Editorial Today – Potential and Impediments of Solar Energy sector in India

Issue India’s renewable energy sector is undergoing a major transformation.

What is solar energy? Solar energy is energy which is created from sunlight, or heat from the sun.

Solar Power Potential in India India is a tropical country and it receives solar radiation almost throughout the year.

Advantages of Solar Energy in India This is an inexhaustible source of energy and the best replacement to other non-renewable energies in India.

Disadvantages of Solar Energy in India We cannot generate energy during the night time with solar energy.

Government Policy As per its latest targets, the government is looking to raise solar power generation capacity to 48 gigawatts (GW) by early 2019, out of a targeted 100GW from solar by 2022.

Why state electricity distribution companies (discoms) are favouring solar energy Lower tariffs is one of the reasons.

Problems which are being faced by solar energy sector Dust, high temperatures and the dearth of water are contributing to a significant increase in the cost of operating solar power plants in the country.

Reason for falling solar tariffs Some players have become very aggressive in the competitive auction process and are bidding very low tariffs with fairly low returns.

Several impediments which needs to be tackled Land acquisition, financial condition of discoms and financing.

Conclusion

 

Issue

• India’s renewable energy sector is undergoing a major transformation. Wind energy, which till a few years ago was at the centre of attention, is now slowly losing traction. The government’s focus has now shifted to solar energy, which has the potential to light up millions of homes and power micro to large enterprises across the country.

 

What is solar energy?

• Solar energy is energy which is created from sunlight, or heat from the sun.
• Solar power is captured when energy from the sun is converted into electricity or used to heat air, water, or other fluids.
• There are currently two main types of solar energy technologies:

Solar thermal: these systems convert sunlight into thermal energy (heat). Most solar thermal systems use solar energy for space heating or to heat water (such as in a solar hot water system). However this heat energy can be used to drive a refrigeration cycle to provide for solar based cooling. The heat can also be used to make steam, which can then be used to generate electricity using steam turbines. It is considered more efficient to build solar thermal electricity generators at large scale, typically in the tens to hundreds of megawatts

Solar photovoltaic (PV): the conversion of sunlight directly into electricity using photovoltaic cells. PV systems can be installed on rooftops, integrated into building designs and vehicles, or scaled up to megawatt scale power plants.

 

Solar Power Potential in India

• India has tremendous scope of generating solar energy. The geographical location of the country stands to its benefit for generating solar energy. The reason being India is a tropical country and it receives solar radiation almost throughout the year, which amounts to 3,000 hours of sunshine.
• The National Institute of Solar Energy in India has determined the country’s solar power potential at about 750 GW.
• The solar power potential has been estimated using the wasteland availability data in every state and jurisdiction of India. The estimate is based on the assumption that only 3% of the total wasteland available in a state is used for development of solar power projects.
• According to the estimates, Rajasthan and Jammu & Kashmir have the highest solar power potential. Rajasthan, with its healthy resource of solar radiation and availability of vast tracts of wasteland in the form of the Thar Desert, has a potential of about 142 GW. Jammu & Kashmir receives the highest amount of solar radiation in India, and has a significantly large area of wasteland in Ladakh.
• Agricultural states like Punjab and Haryana expectedly rank low in terms of estimated solar power potential. Punjab would find it difficult to make available land for large solar power projects and has thus decided to concentrate efforts to set up solar power projects over rooftops and canals.
• India’s current solar power installed capacity is around 3 GW, or less than 0.5% of the estimated potential. Naturally there exists a massive opportunity to tap this potential.
• India ranks among the highest in the world in terms of solar irradiation with an average reading of 5.1 kilowatt hours (KwH) per square metre, according to CARE Credit Research. This is higher than Germany (2.9 KwH), Japan (3.65 KwH), the US (4.7 KwH) and Italy (3.8 KwH), all of which have a larger solar installed capacity than India.

 

Advantages of Solar Energy in India

Some of the advantages of solar energy which makes it all the more suitable for India are as follows:

• This is an inexhaustible source of energy and the best replacement to other non-renewable energies in India.
• Solar energy is environment friendly i.e. it does not release CO2 and other gases which pollute the air. Hence it is very suitable for India, India being one of the most polluted countries of the world.
• Solar energy can be used for variety of purposes like as heating, drying, cooking or electricity, which is suitable for the rural areas in India.
•  It can also be used in cars, planes, large power boats, satellites, calculators and many more such items, just apt for the urban population.
• In energy deficient country like India, where power generation is costly, solar energy is the best alternate means of power generation.
• We don’t need a power or gas grid to get solar energy. A solar energy system can be installed anywhere. Solar panels can be easily placed in houses. Hence, it is quite inexpensive compared to other sources of energy.

 

Disadvantages of Solar Energy in India

• We cannot generate energy during the night time with solar energy.
• And, also during day time, the weather may be cloudy or rainy, with little or no sun radiation. Hence, this makes solar energy panels less reliable as a solution.
• Only those areas that receive good amount of sunlight are suitable for producing solar energy.
• Solar panels also require inverters and storage batteries to convert direct electricity to alternating electricity so as to generate electricity. While installing a solar panel is quite cheap, installing other equipments becomes expensive.
• The land space required to install a solar plant with solar panel is quite large and that land space remains occupied for many years altogether and cannot be used for other purposes.
• Energy production is quite low compared to other forms of energy.
• Solar panels require considerable maintenance as they are fragile and can be easily damaged.  So extra expenses are incurred as additional insurance costs.

 

Government Policy

• As per its latest targets, the government is looking to raise solar power generation capacity to 48 gigawatts (GW) by early 2019, out of a targeted 100GW from solar by 2022.
• To ensure that there is a stable market for solar energy, the central government has already made it mandatory for state power utilities to buy a certain amount of this clean energy from independent power producers (IPPs).
• The duty structure for equipment needed to generate solar energy is more favourable compared to that needed for producing wind power.
• Government is ensuring grid connectivity and subsidies for rooftop solar projects.

 

Why state electricity distribution companies (discoms) are favouring solar energy

• Lower tariffs is one of the reasons
• Solar power helps discoms meet their peak power requirement.
• Solar power helps discoms meet their peak power requirement.
• The generation of solar energy can be forecast better, as compared to wind, which typically blows strongly at night and during the monsoon months, when the demand for power is low.

 

Problems which are being faced by solar energy sector

• Dust, high temperatures and the dearth of water are contributing to a significant increase in the cost of operating solar power plants in the country.
• Some of these factors, such as the level of dust particles and the type of dust, vary from region to region within the country, while other factors such as the hardness of the water and the shortage of a skilled labour force are more general problems faced by plants across the country.

Problems associated with high temperature

• The solar panels that are used are not designed for such high temperatures.
• In remote areas with high temperatures, it is being found that we are not getting the required units of power. The panels do not yield their optimal usage.
• Dust is a problem, especially in Rajasthan, where the dust conditions are really bad and require frequent cleaning around two times a month, which then increases the operational costs.
• There is alluvial dust (present in plains of north India and delta regions of south India). This type turns into mud when water is poured. Then there is sandy dust (present in Rajasthan and Gujarat), which can be washed away easily with water.

Cleaning costs      

• Dust is a problem, especially in Rajasthan, where the dust conditions are really bad and require frequent cleaning around two times a month, which then increases the operational costs.
• There is alluvial dust (present in plains of north India and delta regions of south India). This type turns into mud when water is poured. Then there is sandy dust (present in Rajasthan and Gujarat), which can be washed away easily with water.
• Apart from the dust, one other main issue is the hardness of the water.
• Hard water is not suitable for cleaning, and companies have to invest in reverse osmosis (RO) and other technology to make it suitable.
• Since many large-scale power plants are located in the interior regions of Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh and parts of South India, getting soft water on sites becomes difficult at times. Therefore, reverse osmosis or distillation plants have almost become mandatory for solar plants in order to provide water which can be used for cleaning modules.
• Apart from treating the water, the unavailability of a steady water supply also proves to be a problem for solar plant operators.

Rooftop solar

• While the government has sanctioned Rs.5,000 crore to provide a 30 per cent capital subsidy for rooftop solar installations, this works out to a one-time fix. Consumers will still be expected to foot the water bill and cleaning bill which means that individual households will also have to bear the operational costs of having solar modules on their roofs.

Skill Labour

• Skilled workforce required for cleaning and maintenance is not available in these areas and so companies have to bring them in from other areas and train them.
• All this results into higher operational costs but solar tariffs in India have fallen tremendously which pose a future risk for the industry.
• Thus companies in India are beginning to employ new technologies to counter the dust problem. For example anti-soiling technology like dust-free glass with self-cleaning hydrophobic nano-coating which stops dust from sticking to the glass of the module.

 

Reason for falling solar tariffs

• In the rush to build market share in this exciting sector, some players have become very aggressive in the competitive auction process and are bidding very low tariffs with fairly low returns.
• There is a fear that some of these projects could become unviable because developers will find it difficult to raise funds at attractive interest rates and contain high project costs.
• Low tariffs can also negatively impact the government’s target of achieving 100GW by 2022. We need to attract more players and many more investors into this nascent sector.
• This will come only if the returns are attractive for investors. Hence, it is important that every project remains viable from both aspects—tariff and profitability.

 

Several impediments which needs to be tackled

• From land acquisition to problems in grid evacuation, there are many issues that can derail returns on a project.
• Several discoms, the ultimate buyers of power, are in a poor financial condition. Hence, payment delays and rising receivables can upset both financial plans as well as cash flow management.
• Financing a large number of projects that have been awarded will require debt of almost $10 billion every year. India’s banking sector is already facing its own set of challenges and there are only a few banks that finance such long-term projects.

 

Conclusion

• The onus for giving a boost to the sector also lies with the government. The government could compensate bidders for delays in evacuation and land acquisition. However, the ideal solution would be to announce a feed-in tariff mechanism, and let companies acquire land and build their own evacuation.
•  There is also a need to invest in supporting infrastructure like transmission and distribution for evacuating power from solar projects.
• All it needs is policy and infrastructure support from the government and a pragmatic approach from industry players.