HYDERABAD, INDIA: At a time when India is grabbing international limelight in the solar sector SOLARCON India became an international platform for PV stakeholders globally to explore the potential solar market opportunities in India. The third edition of India’s largest solar conference SOLARCON India 2011, commenced on Nov. 9, 2011 at the Hyderabad International Convention Centre (HICC), Hyderabad.
The event comprises an exhibition, a conference and parallel technical events for three days (November 9-11, 2011). This year’s conference features more than 70 distinguished speakers from the solar value chain. SOLARCON India 2011 conference themed “Charting India's Roadmap to Solar Leadership— Translating Potential into Reality” is certified by the US Department of Commerce. The event has participation from various companies in the solar supply chain from India and around the world.
Indian power market landscape
The demand for power is growing quickly in India, owing to the economic development, and is translating to wide range of growth opportunities within all segments of the power sector. During the first day of SOLARCON India 2011 conference held on 9 Nov., 2011, most of the speakers opined that India’s power generating capacity will reach around 750-900 GW by 2030.
According to Franciso J. Sanchez, Undersecretary for Commerce for International Trade, US Department of Commerce, in the inaugural ceremony of the event, India needs 150 GW of additional power generating capacity over the next five years.
According to the latest research and analysis by GlobalData, a premium market and business intelligence firm, estimates India’s power generating the capacity to be around 426.3 GW by 2020 rising from 171.4 GW in 2010 at a forecast CAGR of 9.5 percent between 2010 and 2020.
India’s energy challenge - need for renewable power
Dr. Bharat Bhargava, MNRE, Govt. of India, in his inaugural keynote at SOLARCON India 2011 opines that India has the following energy challenges:
• Electricity shortage – India’s electricity shortage is estimated at 25-35 GW.
• Access to power – Approximately 400 million people in India do not have access to electricity.
• Energy security – India is largely dependent on oil imports to meet its energy demand. The country imported 81 percent of its crude oil requirement in 2010.
• Climate change – It is an important issue and India aims at 25 percent reduction in carbon emissions by 2020.
• Power demand – Over the next 12 years, India’s electricity needs will grow two to five times.
To address issues such as electricity shortage, energy security, power access in rural areas and climate change, India needs to move towards renewable sources of energy to reduce its dependency on fossil fuels such as coal, natural gas and crude oil and transform into an energy secure nation.
Jim G. Brown, president, Utility Systems Business Group, First Solar, stated during the conference that India is largely dependent on imports to meet their energy needs. According to him, India imported 10 percent of coal, 30-40 percent of natural gas and 80 percent of crude oil in 2010. Renewable energy offers energy security and will help India bridge their demand-supply gap of power. He opined that while India’s power capacity will reach around 750-900 GW by 2030.
He estimates coal based power generation to account for 100 GW, natural gas and wind for 50 GW, nuclear for 80 GW, hydropower for 90 GW and biopower for 40 GW of total capacity by 2030. He is of the firm belief that solar potential in India can be the answer to bridge the gap in demand and supply.
Indian solar power market scenario
According to the latest research and analysis by GlobalData, the cumulative installed capacity of solar PV in India has increased from 107 MW in 2006 to 145 MW in 2010 at a CAGR of 7.7 percent. The growth in the installed capacity in India is driven by financial incentives and the policy framework of the Indian Government.
The Government of India had announced Jawaharlal Nehru National Solar Mission (JNNSM or NSM) with plans to rapid scale up PV by promoting utility-scale solar PV power plants to reduce the cost of solar PV generation. As part of the National Action Plan (NAP), NSM aims at 20 GW of solar power from integrated facilities by 2022. The main objective is to make solar power cost-competitive in comparison to fossil fuels. Thus, this mission is expected to spur domestic manufacturing of solar PV equipment in India.
Support from the government under the NSM is expected to further drive the growth of off-grid and on-grid PV market. The market is expected to grow at a CAGR of 58.1 percent during the forecast period 2011-2020, thereby reaching 14,020 MW of cumulative installed capacity by 2020.
However, Anand Jain from KPMG, in his presentation, expects India to reach a cumulative solar capacity of 9.8 GW during phase II of the NSM and to further reach 57.3 GW by the end of phase III of the mission. He opined that of the total solar power installed, 64 percent will be off-grid and 34 percent will be from utility scale power.
Solar power – An answer to energy challenges in India
Dr. Bharat Bhargava emphasized the need for solar power in India for the following reasons –
• Energy security perspective – Solar is most secure and is abundantly and locally available.
• Most parts of the country receive a solar irradiation of 4-7 kWh/sq.m.
• Consumption of kerosene and diesel for lighting can be reduced.
• Widespread access to power and empowerment of the grass root level population.
Key policy drivers
National Solar Mission (NSM) – major policy driver
Jawaharlal Nehru NSM launched in November 2009 under the NAP on Climate Change with an objective:
• To establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country.
• Large scale utilization and rapid diffusion and deployment of solar technology across the country at a scale which leads to cost reduction.
• Mission anticipates achieving grid parity by 2022 and parity will coal based thermal power by 2030.
• Aim of the mission is to focus on setting up an enabling environment for solar technology both at centralized and decentralized level.
• Research and development (R&D)
• Support local manufacturing.
The table summarizes NSM roadmap during 2010-2022.Source: GlobalData, MNRE, IREDA.
• Scale up the consultation process
• Enable policy and regulatory framework
• Support utility scale
• Expand off-grid applications
• Accelerate R&D
• Increase domestic manufacturing base
• Tariff for solar power purchase by regulators.
• Competitive bidding to select utility PV projects by NTPC Vidyut Vyapar Nigam Ltd (NVVN) – Bundling solar power with unallocated thermal power.
• Solar specific Renewable Portfolio Obligation (RPO) – A solar carve out of 0.25 percent in the first phase of the NSM and the same will increase to 3 percent by 2022. So far, 16 regulators have announced solar purchase obligations beginning with 0.25 percent.
• Solar REC - Floor price of Rs. 12 and forbearance price of Rs. 17 is announced for solar.
• Refinancing at lower interest rates of 5 percent for offgrid application -- (involvement of NABARD).
• Capital subsidy (30-90 percent).
• Grant support for R&D and technical advancements.
• CERC first announced the guidelines to fix tariffs for solar power SERC in September 2009.
CERC tariff for 2010-2011 and 2011-2012 are given in the table.Source: GlobalData, MNRE, IREDA.
Other fiscal incentives
• 100 percent foreign direct investment (FDI).
• Tax holidays.
• Tax exemptions.
Probir Ghosh, CEO and Ambassador invVEST, during his presentation in SOLARCON India 2011 stated: “India’s advantage over developed countries lies in the Balance Of the Systems (BOS) of a PV system. Because of the high labor content in BOS, India’s advantage is at least 20-25 percent in that area.”
According to Larry C. Holmberg, CEO, Solar Semiconductor: “India is very likely the long term answer to China in the manufacturing space. In India, Solar Semiconductor has the cost structure on par with any Chinese manufacturer. However, India should have an integrated end-to-end value chain to compete with China."
Fred Sisson, CEO, Synnove Energy, stated that India provides a fair amount of margins for Engineering, Procurement and Construction (EPC) companies as not many players are operating in the market at the moment. However, he is of the opinion that margins will shrink in the future due to competition. “Process efficiency is also important in India although labor is cheap”, he said.