Solar power in india


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Indian Power Scenario: Increasing importance of renewables
A Knowledgefaber Article focusing on Solar Power in India

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Solar power in india

  1. 1. Indian Power Scenario:Increasing importance ofrenewablesA Knowledgefaber Article focusing on SolarPower in IndiaWritten by Vipul Vohra and Sushil Rajpurohit, EngagementManager and Consulting Partner at Knowledgefaberrespectively. Knowledgefaber can help you at every step ofbuilding and growing successful power generation,transmission or distribution business11/14/2011
  2. 2. Indian Power Scenario: Increasing importance of renewablesIn this article the main objective is to understand the renewable energy scenario in India:1. What is the current power situation in India?2. What is the current renewable power portfolio in India?3. What factors are responsible for attractiveness of renewable energy and solar energy generation sectors in India?4. Solar energy policies and incentives offered by Central and State governments in IndiaResearch MethodologyKnowledgefaber researchers have been tracking Indian Power sector on an ongoing basisExtensive secondary research including but not limited to company websites, journals, magazines, literatureshared by participants, web search, etc. Numerous Interviews (primary research) with key participants fromexisting industry players, investors and industry expertsIndian Power situation:Power deficits are common in India and to some extent is one of key constraint to achieve high GDP growth.Supply is much less than demand. Power cuts are common in most parts of country and power supply is erratic andunreliable to be leastThe GDP growth of 7-9% in last 7-8 years has fueled a rapid rise in demand which has outpaced the capacity staddition/renovation of the power plants in India. As of 31 march, 2011 the Installed power capacity is 176 GWwith energy mix of 65% thermal, 21% hydro, 3% nuclear and 11% from renewables as also indicated in fig.1.Capacity addition has grown at 7% CAGR from 2007-2011 but still there remains high power and peak powerdeficit ranging from 9-11%. Figure 1: India’s segment-wise installed power generation capacity 2008-2011 (GW) 2
  3. 3. Indian Power Scenario: Increasing importance of renewablesRenewable portfolioOne of the interesting aspects of India’s energy mix is the relatively high penetration of renewables and thissegment has witnesses the highest growth at about 20-22% in last four years.As of 31st March, 2011 the installed renewable energy capacity in India is ~ 21 GW. As reflected in Fig. 2 wind has69% share, small hydro with 15% followed by Cogen at 8% at Biomass at 6%. Solar is at nascent stage with <1%. Sowe can see that in India the renewable energy is heavily skewed in favour of wind although enough potential existsfor biomass and bagasse. The biggest potential we believe lies in Solar. Solar has present capacity of ~45 MW with87% as grid connected and 13% as off grid. Figure 2: Segment-wise break up of installed renewable power generation capacity (GW)Attractiveness of Renewable in India1) India has limited coal availability for power as well the quality of coal has 30-35% ash content which makes it highly undesirable. Also, coal policies are controlled by government and establishing sufficient coal linkages is a challenge for the power generators2) In a bid to secure supplies to high grade coals, many Indian power generating players have to make coal mine acquisitions abroad resulting in added costs. These players should look at investing in renewable energy generation to diversify their operations and reduce dependence upon thermal energy alone.3) Limited domestic production of oil and gas in India restricts its use in power plant4) Increasing thrust from Indian top leaders on sustainable growth and clean technology5) Large thermal plants require huge tracts of land adjacent to a water source. Availability of such land and land acquisition are the major challenges.The above mentioned issues does indicate the importance of renewable energy and particularly solar to meet therising demand of power and also to provide the energy security to India.Potential and attractiveness of Solar in India India receives solar energy equivalent to - 5,000 trillion kWh/year 3
  4. 4. Indian Power Scenario: Increasing importance of renewables Daily average solar energy incident varies from 4 -7 kWh per sqm with about 2,500–3,000 sunshine hrs/year High solar yield Attractive Feed in tariffs and solar policies(National solar mission and various state solar policies) Tremendous opportunity for offgrid solution in India Solar In India has potential to reach 20-30 GW by 2020 Figure 3: India’s segment-wise installed power generation capacity 2008-2011 (GW)Solar policies/incentivesIndian solar policies can easily be divided into two main categoriesA) Central levelB) State levelAt central level National solar mission(NSM) is the most attractive solar policy with target of adding 20 GW of Solarby 2022.The intent of this policy is to create a environment for a self-sustaining business models for utility scalesolar power plants and rapid diffusion of solar technologies in India. In long term, promote India as a leader in solarindustry through indigenous R&D, local manufacturing hub and innovative solar solutionsHighly attractive feed in tariff of INR 18-19 Kwh of PV and INR 12-14 kWh for solar thermal has been announcedand also a solar Renewable purchase obligation of 0.25% to start with is also mandated.NSM has created lot of excitement among domestic and international solar community to look at India as one ofthe potential solar hub. Already plants of ~ 300-400 MW are under various stages of construction/approval 4
  5. 5. Indian Power Scenario: Increasing importance of renewablesAt state level the two states of Rajasthan and Gujarat have taken the initiatives to launch state specific solarpolices with attractive tariffs and incentives. Both the states are attracting tremendous investor interest. 500+ MWof solar projects are under various stages of approval/construction as per state policies Figure 4: Central and state level solar energy policies in IndiaWith fast rising fuel costs and depleting resources, solar energy will play a vital role in ensuring energy security forthe country. Huge potential of solar energy in India along with investor friendly policies present an attractiveopportunity for investors to enter this largely untapped space and achieve high rate of growthSolar application in IndiaIndia provides varied opportunities for the application of solar technology. Application ranges from powergeneration in grid and off grid way to non power application of lighting, water heating and cooking food, irrigationpumps etc. Figure 5: Power and non-power applications of solar energy in India 5