Replacing Diesel with Solar
A comprehensive guide from
Energy Alternatives India
Preview of September 2013 report
Energy Alternatives India (EAI) prepared the Replacing Diesel with Solar
report based on our extensive interaction with clients who require an objective
assessment of what solar energy can do for them in their quest to reduce diesel
consumption. The report has several objectives
For Energy Consumers
A clear conceptual overview that allows your strategy team to decide on
including captive solar power in your energy mix by analysing
The business case – price movement in diesel power vs. solar
The benefits of, and challenges in, integrating solar power in your
Detailed financial analysis of returns from replacing diesel with solar under
Favourable policies that incentivise your adoption of solar energy
Case studies – others’ experience in using solar energy
For solution providers
A study of the market for diesel-to-solar solutions, including
Current installed captive power capacity
Demand for diesel power
Attractive market segments
Economics of captive solar
PV industry status and trends
Why replace Diesel with Solar ?
Because not only is it clean energy, it is also much cheaper
Captive solar power costs just Rs. 7-8.5/kWh
Power from Diesel generators costs Rs. 16/kWh
• The cost goes even higher once losses from pilferage, evaporation, etc.,
are taken into account.
• In some applications, such as rural telecom towers, diesel power can cost
as much as Rs. 40/kWh!
The cost of diesel fuel keeps on increasing
• The price has increased 300% since 2002
and 46% since 2010
• If the price increases by 10% a year
(which has been the trend), diesel would
cost about Rs. 68/litre in 2015 and the
cost of power from diesel would be close
to Rs. 20/kWh!
Bottom line: Captive solar power is much cheaper than
diesel, and once the plant is installed the cost of power is fixed
for the next 25 years, unlike diesel where the cost keeps
What are the issues to be considered when
substituting Diesel with Solar?
While solar energy can replace diesel, there are several critical
aspects of using solar power in India that need to be examined
carefully when framing your solar strategy, such as
Will solar energy generate power during power cuts?
Can I replace my entire diesel consumption with solar power?
Are there any issues in using solar power that I should be aware of?
What incentives are available for setting up captive solar PV plants?
What are the costs involved and financial returns that I can expect
from replacing diesel with solar?
Who are the key vendors providing captive solar PV plants in India?
Do I need to have my own PV plant? Can I just buy solar power the
way I buy power from my utility?
Each of these, and many other such questions, are
discussed in the Replacing Diesel with Solar report
Will solar energy generate power
during power cuts?
Not all solar PV plants generate power during power cuts –
a fact that comes as a surprise to many of our clients. There
are three kinds of PV plants
The Replacing Diesel With Solar report discusses each
type of plant with respect to how they function and the
applications they are best suited to, including providing
power during power cuts. We also examine the use of
batteries to provide backup power when solar power isn’t
Can I replace my entire diesel consumption
with solar power?
Whether your entire diesel consumption or only a part of
it can be replaced with solar power depends on several
factors, such as
The extent of rooftop space available
The nature and schedule of the load
The timing of power cuts
The Replacing Diesel With Solar report examines the
impact of each of these factors on substituting diesel
with solar, and critically analyses integration of solar
power with diesel generators where sufficient solar
power cannot be generated to support the entire load.
We also discuss the timing of power cuts and the
financial impact of using solar power partially to offset
utility power and partially offset diesel consumption.
Are there any issues in using solar power that
I should be aware of?
Solar power is an intermittent source of power as
the sun isn’t always shining to the same extent on
the panels. These may create issues, particularly
when integrating solar power with diesel, such as
Reverse current flows
Efficiency losses in the DG set
The Replacing Diesel With Solar report discusses
these and other issues experienced when
implementing a solar solution. The solutions and
workarounds to these issues are also presented, as
well as our recommendations for integrating solar
What incentives are available for setting up
captive solar PV plants?
There are several incentives available to those
setting up captive solar PV systems, including
Renewable Energy Certificates
The Replacing Diesel With Solar report
discusses these in detail, including eligibility
criteria and amount of subsidy for different
categories of consumers and different kinds of
installations. We also illustrate other policy
initiatives such as group captive provisions that
allow several consumers to come together and
setup a common power plant
What are the costs and financial returns
that I can expect from
replacing diesel with solar?
The Replacing Diesel With Solar report gives detailed breakup of cost involved
in setting up a solar PV plant, such as
Cost break up of a 100 kW solar captive system – without batteries
Inverters (grid tie)
Balance of System (transformers, cables
and wires, tracking devices, etc.)
Installation (civil & general works)
31.5 - 33.8
7.7 - 8.3
23.8 - 25.5
6.3 - 6.8
70.0 – 75.0
The report also analyses financial parameters such as IRR and payback when
replacing diesel with solar under 3 scenarios (pessimistic, likely, and optimistic)
that vary the capital cost of the system, the escalation in price of diesel, and the
extent of diesel substitution.
Who are the key vendors providing captive
solar PV plants in India?
Due to the complexities in designing and installing
a captive solar PV plant, we recommend utilising
the services of a qualified vendor who can provide
you with turnkey solutions that are best suited to
The Replacing Diesel With Solar report provides
you with a list of 35 vendors in India with details
on solutions offered. We have included both
Companies that manufacture the solar power
system and also provide turnkey solutions in
integrating the system for the developers and
Companies/consultancies that merely provide
Do I need to have my own PV plant? Can I just
buy solar power the way I
buy power from my utility?
To avoid the initial investment required by solar PV
plants some organisations prefer to buy only the
power generated from a captive PV plant, just like
they buy power from a utility. This is known as the
Build Own Operate (Transfer) – BOO(T) model
The Replacing Diesel With Solar report discusses
the characteristics, features, and challenges in
implementing a BOO(T) solution, as well as a list of
10 vendors offering this solution in India.
How will the Replacing Diesel with Solar
report help me ?
This report answers the most critical questions that EAI has come
across in advising our clients
Why should I go for solar based captive power?
How much solar PV capacity do I need?
How much will it cost to install a solar PV captive system?
How much maintenance does a solar PV system require?
What are the key things I should look out for before installing a solar PV
What are the mistakes I should avoid?
How much space will I need for the captive PV installation?
Should I use solar as a backup power or as a mainstream power source?
Will I be able to depend completely on solar energy for my day time
If I operate night shifts, will I need a storage system (battery) for my energy
Can I sell my excess energy to the grid?
What are the components of the solar PV system?
What is the lifetime of the system?
Am I eligible for availing government incentives?
Can I install a hybrid captive system (mix of solar and wind OR solar and
When should I consider using a generator with my solar PV system?
Summary of Benefits
If you are looking to save on diesel by moving to captive solar
power, EAI’s Replacing Diesel with Solar report is
a one-stop resource for all the information you will need to
assess, implement, and profit from substituting diesel with
Within this report you will find 186 pages that
Captive solar PV technology and components
Constraints in replacing diesel with solar
Government incentives and regulations
Inputs on capital and operational costs and financial
Case studies of businesses that already use solar for
Vendors, component suppliers, and system integrators
List of solar PV captive power plant systems all over India
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Replacing Diesel with Solar report
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List of Contents – Chapter 1
Captive Power in India
Captive Power Plants in India
Diesel in India
Why Solar for Captive Power
The Business Case for Captive Power Plant (CPP) Using Solar PV (SPV)
Attractive Market Segments
Large Industrial Facilities
Large Commercial Buildings/Facilities
On-shore and Off-shore Oil & Gas
Remote Monitoring Stations
Solar Power vs. Diesel Generator
List of Contents – Chapter 2
Stand Alone PV Systems
Grid-tied Captive Power Plant
Grid-tied Systems With No Battery Backup
Grid-Interactive With Battery Backup
Solar Photovoltaic-Diesel Generator Hybrid System
Solar Photovoltaic-Wind Hybrid System
Summary of Solar PV Technology Options
List of Contents – Chapter 3
Setting up Solar CPP in India
Steps Involved in Setting Up a Captive PV Power Plant
Steps Involved in Setting up a Hybrid System
Key Requirements to Set Up a Captive Power Plant (CPP)
Setting up PV Captive Power Plants - Key Factors to Consider
Indian Companies and Entities Involved in Setting up of a Captive Power
List of Contents – Chapter 4
Policies, Regulations & Incentives
Government Incentives and Policies
Captive SPV and the NSM
• Guidelines for Off-grid and Decentralized Solar Applications
• Central Financial Assistance & Eligibility
• How to Apply
Commissioning of the Projects
Frequently Asked Questions
List of Contents – Chapter 5
Economics of Captive Power Plants
• Solar PV and Grid Parity
• Solar PV’s Diesel Parity
Capital Costs and Breakups
Inputs Used in the Financial Model
Performance of Solar PV System
Results of the Financial Model
• Pessimistic Scenario
• Likely Scenario
• Optimistic Scenario
The BOO(T) Model
List of Contents – Chapter 6
Financing of Solar CPPs
Project Finance Characteristics
Asset Finance Characteristics
Most Likely Routes for Financing of Solar PV CPP
Nodal Agencies that Support Renewable Energy Financing in India
Power Finance Corporation Ltd
Financial Institutions that Fund RE Projects in India
List of Contents – Chapter 7
Next Steps to be taken by a Solar PV Captive Power
Preparing Prefeasibility and Detailed Project Reports
Meeting Government Departments
List and Contact Details of State Nodal Agencies (SNA) in Various States
Central Government Relevant Department Details and Contacts
List of System Integrators of Solar PV Captive Power System
List of Contents – Chapter 8
Solar PV in India – Industry Status and Trends
Introduction to Alternative Energy Sources
Solar PV Technology
Solar PV – Crystalline Solar Cells
Solar PV – Thin Film Solar Cells
Solar PV - Concentrating Photovoltaic
Photo-electrochemical, Polymer, Nano-crystal and Hybrid cells
Solar PV Market Status and Trends
Market Share of Thin Film Photovoltaics
Solar Photovoltaic in India – A Snapshot
Solar Energy Potential in India
Regional Potential for Solar Power
Current Solar PV Scenario in India
Future Solar PV Scenario
Solar PV Future Contribution in Indian Electricity Supply
Status of Solar PV Technology in India
Solar Cells and Solar PV Production
Foreign Trade of Solar PV
Prominent Solar PV Power Projects & Companies in India
Solar PV Power Projects Installed
Solar PV Power Projects Approved by the Central Government under Phase I of JNNSM Scheme
Solar PV State Projects
Key challenges to growth of Solar PV in India
List of Contents – Chapter 9
Case studies of Indian Use of Captive Solar PV
Captive Solar PV Systems – Experience of L&T, Chennai
Captive Solar PV Systems – Experience of SSN Research Center, Chennai
1 MW Hybrid Energy Supply for a Cotton Mill, Tirupur, TN, India
Captive Solar PV Systems – Experience of Omax Auto Ltd, Gurgaon,
Captive Solar PV Systems at Daimler India, Chennai
Solar PV Captive Power Installations in India
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