MARKET POTENTIAL FOR SOLAR WATER PUMPING

SYSTEM AND COST BENEFIT ANALYSIS

OF DIESEL VS. SOLAR PUMP
Guided By:
Dr. Mercy Samuel (Faculty Guide)
Associate Professor,
Faculty of Management, CEPT University
Mr. Nilesh Arora (External Guide)
Founder - Partner,
ADDVALUE Consulting Inc. (www.avci-lean.com)

July 2014

Prepared by: Kevin Kovadia (AM0712)

Flow of Presentation

Keywords
Abbreviation
Introduction
Research Objective
Literature review
Research Methodology
Cost Benefit Analysis of Diesel vs. Solar Water Pump
Conclusion
Bibliography
Appendix

Keywords

Solar Water Pump,

Off grid Solar Application,

Market Potential,

Cost Benefit Analysis,

Break even point

Abbreviation
SWP
MNRE

Solar Water Pump

Ministry of New and Renewable Energy

PVP

Photo Voltaic Pump

PV

Photovoltaic

AC

Alternate Current

DC

Direct Current

JNNSM

Jawaharlal Nehru National Solar Mission

RKVY

Rashtriya Krishi Vikas Yojana

GDP

Gross domestic product

GHG

Greenhouse gas

JGS

Jyotirgram Scheme

Indian Pump Industry Overview

The Indian Pump industry has more than 800 manufacturers

with worker strength of over 40,000 producing about 5 million
pumps annually.

Year

FY 2012

FY 2013

Estimated Market (in Rs)

5000 Cr

8375 Cr

Annual Growth rate

8%

12%

No. of Pump Manufacturers

800+

800+

% of Demand meet by Domestic

Manufacturers

95%

95%

Source: (Singhi_Advisors, 2011), (TATA , 2013)

Solar Water Pump

It is a pump running on electricity generated by photovoltaic

panels or the thermal energy available from collected sunlight
as opposed to grid electricity or diesel run water pumps.

SWP system has three parts :

Pump
Inverter

Solar panels

Why Solar?
16

Cost (Rs) (Per KWh)

14
12
10
8

6
4
2
0
2011
Solar PV

2013

2015

2017

Conventional Power

2019

2021

Diesel Gen. Set

Source: Headway Solar (P) Ltd.

Market Potential

The estimated maximum total sales/revenue of all suppliers of

product in market during a certain period. 1

Estimating Market Potential (MP) = N P Q

Estimating Market Potential (MP) of firm A = N P Q MS 2

MP
N
P
Q
MS

= market potential
= total number of potential consumers
= average selling price
= average annual consumption
= market share (%) of consumers buying from firm A
1. http://www.businessdictionary.com/definition/market-potential.html
2. http://plantsforhumanhealth.ncsu.edu/extension/marketready/pdfsppt/business_development_files/PDF/estimating_market_potential.pdf

Cost benefit analysis (CBA)

CBA is a systematic process for calculating and comparing benefits

and costs of a project, decision or government policy.
It involves comparing the total expected cost of each option against
the total expected benefits, to see whether the benefits compensate
the costs, and by how much. It is also called as benefitcost analysis
(BCA).

CBA has two purposes:

To determine if it is a sound investment/decision
To provide a basis for comparing projects.
Cost-Benefit Analysis (CBA) estimates and totals up the equivalent
money value of the benefits and costs to the community of projects
to establish whether they are worthwhile. 3
3. http://www.sjsu.edu/faculty/watkins/cba.htm

Research Objective

The objective of this study is to analyze market potential of

solar water pumps.
To analyze what is the need of Solar Water Pump.
To conduct a comparative cost benefit analysis among Diesel
vs. Solar Water Pump.

Literature review

The electricity consumption in agriculture sector amounts to

27% of total consumption of electricity in India. About 25%
of electricity consumption is account for Irrigation pumps used
in the agriculture sector in India.
48.89 % in Gujarat,
43.39 % in Haryana,
42.27 % in Karnataka

21 million irrigation pump sets in India, of which

9 million are run on diesel and rest are grid based.
(Source: Amit Jain; Stellina Jolly, 2012)

Literature review

According to the KPMG report, a cumulative potential of

around 16 GW from agriculture category could be realised
by 2022. (JNM Target is 20 GW by 2022)
Innovative business models such as integrators of pump set and
solar modules may be required to realize this potential.

(Source: KPMG, n.d.)

Literature review

Indias Ministry of New and Renewable Energy estimates

700,000 diesel pumps that could be replaced are bought in
India every year.

Tarun Kapoor, the joint secretary, MNRE said that Irrigation

pumps may be the single largest application for solar in the
country (SPROSS, 2014).

Literature review

Source: Self Compiled

Literature review

(Image Credit: Sunible.com)

Research Methodology

Interview: The interview includes questions like - what is

capacity of solar water pump, what is process of installing
SWP, effectiveness of Government subsidy etc.

five structured interviews were carried out of solar water

pump users. And this all SWP user belong to north central
Gujarat.

Kheda District - 3 Interviews

Gandhinagar District - 1 Interview

Banaskantha District - 1 Interview

Cost Benefit Analysis of Diesel vs. Solar Water Pump

5hp Diesel Pump Costing Assumptions
Particular
No. of Hour Pump Usage /day

Scenario 0

Scenario 1

Scenario 2

Scenario 3

No. of Sunny Days/ Year

250

250

250

250

No. of Hour Pump Usage/ Year

250

500

1000

2000

Price of Diesel/ litre (Rs)

63

63

63

63

Diesel Usage/ Hour (5HP) 1

1.7

1.7

1.7

1.7

Hike in Diesel Price (%)

10

10

10

10

Total Running Cost (Rs)

26775

53550

107100

214200

(Source: Seleshi Bekele Awulachew (IWMI), 2009)

5hp SWP Costing With and Without Subsidy (30%)

Year

Capital Cost
Without
Subsidy (A)

Capital Cost
With 30%
Subsidy (D)

Operating
Cost (B)

Maintenance
Cost (C)

SWP Cumulative Cost

W/O Subsidy
(A+B+C)

SWP Cumulative Cost

With 30% Subsidy
(D+B+C)

489400

342580

2500

491900

345080

2500

494400

347580

2500

496900

350080

2500

499400

352580

2500

501900

355080

2500

504400

357580

2500

506900

360080

2500

509400

362580

2500

511900

365080

10

2500

514400

367580

5hp Diesel Pump vs. SWP Costing (Scenario 0)

Capital
Cost (A)

Year

Operating
Cost (B)

Maintenan
ce Cost (C)

Total Cost
(A+B+C)

Diesel Pump
Cumulative
Cost

SWP Cost
Without
Subsidy

SWP Cost
With 30%
Subsidy

30000

26775

5000

61775

61775

491900

345080

29453

5000

34453

96228

494400

347580

32398

5000

37398

133625

496900

350080

35638

5000

40638

174263

499400

352580

39201

5000

44201

218464

501900

355080

43121

5000

48121

266585

504400

357580

47434

5000

52434

319019

506900

360080

52177

5000

57177

376196

509400

362580

57395

5000

62395

438590

511900

365080

10

63134

5000

68134

506725

514400

367580

Total

506725

Breakeven Point in Scenario 0

600000

Cumulative Cost (Rs)

500000

400000

Diesel Pump

300000

SWP without Subsidy

SWP With 30% Subsidy

200000

100000

0
1

Break Even Duration (Year)

10

5hp Diesel Pump vs. SWP Costing (Scenario 1)

Capital
Cost (A)

Year

Operating
Cost (B)

Maintenan
ce Cost (C)

Total Cost
(A+B+C)

Diesel Pump
Cumulative
Cost

SWP Cost
Without
Subsidy

SWP Cost
With 30%
Subsidy

30000

53550

5000

88550

88550

491900

345080

58905

5000

63905

152455

494400

347580

64795.5

5000

69796

222251

496900

350080

71275.05

5000

76275

298526

499400

352580

78402.56

5000

83403

381928

501900

355080

86242.81

5000

91243

473171

504400

357580

94867.09

5000

99867

573038

506900

360080

104353.8

5000

109354

682392

509400

362580

114789.2

5000

119789

802181

511900

365080

10

126268.1

5000

131268

933449

514400

367580

Total

933449

Breakeven Point in Scenario 1

1000000
900000

Cumulative Cost (Rs)

800000
700000
600000

Diesel Pump

500000

SWP without Subsidy

400000

SWP With 30% Subsidy

300000
200000
100000
0
1

Break Even Duration (Year)

10

5hp Diesel Pump vs. SWP Costing (Scenario 2)

Capital
Cost (A)

Year

Operating
Cost (B)

Maintenan
ce Cost (C)

Total Cost
(A+B+C)

Diesel Pump
Cumulative
Cost

SWP Cost
Without
Subsidy

SWP Cost
With 30%
Subsidy

30000

107100

5000

142100

142100

491900

345080

117810

5000

122810

264910

494400

347580

129591

5000

134591

399501

496900

350080

142550.1

5000

147550

547051

499400

352580

156805.1

5000

161805

708856

501900

355080

172485.6

5000

177486

886342

504400

357580

189734.2

5000

194734

1081076

506900

360080

208707.6

5000

213708

1294784

509400

362580

229578.4

5000

234578

1529362

511900

365080

10

252536.2

5000

257536

1786898

514400

367580

Total

1786898

Breakeven Point in Scenario 2

2000000
1800000

Cumulative Cost (Rs)

1600000
1400000

1200000

Diesel Pump
SWP without Subsidy
SWP With 30% Subsidy

1000000

800000
600000
400000
200000
0

Break Even Duration (Year)

10

5hp Diesel Pump vs. SWP Costing (Scenario 3)

Capital
Cost (A)

Year

Operating
Cost (B)

Maintenan
ce Cost (C)

Total Cost
(A+B+C)

Diesel Pump
Cumulative
Cost

SWP Cost
Without
Subsidy

SWP Cost
With 30%
Subsidy

30000

214200

5000

249200

249200

491900

345080

235620

5000

240620

489820

494400

347580

259182

5000

264182

754002

496900

350080

285100.2

5000

290100

1044102

499400

352580

313610.2

5000

318610

1362712

501900

355080

344971.2

5000

349971

1712684

504400

357580

379468.4

5000

384468

2097152

506900

360080

417415.2

5000

422415

2519567

509400

362580

459156.7

5000

464157

2983724

511900

365080

10

505072.4

5000

510072

3493796

514400

367580

Total

3493796

Breakeven Point in Scenario 3

4000000
3500000

Cumulative Cost (Rs)

3000000
2500000

Diesel Pump

2000000

SWP without Subsidy

SWP With 30% Subsidy

1500000

1000000
500000
0
1

Break Even Duration (Year)

10

Conclusion
Particular

Scenario 0 Scenario 1 Scenario 2 Scenario 3

No. of Hour Pump

250

250

250

250

250

500

1000

2000

Operating/ day
No. of Sunny Days/ Year
No. of Hour Pump
Operating/ Year
Break Even Point
Without Subsidy
Break Even Point
With 30% Subsidy

10 Year

3
4

Year

1
4

3
4

Year

Year

3
4

1
2

Year

Year

2 Year

1
2

Year

Conclusion

Farmer buys a solar water pump mainly because of two

reasons. One is unavailability of electricity at farm and other
is increasing price of diesel.
Out of the primary survey it was found that farmer also buy
solar water pump because of land ownership issue. To get
electricity connection, farmer need land ownership document
and signature of related owners.
Normally one can become land owner from his fathers land
and fathers land is shared among his children. Now to get
signatures of all related owner is difficult.
So, in this situation to get electricity connection is difficult. So,
farmers prefer to buy solar water pump.

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Site location of SWP User (1) near Hirapur Chokdi

Site location of SWP User (2) near Hirapur Chokdi

Site location of SWP User (3) near Hirapur Chokdi

Site location of SWP User (4) near Palanpur

Site location of SWP User (5) near Ghamij Village

Thank You !!!

CEPT/ M TM/ AM 0712/ Kev in Kovadia/ k kovadia@gmail.com