India’s National Solar Mission aims to increase solar capacity from 250 MW at the end of 2011 to 20 GW of grid-connected solar alone by 2022. The total installed capacity of grid-connected solar power in India is reported to be 503.9 MW so far. Excerpts by R Srinivasan on the 3rd Power Today Round Table on “Solar: Towards Grid Parity†recently organised in Mumbai by Power Today magazine.
Experts:
Umesh Agrawal, Associate Director, GRID, PwC
JP Gupta, Vice President (Engineering), Waaree Energies
Mukti Marchino, Assistant VP, PXIL
Shirish Garud, Senior Fellow, The Energy and Resources Institute (TERI)
Ramesh Vyas, Director, Solar, International Marketing Corporation
Sourabh Jain, Vice President, Solid Solar
Kunal Chandra, India head, Proinso
Satish Kashyap, Co-Founder and Director, General Carbon
Vikram Shetty, General Manager, Twincity Sunlife
Ashutosh Dravid, Assistant VP and Head–Business Development, PXIL
Pallavi Bedi, Partner, J Sagar Associates
Kolan Saravanan, GM, Centrotherm Photovoltaics
Sandeep Mahajan, Dy GM–Business Development, Sterling and Wilson
Ajit Habbu, Regional Manager–Environment & Energy Services, TUV SUD South Asia
Pratap Padode, Editor-in-Chief, Power Today
Moderated by: Shashidhar Nanjundaiah, Group Executive Editor, Power Today
Nanjundaiah: The recent bidding for solar (for per unit long term agreement of Rs 7.49) has been very aggressive, but will it work? We are supposed to achieve 1,100 MW and we are getting there. The first phase won’t be a problem but Phase 2 will be a litmus test. What can we do to get to the point where we can do away with the subsidies, and when will we achieve grid parity?
Gupta
Grid parity is basically the cost of electricity that we call the average pooled purchase cost (APPC). In India, land to generate solar is a big issue, and this is why I believe we must go for alternatives like floating solar. The technologies are available now, Tata has introduced it and Gujarat has come up with a different kind of floating solar. So the cost of floating solar is in the range of Rs 6-6.5 crore, which is cheap. And with this present technology we can say that we are already at grid parity.
Nanjundaiah: Are the bids realistic?
Agrawal
It would be difficult to comment since everyone will have their own stand with respect to not only pricing but also financing. With commercial numbers available in the market, Rs 8-8.50 is feasible for most players. The power purchase basket is closer to Rs 3 and inching forward, because in many cases we have not absorbed the increase in coal price, increase in imported coal price, etc. So we have a scale effect on the price of solar modules as well as the rest of the components and it is coming down and you have another push from coal-based plants so the prices are going to go up both on the capital side as well as the side of the fuel price.
If you look at a meeting point of Rs 6, then what has been projected in a variety of studies we should achieve grid parity in 2017. But that grid parity may or not fully factor in some issues. The issue in solar and other renewables is the intermittent nature of generation. The price or cost of that is not factored in when you talk about grid parity. Without factoring that in, may be grid parity should be there by 2017.
Garud
We can generate solar at the point where we need it. That is why the government is initiating rooftop, which is a very important method. In Mumbai, consumers pay Rs 13, but with rooftop solar technology, a consumer can get power at Rs 8. So decentralised generation is a solution.
Nanjundaiah: Does the government subsidise rooftop enough?
Jain
There is a supporting structure and framework available for these kind of projects. The current rooftop installation capacity is less than 10 MW, while an estimate suggests that 30,000 MW generation is taking place through diesel gensets (DG sets) in India and that is a huge capacity that is currently viable in terms of being replaced by solar rooftops. In Germany, around 80 per cent of rooftop installations are on roofs of SMEs and commercial enterprises and 20 per cent is on individual rooftop owners. Assuming that this is going to be replicated in India, the current framework does not sufficiently give a boost to individual rooftop owners.
Vyas
Solar is never intended to replace other sources of power, it is the third supplement. Now if the policies come, the government would like to have a focused approach to encourage the industrial rooftops that even if it does not replace [more conventional supply]. Diesel generation as a captive requirement, it is said that the all-India capacity could be in the region of about 40 GW. Now we are already at grid parity vis-Ã -vis diesel.
Nanjundaiah: On the equipment import issue, how can we strike a balance between domestic manufacturing capacity versus bringing down the prices?
Saravanan
The domestic industry needs some time to develop and mature. The big companies have been asking the government to impose a duty of 25 per cent on equipment that they have been making for years, but on the other hand, they are not able to compete with the Chinese. How then do we expect to compete with these Chinese banks that have loaned up to $40 million over the last 3-4 years?
Shetty
In favour of the solar industry growing we should support any country who can manufacture at a cheaper price and support the cause of achieving grid parity. That said, we also need to support the domestic market. If somebody wants to import the raw materials and manufacture the modules then that module is going to be more expensive because of the duties on the raw materials. So it should be fair for both.
Bedi
Domestic content and manufacturing definitely needs a boost. That is why imports have a 30 per cent requirement. That is good enough. There needs to be more incentive for promoting the industry set-up here for manufacturing as against putting anti-dumping duties against the Chinese. That is not needed at this stage and that is something that can be pushed for later. At the moment we need to bring down the cost and to do that you need to get the equipment cheaper. So that should be the focus right now, to bring down the cost.
I will add R&D development because the main motive of the [National Solar] Mission is to obtain and apply technological advancement and in time that will bring cost down. With the technological advancement, the cost will go down and that is a good time to impose anti-dumping on Chinese equipment.
Saravanan
I do not believe we should accept imports from a country that does not follow World Trade Organisation (WTO) rules for the sake of the lowest cost. In that case, we should never go back to WTO and complain about anything else, just open up everything.
Garud
Our manufacturing cannot survive because raw material is coming from Western countries and China. We do not have proper homegrown technology in thin-film technology. So the government can keep certain market segments reserved for the domestic market–perhaps small rooftops, for example, where you give better subsidy. That is what Europe is trying to do.
Nanjundaiah: What will be the implication of exchanges specifically for renewable energy?
Dravid
We are open to trading renewable power on the exchange. As far as normal power is concerned in green it is already on the cards but vis-Ã -vis solar we are a little distance away. There were hardly 300 certificates in the market last month vis-a -vis buyers of 10,000 certificates.
Nanjundaiah: In view of these hurdles, do we see grid parity happening by 2017, and at what tariffs?
Agrawal
Demand might build up in the next 3-5 years and that is when you will see prices crashing much lower than what it is already so may be by 2017 you will have some kind of grid parity. But this will be possible without factoring in the intermittent nature of the resource… How much solar you can have in the grid is constrained until and unless you find a solution to the storage and other power technologies. 2017 there should be grid parity in the range of Rs 5.50-6.
Kashyap
Grid cost is taken from the concept of average increased cost of coal and increased cost of natural gas. So where do we see this number going over the next 3-5 years that is one side of the story. Do we see it doubling? I don’t think so… My assessment is Rs 4.20-4.30 of where pooled costs should be going forward.
Gupta
With this state of affairs, Rs 2.30 and maximum Rs 3 seems unimaginable, with this it should go up to Rs 6-8.
Marchino
When we see the economy as a whole we should also take into consideration what is the demand of power and what have we met through solar and we kind of apportion some cost of demand which is not agreed by conventional energy then we can reach that grid parity. I cannot estimate but it could be around 30 per cent.
Garud
You can come down to Rs 6 or so which is today’s wind power so by 2015 it is possible. It depends on the second phase of JNNSM because there you are targeting 4,000 MW and that is the real game-changer.
Jain
There may be some abnormal factors that are giving us an impression that Rs 8 is viable. With the current policy set-up it might be difficult for solar costs to go down but if we can work on policies for example propagating rooftop solar, making it so obvious that every household wants to install it.
Gupta
In Haryana every time they have elections, the bills will be removed and they will take free connections and we have 30 per cent T&D losses. So, what they effectively do is charge people who are paying the bills more and more. If you look at it, rural India does not pay electricity bills at all. It is urban areas that are paying the bills and maximum we tax the industry. Power in China is Rs 2 and in India it is Rs 6.
Chandra
I believe Rs 7.50 is a very aggressive price. In the off-grid market the opportunity is massive and the advantages too are immense. If something like that pushes or drives the market, 2017 seems a little realistic.
Kashyap
I am not so confident on grid parity in solar, not even in 2017. If you take wind energy in the last 7 years the price per MW in 2005 was around Rs 4 crore and today it is nearly Rs 6 crore per MW. So it has actually gone up. For a technology you would always say it has to go the other way. So if wind has not been able to achieve parity over so many years, what makes us believe that solar will? In solar you can say that there is grid parity because you are replacing diesel cost. So it is more a question of perception but trying to equate that to the cost of power from fossil fuel and saying that that is grid parity, I don’t see it happening, not even in 2020.
Shetty
We have seen a lot of German, European and American companies shutting down which is the phase of the business. You will have next generation investors like Mitsubishi, Honda, etc, pumping in fresh investÂments and starting with new technology manufacturing facilities. So, first we should not restrict import of any foreign technologies because it is only going to do
justice to the business and help solar grow and come closer to grid parity.
Coming to grid parity, it is much more than just the pooled price or trying to compete with the conÂventional power price. Grid parity for me would be that the cost of solar power is at the same price that I would buy conventional power. So it is tariff-related. So, for example, the rooftop systems should have RECs starting from 100 kW and should go to 5 MW from 2 MW. Similarly, it should come down to 100 kW systems so the REC trading starts from 100 kW systems. As we move forward, every year we bring down the REC trading limit to even rooftops of 10 kW. This way, everybody turns into an entrepreneur and everybody looks at an opportunity to invest into solar, to have solar systems on their rooftops and this would actually drive the market. There was a question you had that ‘besides tariffs what would drive the solar market’. I think this would be a major driving factor other than megawatt power plants.
Bedi
It all depends on how Phase 2 pans out, how technology advancement is linked to cost reduction, whether the government can get its act together and offer incentive schemes, how the world market pans out and if there can be schemes to promote smaller solar power plants. We could get to grid parity, post the second batch in 2017-2018 and the tariff would be close to about Rs 5.
Dravid
I think grid parity should be by 2020 and the price will be around Rs 6 – Rs 7.
Padode
So they would rather invest in the technology but the civil construction can be as cheap as possible. It is good that the industry is not in a state of boom or you would have every company renaming their company with something in solar and the industry would have gained a bad name even before it had begun.
Nanjundaiah
This has been a fascinating debate because the kind of facets that were brought out were far beyond the scope of what we had actually thought. The larger picÂture is that while supply of solar energy per se has been exponentially growing it is the demand side that needs to be really addressed going forward especially in Phase 2. I think that might remain the key issue for policy makers as well as the industry to think about.
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