Solar Energy Power Project : Execution Stages

Solar Energy Power Projects using Photo Voltaic (PV) technology is gathering momentum in India due to deeper penetration in understanding of the Technology, Commercials and supporting Government policies. Of course improved affordability due to fall in PV module costs is another major factor fueling the momentum. In fact as observed earlier - PV Solar Power has the potential to exceed Wind Power in terms of generation.

Industrial plants and Commercial Facilities opt for PV Solar Project due to several reasons. The most significant ones include –

• Ever-increasing price of grid power (anything above INR 5.0 per kWh for grid power can be considered expensive)
• Availability of good rooftop space
• Excellent subsidies and incentives for captive projects
• Long and maintenance-free life of the installation

Details of the same are also included in our generic Solar Energy Industrial Report.

PV Solar Power Project execution consists of various stages as depicted below

Solar Energy Power Project : Execution Stages

The Pre-Project Stage consists of site visit by a Solar Expert for Site Survey + Analysis + Techno-Commercial Viability Report Preparation. It is the most important stage of a PV Solar project as it enables one to understand complete Techno-Commercials of the Project primarily the RoI and IRR calculations which form the basis of the investment decisions.

This stage also enables one to get answers to various queries such as :

1. Is my plant suitably located to generate Solar Power?
2. What capacity installation is possible at my site?
3. Are there any technical challenges in PV Solar project execution at my site?
4. What are the major technical components in the project and what is their life?
5. How many units (kWh) per day, per month, per year can I expect from PV Solar?
6. What is RPO Obligation?
7. What are the various Government subsidies and incentives and which is the best for my projects?
8. What is the investment required for the projects at my site?
9. What is the RoI and IRR of the identified projects?
10. What are various technologies and what is the most suitable technology for my site in terms of output and durability?
11. What are the short, medium and long-term REC (Renewable Energy Certificate) benefits?
12. What kind of loads can Solar support in my plant and what part of such load should I focus on for PV Solar?
13. Will these projects be grid-synchronized or will these projects require batteries?

And More....

Several such questions are answered through our onsite discussions with your team and also in our Detailed Techno-Commercial Viability Report submitted at the end of Pre-Project stage. This Report forms the basis of an informed decision and is thus no wonder that several leading Industrial Plants are opting for PV Solar Power Project beginning with the first step of Pre-Project assessment. In consecutive posts we will update the information about the next stages.

If your plant or commercial site is paying anything above INR 5.0 per kWh for power it makes tremendous sense to opt for PV Solar power for at least a part of your requirement. 

Enerco Energy Solutions LLP is a leading Consulting and Advisory Company in PV Solar and Energy Optimization with Clients such as :

And More.....

Solar Energy Capacity to exceed Wind Energy?

Primary Renewable Energy sources in India are Wind, Biomass, Small Hydro and Solar. By installed capacity - Wind Energy dominates the RE space with nearly 18,000 MW (18 GW) of installed capacity.
Distant second is Small Hydro and Biomass with around 3 GW of installed capacity each. Solar Energy - which has just started picking up - is just over 1 GW.

Fig. 1 - Renewable Energy - % Breakup in India 

as on Dec 2012

Solar Energy usage for power generation started in 2011 - nearly 20 years after the use of Wind Energy. Moreover Wind Energy was supported with several incentives and benefits including tax breaks. It is therefore natural for Wind Energy to lead the pack of RE in India. In fact Solar power is also supported by various incentives and subsidies - in fact more than wind. But interestingly quick penetration / adaption of Solar power, technology improvements and high demand has resulted in significant reduction in cost of power generation from PV Solar. One of our other posts stresses on the fact that PV Solar power project can also become financially viable even in the absence of subsidies and incentives.

While it has taken Wind Energy around 20 years to reach about 18 GW it has taken Solar Energy less than 2 years to reach a cumulative figure exceeding 1 GW. There are reasons for strong growth of Solar Energy in India and there is no doubt that further growth will be exponential. In fact capacity-wise PV Solar Power generation will  far exceed that of Wind Energy in the years to come because :

1. Solar radiation across 85% Country can be termed as good to excellent and hence majority of Country is ideal for use of Solar Energy. As compared to this Wind Energy can only be used in around 30% of the Country as per CWET.
2. Cost - which plays a major factor in deciding the success of a RE - is a bit higher for PV Solar. However the cost of power generation from PV Solar has come down significantly in recent times and now the cost of generating PV Solar power is almost at par with that of wind. With advancement in technology and opening up of new markets cost of power generation from PV Solar will continue to come down and PV will perhaps achieve absolute grid parity in India by 2014/15. 
3. Life of a PV Solar project is around 25 to 30 years with appropriate warranties for major components in place. Moreover the wear and tear is very low as in a static PV Solar system there are no moving parts. This far outweighs the Wind energy which has moving parts and requires periodic maintenance as well - not to mention the loss in output due to maintenance. PV Solar is a fit-and-forget system with upfront Capital Expenditure (CAPEX) and ZERO Operational Expenditure (OPEX).
4. Solar PV is highly modular and easily scalable and installations can be as small as sub-kW level as well. Smallest wind turbines are in kW level. Hence PV Solar is the most ideal for decentralized power for home use. For a Country like India which has one of the highest T&D (aka ATC) losses decentralized power will prove to be a game-changer. PV Solar will thus prove a boon for areas where grid has not yet reached.
5. PV Solar is the most ideal for captive use for Industrial Plants especially in States like Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh etc. where per cost of power (per kWh) is around INR 6.0 to INR 8.0.  It may not be suitable for these plants to go for smaller wind turbines due to maintenance and other issues. More about PV Solar's suitability for Industrial Plants can be seen in our FREE Solar Energy Report.

Once the above benefits and facts are commonly known among the masses PV Solar will gain popularity and  hence result in rampant use of PV Solar at all levels. In this post we have given detailed comparison between Wind and Solar. However it is a known fact that PV Solar scores over other Renewable Energy Technologies as well as can be seen here - How and Why PV Solar scores over other Renew Techs?

Solar Power - 30% Subsidy in India

Photo Voltaic Solar Power - although considered quite expensive is actually becoming practical and viable with falling prices in cost of generation. This is mainly attributed to the significant cost in fall of PV Modules - which form a significant component of the project cost. There are various stages of a Solar Energy Power Project.

Considering the potential of PV Solar for a power deficit and Solar-rich country like India the Government has announced various subsidies and incentives in order to make the project viable. However a PV Solar Power Project can become viable even in the absence of subsidies (Can a Solar Project become financially viable without subsidies / incentives?). Mainly for Industrial Plants which are already facing a high power price (which directly impacts the cost of production) with majority of the plants opting for a D.G. Set for regular use.

Jawaharlal Nehru National Solar Mission (JNNSM) announced in 2009 is one of the 8 missions part of National Action Plan for Climate Change (NAPCC). Interestingly in 2009 the cost of generation from PV Solar was significantly higher (nearly twice of what it is today). Moreover the same was also very high as compared to grid power price. In 2012 nearly all the States in India have significantly hiked the power price ranging from 4% to 15%. It is anyone's guess that Solar Power will play a significant role in the Power Scenario of India.

(Suggested Reading - Is Solar the answer to India's Power Problems?)

Additionally in the present context owing to rise in deficit in electrical power, unreliable power supply in major parts of the Country, issues in Coal supply (recently some of the TPPs had critically low coal stock of less than a week) there is a rising interest in Solar Power. This interest is boosted by the fact that power generation from Solar enjoys several financial benefits - which no other technology enjoys in India.

One of our recently executed PV Solar Projects in Mumbai under MNRE 30% Subsidy Scheme

The incentives and subsidies for a PV Solar Power Project are of various kinds and depend on factors such as -

• Size of the Project.
• Location of the Project.
• Type of Project (Captive Consumption / Grid-Feed / Off-Grid etc.).

Although the type of incentives could be dynamic i.e. benefits achieved over a period of time or could be static i.e. one-time upfront subsidy received from the Government. The other incentives - although much more beneficial - are quite complex to be covered here. The same is generally covered as part of our comprehensive report prepared for a Client. The Project IRR in such cases is in the range of 16% to 20% and Equity IRR is 80% and above. To know more please send a mail to solar@econserve.in

(Suggested Reading - Solar Energy Report - FREE - including link to receive the Report !)

The simplest form of subsidy is 30% capital subsidy by MNRE.

Following are the basic MNRE guidelines for this -

1. Project should not exceed 100 kWp installation (single location).
2. Project could be off-grid or grid-synchronized.
3. Power cannot be fed to the grid i.e. it has to be for captive consumption only.
4. Battery backup is optional. The subsidy for projects with and without battery is different - MNRE adjusts subsidy amount for higher project cost due to battery.
5. Project should be preferably executed by MNRE empanelled vendor.

Our Group is an empanelled MNRE vendor for execution of such projects and availing 30% subsidy directly from MNRE. Contact us to know more or you can directly drop a mail to solar@econserve.in

Solar Energy vs D.G. Set !

We have been promoting Solar Energy Solution (Solar PV) as a part of a Power Portfolio for Industrial consumers. The benefits and advantages of Solar PV are quite well-known including :

• Affordability
• Financial Viability (even in the absence of subsidies / incentives)
• Strategic Power Solution
• Suitability for Indian Conditions
• Benefits over other Renewable Solutions

As per various sources the cost of generating electricity from D.G. Set is about INR 12.0 to INR 14.0 per kWh based on location and other details. O & M and other costs are additional - not to mention the air and noise pollution.

With the recent hike in diesel prices (of about 15%) it is very much likely to impact D.G. Set users especially Industrial Plants - who would be hit the hardest. This would mean cost of generation from D.G. Set would be around INR 15 per kWh - exorbitantly high and expected to rise further.

Enerco Energy Solutions had posted about comparison between Solar Power and D.G. Set in August 2012. The same was posted on our Facebook page and is now posted below as well.

                          Expected Trend : Cost of Power Generation from Solar vs Diesel Genset

The diesel price hike is primarily to control fiscal deficit i.e. the difference between Government spending and Government earnings. The fiscal deficit had touche around 6% of GDP which is extremely high. The Government is under severe pressure to hike the fuel prices to reduce its fiscal deficit i.e. internal reasons. Externally there is tremendous pressure to reduce reliance on fossil fuels especially D.G. Sets. Even after the recent hike the subsidy on diesel is quite high and the fiscal deficit will be hardly impacted. With the risk of downgrading the Country rating the Government will try to appease overseas investors. Hence in all likelihood Diesel prices will touch around INR 60 per litre in next one year.

PV Solar is a much better alternative to grid power as it offers a consistent cost of generation and does not require any fuel to operate and has a useful life of about 25-30 years. Although D.G. set can be used as an emergency backup it should be only used in case of emergencies and not as a backup solution. With the focus on renewable energy technologies it is no surprise that Solar Energy would continue to enjoy good subsidies and incentives till such time that grid parity is achieved. It is thus not only economically viable to invest in Solar Energy Projects but also a much needed and the only solution offering such viability.

Can a Solar Energy Power Project become Financially viable without Subsidies or Incentives?

The driving force behind JNNSM to encourage Solar Energy Power Projects was the depletion of domestic fossil fuel resources, reliance on imported fuels - a drain on foreign currency, environmental concerns and the need for a better power portfolio for the Country which can solve several problems including overcoming the problem of T & D losses (Decentralized Power Systems). While several Incentives and Subsidies have been announced under JNNSM and other State-level initiatives - it should be noted that what would happen in case of absence of these subsidies or incentives.

Can a PV Solar Power Project become viable without subsidies or incentives being offered by the Government? The answer is yes it can. Presently it can very well work for Industrial Plants who are looking for PV Solar as a source for captive power generation. Industrial plants are paying quite a high tariff for grid power which will keep on rising - even if India were to meet all of its power demands today - due to natural growth of economy.

(Interesting Read - Energy Audit :: Why Should a Plant go for it?)

While PV Solar remains a topic of interest among many it is worthwhile to note that it is commercial viability which matters for an Investor or Captive Power user or an Independent Power Producer. We carried out an analytical comparison between various Power sources and below is the graph depicting the Cost of Power (INR / kWh) from each source of Power i.e. PV Solar Project, Utility Grid and D.G. Set. For PV Solar power since there is nearly ZERO running cost, the INR per kWh value has been obtained by amortising the cost of Project over a period of 10 years although trouble-free life of a PV Solar Project is around 25-30 years.

INR per kWh Comparison of Solar Power with Grid and D.G. Set

(Above Diagram taken from our FREE Solar Energy Report)

It should be noted that NO Government subsidies and incentives for Solar Project have been considered here. If the same is considered then INR per kWh for PV Solar can be much lesser possibly lesser than INR 3.00 per kWh.

(Suggested Reading - 30% Subsidy on Solar Projects)

Moreover INR 5.0 per kWh has been considered as the present grid price. In most of the cases across India this is true and INR per kWh for Grid Power is in the range of INR 6.0 to INR 7.0 as well. In some rare cases it can be lesser than INR 5.0 per kWh. For a plant using Grid + D.G. Set the landed cost will be certainly much above INR 5.0 per kWh.

Typically a PV Solar Project has a life of 25-30 years (with appropriate warranties in place) and its Project IRR is quite attractive at 16% (minimum) and can be as high as 20% as well. In fact equity IRR of 75% (minimum) and a maximum of 95% ensures that Equity is recovered from the project within 2 years of investment - on Tax benefits alone !

(You may also like - Is Solar Energy the Answer to India's Power Problems?)

Solar Energy Report (FREE)

We have recently released our First FREE Solar Energy Report for Indian Industrial Plants.

The FREE Solar Energy Report titled - Why Indian Industrial Plants should opt for Photo Voltaic (PV) Solar (Download Link) takes a look at Indian Power Scenario, Indian Renewable Energy Scenario, Indian Industries - Power Outlook and a deep insight into Solar Energy i.e. Photo Voltaic Solar and the practical applications from an Industry viewpoint including a touch up on Viability aspects.

Primarily any Industrial Plant Manager would look to reduce cost while maintaining optimum production level through a consistent and quality power. This Solar Energy Report strengthens the view that an Industrial Plant should have an Ideal Power Mix or Portfolio to reduce its reliance on a single source of energy. By this report we do not intend to say that an entire Industrial Plant can run on Solar Energy - not practical and feasible in the near term. However adding PV Solar Power as part of the Power Mix would be an ideal solution as we believe Solar Energy can indeed be an answer to India's Power Problems.

We are offering our Consultancy Services in Solar Energy (Photo Voltaic) for  several Industrial Plants across India (majority of them leaders such as Reliance Group, Aditya Birla Group, Emami Group, Cement Plants, Chemical Plants etc.) and the findings have been quintessentially interesting. Every Industrial Plant that we audited has the potential to have a PV Solar Project installation of 500 kW to several MW for both rooftop and Ground-mounted systems. This was carried out as part of our Solar Energy Consultancy Package. The project are all viable and feasible under various subsidies and incentives offered by the Government under Jawaharlal Nehru National Solar Mission. Even in the absence of subsidies the project RoI is very much attractive due to rising grid power prices, inconsistent power supply, unreliable fuel supply etc. The findings of the Industrial Plants will be captured in our Next Report.

(Interesting Read - Energy Audit :: Why should a Plant go for it?)

If you wish to download the Free Solar Energy Report - please Click Here. If you face any issues in downloading - please Contact Us.

Do you want a FREE Assessment of your Site for Energy Saving Potential?

You may also find it interesting to read our other posts -

1. Solar Energy Capacity to exceed Wind Energy?
2. 30% Subsidy on PV Solar Power Projects
3. Can a PV Solar Power Project become viable without Subsidies?
4. Is Solar Energy Really Affordable?
5. How and Why PV Solar scores over other Renewable Energy Technologies?

Is Solar Energy the answer to India's Power Problems?

Fossil Fuel Thermal Power Plants account for more than 70% power generation in India. Primarily Coal-based Thermal Power Plants (TPPs) dominate the Power Scenario with nearly 55% of overall power generation share. With the recent hike in Coal prices or in general fossil fuels - including Petrol - there is no other time better than now to look at Alternative options. There are mainly 2 issues with Coal - Availability and Cost.

Coal availability is forcing Indian Power Cos. to look at imported coal and overseas mine acquisitions. Even this looks far from solving the issue as seen in case of Tata's Mundra power project where the Indonesian Govt. increased taxes on Coal export. Despite demands from the Power Company to renegotiate Power Purchase Agreement terms the State Government is reluctant to give in. Central Government is trying to do its bit by reducing duty on imported coal but then International coal prices are on an upswing. The recent attempt by the Central Government to arm twist Coal India to sign Fuel Supply Agreements (FSAs) with Power Companies has indeed boosted the spirits of the Power Companies - but at what cost? Even if the FSAs are signed it would ensure availability. But the high cost of imported Coal would be transferred to power Companies and in turn to the consumers who are already reeling under the pressure of inflation, blackouts and brownouts.

[What other people are reading and liking - Does Energy Audit really Save Energy?]

Logically an abundance of a resource justifies its dominant utilization in any Country or a region. For instance India was indeed a Coal-rich Country - once upon a time. However due to rapid development of new Thermal Power Plants for increasing demand coupled with rapid growth of Industries relying on Coal - the reserves have gone down significantly with nearly 100 years reserve a few years back the present figure is much lesser (recent estimates of less than 60 years). The rapid downward momentum is expected to continue. Not to forget the other challenges in the Indian Power Sector especially on Infrastructure - Logistics for Coal Supply, Transmission & Distribution, ATC Losses (nearly 33% and one of the worst in the world), Power Thefts, Power Wastage / Losses etc.

So what should be the next logical step for solving the power problem of the Country facing a peak power deficit of 10-12%? We do not have to look far for an answer as it is quite obvious. Solar Energy (Solar Photo Voltaic) - one which has significant benefits over not only fossil fuel plants but also over other renewable technologies. Traditionally being used for heating water - Solar Energy is now seriously being looked at as a source for Power Generation. Solar Energy is a generic term which refers to the Light Energy and Heat Energy of the Sun. Last decade has witnessed significant developments in Solar Water Heating - at household level as well as Community and Industrial level.

Power generation could either be through Solar Thermal or Solar Photo Voltaic. A Solar Thermal Power Plant uses concentrated Thermal energy of the Sun to generate super-heated steam to run turbines for generating power. Although green - Solar Thermal Power has its own challenges and drawbacks - mainly water required for operations and thermal storage. Solar Photo Voltaic Power Plant uses Light energy of the Sun to directly generate power - without any steam generation. It works on the Photo Voltaic Principle i.e. when photons (from Sun light) strike the Photo Voltaic Panel (solid state semiconductor device) these photons let loose the electrons within the PV panel to generate electrical power.

[One of the most liked Articles - What is Solar Energy - focus on Solar PV]

As is evident Solar Photo Voltaic offers notable advantages and inherent qualities of simplicity which is not possible in any other technologies. Important ones are :

1. Does not need any maintenance as there are no moving parts (in a static PV system) - so it is basically a fit and forget system which is not the case with any other technology.
2. Can be used across the Country and hence not location-specific as in case of Wind Power or Hydro Power. The output may marginally differ depending on the location but can certainly be utilized.
3. It is highly scalable and modular in nature and hence can have installations from a few hundred watts and right upto Mega Watt.
4. The critical component i.e. PV Panel has a life of 25-30 years. Therefore once the initial investment is achieved in 3-5 years Power is generated free of cost for the remaining years. [Is Solar Energy (PV) really affordable?]
5. Very well supported by the Central and various State Governments which are offering excellent subsidies and incentives for generating PV Solar Power. In fact PV Solar can also become financially viable in the absence of subsidies and incentives as well. Primarily because the grid power price is increasing very often and cost of power generation from PV prices have significantly come down down. Grid parity is likely to be achieved by 2013 -> 4 years earlier than previously predicted.
6. Does not need water for operations and hence can be installed for utility scale projects in isolated desert lands. It thus offers distinct advantage over Solar Thermal Power Plant as well.
7. Decentralized power systems can ensure that ATC Losses are minimized. The Government must understand that PV Solar is safe for installations closer to human habitat and hence can be used for decentralized power generation. There need not be grid availability at such locations and hence saving on energy - due to minimized transmission & distribution losses. The decentralized power system would cost the Government a fraction of what it would cost them to lay down Transmission and Distribution grid.

[Related Post - Things to know before going Solar]

This does not mean that Solar Photo Voltaic would completely replace fossil fuel plants - atleast not in the foreseeable future. But using Solar Photo Voltaic at various levels can reduce dependence on Coal to a substantial extent to complement grid power. This would not only ensure coal availability in the short to medium term but also preserve coal reserves.

Technology advancements price reductions and opening up of new markets has thrown open a huge opportunity especially for Solar-rich Countries like India. With more than 90% of locations across the Country highly feasible (Solar Map) for using Solar Power - either through centralized or decentralized systems - Solar Photo Voltaic is poised to be the solution of choice in the Indian Power Scenario for a long time to come and can answer most of the power related problems.