National Solar Energy Summit 2012 Solar Thermal Power 14 th December 2012
Presented By: Saurabh Kamdar, Associate Director, CRISIL Infrastructure Advisory 1 Agenda 2 1 Solar Power Opportunity & Current Adoption Status3 2 Solar Thermal Technologies..16 3 Solar Thermal - Risks and Funding Trends..21 Solar Power Opportunity & Current adoption status 3 Solar Power Development Potential India receives on an average 4-7 kWh/m2 of solar energy daily with an average of 250-300 sunny days in a year Rajasthan and Gujarat receive maximum radiation in the range of 66.6 KWh per square meter Solar power potential for India accessed to be >100,000 MWeq However, capacity additions in Indian solar industry have been miniscule as compared to the additions globally
4 Solar Power Density in India Solar Installed Capacity - India Value Grid connected Solar Power (Cumulative Capacity) 1,035 MW Additions during last year (FY12) 446 MW Off-grid Solar PV plants (Cumulative Capacity) 85 MW Solar Water Heating Collector Area (Cumulative Capacity) 5.63 Mn Sq. m Source: MNRE (As at June30, 2012) Grid connected Installed Solar capacity 5 Source: MNRE (As at October, 2012) Indian Power Generation Capacities (As on 31 st March 2012) Presently, of Total Installed Capacity in the country Solar forms 0.45%, and it forms 3% of the Total Renewable Energy Capacity in the country 6 Thermal, 131,353, 66% Hydro, 38,990, 20% Nuclear, 4,780, 2% Renewab le, 24,915, 12% Total Installed Capacity (MW) Wind, 17,353, 70% Small Hydro, 3,396, 14% Solar, 905, 3% Biomass, 3,225, 13% Installed Renewable Power Capacity (MW) Source: MNRE Solar capacity additions expected to increase Source: MNRE Solar power is expected to be ~11% of capacity additions of renewable capacity additions in XII Plan period (2012-17) JNNSM is expected to be a major driver for Solar capacity additions 7 3.5 10.2 24.9 55 2002 2007 2012 2017P Cumulative Renewable Capacity in GW 400 200 200 500 550 50 200 200 500 550 2012-13 2013-14 2014-15 2015-16 2016-17 Projected Solar Capacity Additions JNNSM (MW) Solar PV Solar Thermal Jawaharlal Nehru National Solar Mission (JNNSM) JNNSM is one of the major initiatives in promotion of solar energy technologies, Mission aims to achieve grid tariff parity by 2022 JNNSM (Phase 1) - Capacity allocation between SPV and Solar Thermal was decided to be 50:50. Solar PV: Selection of PV projects done in two batches of 150 MW and 350 MW over two financial years of Phase 1 i.e., 2010-2011 and 2011-2012 Solar Thermal: Given the longer gestation period of Solar Thermal Projects, entire capacity was selected in Batch 1 (2010-2011) The various phase wise targets set under the NSM are as follows:
8 Application Phase I (2010-13) Phase II (2013-17) Phase III (2017-22) Utility grid power, including roof top 1,100 MW 4,000-10,000 MW 20,000 MW Off Grid Solar Applications 200MW 1000MW 2000MW Solar Collectors 7 million sqm 15 million sqm 20 million sqm Various Sale options for Solar Developers are preferring the PPA route as of now. Once the REC markets mature and the regulations are put in place to enforce RPOs, developments based on RECs will also gain traction. 9 Utility NVVN Exchange Solar Radiation Electricity Generation IPP/ Grid Sales & Captive Sales Solar Power Plant Sale to Utility Bundled Power Sale through state tariff policy or REC route (I) FIT + GBI (PPA) (II) APPC + REC (non-PPA) Merchant Sale Market Price + REC Solar Thermal Projects under development in JNNSM (Phase 1) 10 Sr. No. Project Name Promoter Location Capacity (MW) Technology Tariff (Rs./KWh) 1 Rajasthan Sun Technique Energy Private Limited Reliance Power Jaisalmer, Rajasthan 100 Compact Linear Fresnel Reactor 11.97 2 Diwakar Solar Projects Private Limited Lanco Infratech Jaisalmer, Rajasthan 100 Parabolic Trough 10.49 3 KVK Energy Ventures Private Limited KVK Jaisalmer, Rajasthan 100 Parabolic Trough 11.20 4 MEIL Green Power Ltd Megha Engineering & Infrastructure Anantapur, Andhra Pradesh 50 Parabolic Trough 11.31 5 Aurum Renewable Energy Private Limited Aurum Mitrala, Porbandar, Gujarat 20 Compact Linear Fresnel Reactor 12.19 6 Corporate Ispat Alloys Abhijeet Pokaran, Rajasthan 50 Parabolic Trough 12.24 7 Godavari Green Energy Limited Godawari Power and Ispat Limited Jaisalmer, Rajasthan 50 Parabolic Trough 12.20 7 projects for 470 MW selected in December, 2010. Average Tariff Rs. 11.48 per unit (25% reduction on CERC Tariff) Other Solar Thermal Projects under development 11 Sr. No. Project Name Developer Location Capacity (MW) Technology 1 Rajasthan Solar One Entegra Rajasthan 10 Parabolic Trough 2 Bap Solar Power Plant Dalmia Cements Rajasthan 10 Parabolic Dish Sterling 3 NTPC Pilot Project NTPC Rajasthan 15 Parabolic Trough 4 Andhra Pradesh Project Sunborne Energy Andhra Pradesh 50 Parabolic Trough 5 Cargo Solar Power Gujarat Cargo Power & Infrastructure Kutch, Gujarat 25 Parabolic Trough with Thermal Storage Gujarat has been front runner in Solar Power Adoption First state to launch an independent solar policy in 2009 (operative till 2014) PPAs of 969 MW signed. The projects allocated through the MOU route with pre- qualification criteria Projects of 690 MW commissioned till 30th June, 2012. High investor confidence being showcased as More than 1000MW of projects have pre-registered for future allocations Applications worth 1715 MW received for allocation of 150MW
12 Tariffs PV project (Rs. /kWh) Thermal projects (Rs. /kWh) Projects commissioned before 31.12.10 15 (for first 12 years) 10 (for first 12 years) 5 (from 13 th to 25 th year) 3 (from 13 th to 25 th year) Projects commissioned after 31.12.14 12 (for first 12 years) 9 (for first 12 years) 3 (from 13 th to 25 th year) 3 (from 13 th to 25 th year) Other states have also framed their Solar Policies 13 Particulars Karnataka Rajasthan Madhya Pradesh Tamil Nadu Policy instrument Karnataka Solar Policy, 2011-16 Rajasthan Solar Energy policy, 2011-2017 MP Solar Energy Policy TN Solar Energy Policy 2012 Target Capacity 200 MW - DISCOMS upto 2015-16 (40 MW p.a.) 50 MW Solar Thermal 100 MW - REC mechanism 50 MW SPV; 50 MW ST - DISCOMS Phase I (upto 2013) - 200MW Phase II (2013 - 17) - 400MW 200 MW SPV announced 3000 MW by 2015, including rooftop 1500 MW utility scale by 2015 Capacity Cap SPV : Min 3 MW, Max 10 MW ST : Min 5 MW SPV : Min 5 MW, Max 10 MW ST : Min 5 MW, Max - 50 MW SPV : Min 5 MW NA Sale of Energy under state policy Reverse bidding Ceiling tariff : SPV : INR 14.50 / kWh ST : INR 11.35 / kWh Reverse bidding Ceiling Tariff : SPV : INR 10.12 / kWh Reverse bidding Ceiling Tariff : SPV : INR 15.35 / kWh Reverse bidding Ceiling Tariff : SPV : INR 15.35 / kWh Way Forward JNNSM Phase 2 3000 MW capacity to be supported by the Government of India Bundling with thermal power to the extent the latter is available Generation Based Incentive Use of viability gap funding mechanism Additional 6000 MW is envisaged through Solar RPO requirement Requirement of solar power capacity by 2017 is estimated to be about 10000 MW 1000 MW off grid solar applications by 2017 15 million square meters solar thermal collector area by 2017 Solar Capacity required to meet Solar RPOs (MW)
14 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 1465 3018 4659 6387 8204 10109 Solar RPO requirements are expected to provide fillip to the sector Solar RPO obligations of these states are higher than installed capacity in India at present. Enforcement of RPO obligations will lead to increased demand for solar power in coming years. 15 State RPO Target Target in MW Gujarat 1.00% 451 Haryana 0.75% 366 Madhya Pradesh 0.60% 166 Rajasthan 0.50% 152 Karnataka 0.25% 87 Maharashtra 0.25% 182 Tamil Nadu 0.25% 45 Punjab 0.07% 6 Total 1,455 Solar RPO Targets in selected states (2012-13) Solar Thermal Technologies 16 Technology for Solar power plants Solar power generation technologies can be broadly classified into two broad categories: Solar Thermal: Thermal power plants produce electricity by converting the solar radiation into high temperature heat using mirrors and reflectors. This energy is used to heat a working fluid and produce steam. Steam is then used to rotate a turbine or power an engine to drive a generator and produce electricity Solar Photovoltaic(PV): Photovoltaic converters are semiconductor devices that convert part of the incident solar radiation directly into electrical energy 17 Solar Power Generation Technologies Solar Thermal Power Plants Parabolic Trough Solar Tower Parabolic Dishes Compact Linear Fresnel Reflectors Photovoltaic technologies Wafer-based crystalline- silicon Thin Films Solar Thermal Technologies Also referred to as CSP (concentrating solar power) technologies for power generation Technology Options include Parabolic Troughs Compact Linear Fresnel Reflector systems Central Receivers or Power towers Paraboloid dish systems Thermal storage and hybridization with conventional sources are the biggest strength Lot of scope for indigenization, local manufacturing and employment generation Of the 470 MW of CSP capacity being developed under JNNSM Phase 1 350 MW is using Parabolic Troughs and 120 MW is using Compact Linear Fresnel Reflector Inline with global trends as 88% of worlds CSP is being operated using Parabolic Troughs 18 Solar Thermal Technology Options (1/2) Parabolic Trough Parabolic troughs focus the sun onto a linear receiver tubes placed in the trough focal line Gives temperatures up to 400 deg C. Hot liquid is passed through a series of heat exchangers to generate steam, and to drive a turbine Globally most widely adopted technology Compact Linear Fresnel Reflector Similar to parabolic trough however the parabolic trough sliced into individually tracking strips of mirrors & installed near ground Receiver is stationary and does not move with mirrors as in trough systems thus providing additional design flexibility Has advantage of lower production costs and requires least amount of land per MW capacity among all solar technologies
19 Solar Thermal Technology Options (2/2) Central Receivers or Power towers Uses field of mirrors called heliostats that individually track sun on two axes and redirect sunlight to receiver at the top of a tower Sunlight is concentrated 6001,000 times, and achieves working fluid temperatures of 500 800C
Paraboloid dish systems These systems use series of mirrors arranged in concave plate to focus light onto a point Usually a Stirling external combustion engine is placed at the focal point for collecting heat to drive pistons by continually expanding and condensing hydrogen gas 20 Solar Thermal - Risks and Funding Trends 21 Solar Thermal Projects Risks and Challenges (1/3) 22 Some Phase 1 projects encountered imprecise irradiance data from satellite Leading to project delays and higher costs because developers needed to re-design project systems However reliable DNI data availability is expected in future with 51 new stations being set up by C-WET for Solar Radiation Data collection pan India across various states Limited solar irradiance data CSP at early stage of deployment and development in India thus carrying higher risk on its applicability and performance record Lack of trained technicians to build CSP projects: Some developers have struggled in finding adequately trained technicians with fabrication and welding skills for CSP projects leading to project delays Technology Risk & Implementation Record Escalating prices and limited supplies of heat transfer fluid (HTF) have posed challenges to developers Several developers have also experienced delays from long lead times for CSP-specific turbines Supply Chain & Sourcing Solar Thermal Projects Risks and Challenges (2/3) 23 The cost of a parabolic trough CSP plant in India ranges from Rs 10.5 crore to Rs 13 crore per MW Whereas the prices of Solar PV have come down to Rs 10 crore per MW Storage increases the capital cost further but also increases electricity generation Capital Cost Premium CSP plants require water predominately for cooling and also for cleaning similar to thermal plants Locations suitable for CSP are usually arid regions with short supply of water Technology choices to reduce CSPs water demand are available, but affect the levelized cost of electricity (up to 90% reduction in water consumption possible with 9% rise in electricity costs) Water Requirement & Availability Projects are located in remote areas which are often not well connected and lacking in adequate infrastructure Under JNNSM the developer is required to put the required infrastructure (land, water, clearance and evacuation) in place themselves Adds to project cost and increases risks of timely completion of projects Infrastructure Constraints Solar Thermal Projects Risks and Challenges (3/3) 24 Project developers have struggled to achieve financial closure (key milestone under the Missions guidelines) Lenders doubtful about CSP Projects viability: Non recourse funding is challenge and funding often backed by corporate guarantee from parent companies Lenders thus take more time in CSP project evaluations Financing Difficulties In JNNSM Batch 1 bids, average quoted tariffs for CSP was Rs.11.48/unit implying 25% discount to the CERC declared Feed-in-Tariff of Rs.15.31/unit CERC determined tariffs included reasonable returns for developers, however such huge discount in tariffs have raised number of questions regarding financial feasibility of projects Reverse Bidding & Financial Viability Regulatory limitation on resources limiting flexibility in technology adoption (e.g. Tower technology having relatively lower cost cannot be adopted due to limitation on land area) Limits prescribed for indigenous sourcing of items leads to high interest cost on local funding. Alternatively imports can be funded from Exim bank at lower interest rates Policy & Regulatory Limitations Solar Thermal Projects Lenders Perception & Financing (1/2) Emerging energy technology Discomfort: Bankers want to see a CSP project track record in India due to low levels of familiarity and a discomfort with CSP technology. This can only be resolved when consistent performance record develops. Parabolic trough technology deployed in India has been used by more than 80 percent of international CSP projects with a track record of more than 20 years Non-recourse project finance: CSP developers reported securing financing only after parent companies furnished corporate guarantees No CSP plant under the Mission has been financed on a non-recourse basis Endemic power sector issues affecting CSP investment Banks approaching power sector lending limits and hence unwilling to increase exposure to the sector Poor and worsening financial situation of State Discoms increasing credit risks for lenders Even in JNNSM PPAs, the responsibility of payment rests with Discoms (and not NVVN) 25 Solar Thermal Projects Lenders Perception & Financing (2/2) However, loan syndication broadening lender base for solar projects When financing CSP projects, banks have typically taken 25 percent of the projects debt and shared the remaining debt and risk among other participating banks Leading to involvement of a wide range of banks including Power Finance Corporation, Bank of Baroda-Dubai, Punjab National Bank, and State Bank of Bikaner and Jaipur Payment Security Scheme MNRE introduced an additional payment security scheme for grid connected solar projects under JNNSM to facilitate financial closure of projects under Phase I Gross Budgetary Support (GBS) amounting to Rs.486 crore in the event of defaults in payment by the State Discoms to NVVNL Introduction of this scheme has mitigated the payment risks perceived by the lenders considerably 26 In Summary. India has very high solar power potential (>100,000 MWeq) with an average of 250-300 sunny days in a year, which so far has remained largely unutilized Solar forms only 0.45% of the total Installed Capacity in the country Of the 1,045 MW of Grid connected solar installed, almost all projects are using PV technology and are based in Gujarat & Rajasthan Solar power expected to be ~11% of renewable capacity additions in XII Plan period with JNNSM expected to be a major driver 470 MW of Solar Thermal Capacities under development in states of Rajasthan, Gujarat and Andhra Pradesh Parabolic Trough & Compact Linear Fresnel Reflector technologies being adopted in India in Phase 1 (JNNSM) Being new technology, CSP project are subject to various challenges on account of performance benchmarks, radiation data reliance, supply chain issues, infrastructure constrains and Difficulty in Financial Closures Lenders not open to Non-recourse project finance during Phase 1 due to unproven track record
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