With abundant sunlight, India offers a unique opportunity for the development of solar photovoltaic (PV) power. The Jawaharlal Nehru National Solar Mission (JNNSM), launched by the Ministry of New and Renewable Energy and Ministry of Power in January 2010, envisages that more solar power will not only ensure the energy independence of the country but also help reduce greenhouse gas emissions.
By Uma Bansal
Tuesday, August 17, 2011: The target
JNNSM targets an installed solar power generation capacity of 22 GW by 2022, 100 GW by 2030 and 200 GW by 2050. It aims to achieve grid parity by 2022, and parity with thermal based power generation by 2030. It also aims to install 4-5 GW of solar manufacturing capacity in India by 2017.
India is all set to not only meet but beat the target of the JNNSM. In the near term, the solar industry is looking to reach an installation base of about 1 GW. Over the next three years, it may achieve 1-1.5 GW of annual installations, year on year.
“More than 300 MW of solar PV projects are currently under execution. Another 500 MW of solar thermal projects are also in the process of being executed under the JNNSM. In addition to this, more than 900 MW of solar projects, both PV and thermal, have been signed for and are under execution in Gujarat,” informs K Subramanya, chief executive officer, Tata BP Solar.
Several new companies from India and abroad have started solar operations in India, and the existing companies have committed to expanding their capacity. States like Gujarat and Rajasthan have announced their own solar policies, providing further impetus to the solar industry. Off grid applications, which are highly relevant for rural India, are also receiving due attention.
While there are challenges that have been clearly identified by industry stakeholders, especially related to the mode of selecting projects under the JNNSM (price bidding mechanism) and achieving project financial closure, the solar market will continue to grow both based on a real need for energy and driven by key mechanisms like renewable purchase obligations.
“It is, however, important that the first phase of power plant projects under both the state and national policies get implemented in a timely manner, are well executed, and meet performance and quality norms,” says Debasish Paul Choudhury, president, SEMI India.
Grid connected farms: Main growth driver
According to Vivek Chaturvedi, global head, sales and marketing, Moser Baer Solar, the solar PV market in India could be bigger than 1 GW by 2012. This growth will be driven primarily by grid connected farms, with more than 90 per cent of the market being grid connected. The country is rapidly developing indigenous capabilities to build a complete PV ecosystem. This would lead to faster scaling up to meet the full scope of the business.
In the last two decades, the solar energy industry in India has developed in the off grid mode since the policy framework allowing solar power to be connected to the grid did not exist until January 2008. The real fillip came in 2010 with the JNNSM. As of March 31, 2011, grid connected plants that can generate 38 MW of solar power have already been set up, and this number is likely to rise dramatically by the end of 2011.
How big is the manufacturing base?
Currently, India has a solar cell manufacturing capacity of 600-800 MW and module capacity of more than 1000 MW. If all the announcements made by solar players are implemented, the cell capacity will double in the next 18 months. Indian companies are taking significant steps in developing systems as well, on a standalone and partnership basis with international players.
There are as many as 60 companies making solar modules, of which about 20 manufacture solar cells.
However, at present, solar PV cell manufacturing in India is totally dependent on imports for crucial materials like silicon wafers, encapsulating material and high transmission glass. Indigenous capabilities are needed on the material front in order to allow for manufacturing innovation and cost reduction.
Crystalline silicon (C-Si) solar cell technology continues to be the market leader, accounting for 85 per cent of the global market.
“We believe the same scenario will emerge in India as C-Si technology demonstrates a strong roadmap, and cost and price is likely to decline in future years,” says Ravi Surapaneni, vice president, Solar Semiconductor.
Crystalline technology has proven its performance stability over long periods even in field conditions. “One of the scoring factors for C-Si cells is its high efficiency. Two decades ago, crystalline silicon cell efficiency was 8-10 per cent. Today, we are getting about 17 per cent efficiency,” says Sunil Goel, vice president, Maharishi Solar Technology.
Thin film was seen as the technology of the future when it first appeared in the global markets some years ago since it used a fraction of polysilicon (very expensive at that time, costing as much as US$ 700/kg) compared to C-Si. However, two things went against thin film—first, the price of polysilicon dropped to one-tenth (US$ 70/kg), which means the economic argument in favour of thin film is losing its sheen. Second, thin films have rapid degradation of power output, especially in the first few years. Over the 25 year lifecycle of the project, C-Si modules degrade at an annual average of 0.5 per cent, whereas a thin film module degrades at about 1.25 per cent. Due to the long term nature of the business, this translates into a substantial difference in the power output towards the end of the project.
“Thin film technology is constantly being improved to overcome the stability and degradation issues, and many manufacturers now provide warranties similar to those provided for crystalline modules. Although commercially available thin film modules have lower rated efficiencies than crystalline modules, these often perform better in partially shaded conditions and have a lower temperature coefficient (allowing their performance to degrade less in high ambient temperature conditions),” shares Debasish Paul Choudhury.
Within thin films, amorphous silicon is losing ground to cadmium telluride (CdTe). CIGS (copper indium gallium di-selenide) is also making inroads into the market.
The latest breakthrough in cell technology is the introduction of dye or organic cells. Organic solar cells are flexible and lightweight, and their manufacturing cost is about one-third that of an inorganic solar cell. However, the main drawback of organic cells is their lower efficiency in converting sunlight into electricity. In general, organic cells have a 1-3 per cent efficiency rate, compared to silicon based solar cells’ 15-20 per cent. Still, organic cells technology scores over conventional solar cells because of its low impact on the environment and easy manufacturing process. Also, because these cells can be attached to flexible materials, they can be put on many surfaces.
“This technology is at a very nascent stage and it will take some time to replace the current single crystal silicon solar energy solutions. Rather, they are seen as an opportunity in their own niche market. As time progresses and the focus of the research concerning these cells broadens, the dye/organic solar cell might just become a contender in the current solar panel market,” opines Dr VK Kaul, general manager, solar photovoltaic group, Central Electronics Ltd (CEL).
“Eventually, the technology that can deliver the maximum power output over the 25 year lifecycle of the project, at the most competitive cost and without any environmental hazards, will survive and thrive,” says Subramanya.
Can we meet the demand?
The solar products manufacturing capacity in India has far exceeded the demand in the last 10 years, including 2011. The country still continues to be a large exporter of solar PV products. However, now with the JNNSM and state policies driving demand in the domestic market, the industry is well geared to meet this demand as well.
“The key drivers for solar power demand in India are a favourable and stable policy framework, support for solar based generation, rising energy and fuel costs, declining solar system prices, removal of administrative and bureaucratic hurdles, and availability of finance for solar projects at preferential interest rates,” says Ravi Surapaneni.
The biggest driver, however, is the sheer demand-supply gap in the overall power sector in India which stands at 12 per cent and peaks at about 17 per cent. This is when 40 per cent of the country’s 1.2 billion population—that is half a billion people—are not even connected to the electricity grid!
The conventional model of large power plants with the grid trying to connect every nook and corner of the country has failed, since the ‘pipe runs dry’ by the time it reaches the last mile in the remote villages. Therefore, decentralised renewable energy systems are essential to generate power where it is needed and consume it on the spot. Solar energy is an appropriate answer to address the energy security requirements of India.
Another demand driver for solar power is the emphasis on moving away from fossil fuels in order to meet our commitment to reduce CO2 emissions. As much as 54 per cent of India’s power generation capacity is coal based, and this accounts for 61 per cent of India’s GHG emissions. A shift away from coal over the long term is a national goal but this cannot happen until an efficient, accessible and affordable alternative is available. Solar has the potential to fit into this slot over the long term.
The biggest challenge in meeting the demand and the target is the reluctance of banks and financial institutions (FIs) to fund solar power projects. Projects which cannot achieve financing on the strength of their own balance sheets are going to be in difficulty.
Another issue is the quality of materials to be used in the projects. “It would be unfortunate if project developers go in for cheap imported inputs to drive down the capital costs and compromise on the long term durability of the projects. The 145 MW of projects being administered through NTPC Vidyut Vyapar Nigam (NVVN) have been agreed upon at tariffs, which are very low. This would affect their profitability, and in some cases even the economic viability of the projects. If the first set of projects under the JNNSM goes on stream successfully, it will lead to a virtuous cycle of growing confidence in solar technology, and investors, developers and bankers will come forward to participate in the second phase of the JNNSM,” says Subramanya.
Roadmap for the industry
While Indian companies have been exporting modules for many years to markets in Europe and elsewhere, successfully meeting the performance and quality norms, they need to focus on innovation and cost reduction to stay competitive, both domestically and internationally. Today, India has no polysilicon or wafer production capability and the materials ecosystem is also not fully developed, leading to overdependence on imports. This significantly restricts the opportunities for innovation.
“While some companies have begun to invest in polysilicon and in integrated production of crystalline silicon modules, there is a clear need for the industry to come together to establish common goals and a roadmap for itself in all areas of PV technology (crystalline silicon and thin film technology) as well as power electronics, balance of system products and manufacturing equipment,” says Debasish Paul Choudhury.
Suggestions for govt
Building a robust industry needs planning for the long term. Like any other nascent industry, the solar business in India is also undergoing its share of teething problems. This is where a healthy interface between the government and the industry will ensure that the solar business scales up rapidly in the country.
According to K Subramanya, the Ministry of New and Renewable Energy urgently needs to take the following steps in order to sustain the solar industry’s momentum and ensure that the many pitfalls lurking around the corner are skirted:
- Get RBI to ask the banks to treat solar projects on priority and out of the sectoral limits of the power sector. Renewable/solar energy should be a standalone sector with a proportionately adjusted sectoral limit for banks to fund.
- Get international funding support. The Asian Development Bank has already announced a US$ 150 million fund to give partial credit guarantees for solar projects in India. Such opportunities should be explored with other sources, too.
- Ensure that the next round of projects is allocated only after the technical capability of the applicants to develop and run such projects is subjected to due diligence.
- Ensure that the tariffs are based on the average market assessment and not at the lowest level (which would translate into cheap and unreliable technology being used).
- Plug all loopholes and ensure that only ‘made in India’ cells and modules are used in JNNSM projects.
- Measure the performance of the current set of projects as soon as possible and publicise that data, so that there is no ambiguity about the performance of different technologies and vendors.
- There should be strict enforcement of the renewable purchase obligations. It will require political will to enforce the state level utilities to purchase 0.25 per cent of solar power (given their poor financial health). But any laxity on this count will be a setback to the confidence of investors and bankers about the seriousness of the government in implementing this policy.
- Proper attention to the off grid solar segment, as it has the greatest potential to benefit the largest number of poor people in remote and rural areas of India.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine