similar systems are already used in South Africa, Spain and a few sites in the US, such as California’s Mojave desert and Nevada. But at 86ft (26m) tall, Ouarzazate’s recently erected structure is the highest of its kind in the world.

(Credit: Getty Images)

Africa’s sunshine could eventually make the continent a supplier of energy to the rest of the world (Credit: Getty Images)

Other plants in Morocco are already underway. Next year construction will begin at two sites in the south-west, near Laayoune and Boujdour, with plants near Tata and Midelt to follow.

The success of these plants in Morocco – and those in South Africa – may encourage other African countries to turn to solar power. South Africa is already one of the world’s top 10 producers of solar power and Rwanda is home to east Africa’s first solar plant, which opened in 2014. Large plants are being planned for Ghana and Uganda.

Africa’s sunshine could eventually make the continent a supplier of energy to the rest of the world. Sellam has high hopes for Noor. “Our main goal is to become energy-independent but if one day we are producing a surplus we could supply other countries too,” he says. Imagine recharging your electric car in Berlin with electricity produced in Morocco.

With the clouds set to lift in Ouarzazate, Africa is busy planning for a sunny day.

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