Distinctly India

The 1st Solar Industry Summit India in Mumbai on 13 January 2011 organized by Solarpraxis saw high-profile speakers from industries and trade associations. It gave a unique overview on all aspects of the solar photovoltaic (PV) systems production and financing in India. The presentations addressed the entire value chain from factory design to process optimization. For India to achieve its National Solar Mission goal, the subject of production technology is of particular importance.
The major highlight of the event was the theme ‘Application meets Production: How to use and produce PV in India’, perhaps the first time such a focus was addressed in India. Miriam Hegner, Head of Conference Department at Solarpraxis, said the summit offers expert know-how, and the possibility of exchanging information, having discussions and establishing strategic networks, all at a top level. Certainly the National Solar Mission was the driver for hosting the summit. The National Solar Mission envisages 12,000 megawatts of solar PV projects over three phases. It includes both grid-tied as well as off-grid systems.
Through a competitive bidding process 620 MW of projects were short listed through a bidding process. The bids offered a range of discounts and the average tariff for selected plants was to be 12.16 Indian Rupees per kilowatt-hour (kWh) for PV and 11.14 Indian Rupees (INR) per kWh for solar thermal. This has slipped from the NTPC Vidyut Vyapar Nigam (NVVN) reference price of INR 17.91 per kWh (approximately 30 euro cents) for PV and INR 15.31 per kWh (approximately 20 euro cents) for solar thermal. The industry has a divided view. While some believe that the condensed prices will help lower costs of PV in future, others believe such dumping prices destroy the market from the start and are a contradiction for the quality standards of PV-systems and lead to the exit of serious companies. Financial institutions are of the opinion that the tariff digression should be gradual in order to build a sustainable market.

Market, policies and technology

The morning session on the national and state solar policies kept the audience intrigued with presentations from Ernst and Young, India and EuPD Research, Germany. Sanjay Chakrabarti of Ernst and Young, India in his presentation said that previously the country was limited to lanterns, streetlights and other pilot projects but now India has entered into a transitional phase towards larger market opportunity. By the end of National Solar Mission, there would be sufficient capability in the country to utilize solar PV for different applications.
The policy on Renewable Purchase Obligation (RPO) is another key step towards promotion of renewable energy. It mandates distribution companies and other obligated entities to purchase a certain percentage of their total requirement from renewable sources. The Renewable Energy Certification (REC) mechanism will support the efficient enforcement of the RPO policy. RPO varies from around two to ten percent in different states of the country due to the limitations on availability of renewable energy sources. Solar specific obligation of 0.25 percent is envisaged in phase one, increasing thereafter to 0.5 percent during phase two and finally two percent target during phase three. Maharashtra became the first state in the country to declare the implementation of Solar RPO. Ramesh Kumar of EuPD Research informed that their research findings for PV market development showed that India will witness a compound annual growth rate of 171 percent between 2010 and 2012, followed by China at 55 percent and North America at 40 percent.
Presently India’s share of PV production is four percent of the world’s production. The government’s mandate for the country to use locally made cells and modules could however result in targets remaining unmet. Besides, there is a widening gap between cell and module manufacturing capacities that also remains a challenge. As a consequence of global oversupply, the PV market could transform from a sellers to buyers market.
The pre-lunch session saw equipment suppliers present their latest technological developments in machinery supplies. They included Roth and Rau, CTF Solar, Grenzebach Maschinenbau, vogt group SE, Centrotherm and MW High Tech Projects. At the session, the general conclusion drawn pertaining to crystalline silicon and thin film was that thin film has niche markets for low temperature applications while crystalline technology provided high energy yield and maturity but had more complexities in manufacturing.
Alexander Woitas of Solarpraxis Engineering shared the experience related to the flaws in installations in Germany. It was well received by the audience and was an eye-opener to the various developers of PV projects in India attending. The system planning is as crucial as the quality and reliability of the components and the final construction. PV systems must perform for at least two decades minimum, as profitability of PV-projects is generally calculated on a 20 to 25 years basis. The warranty deadlines should set the frame for ongoing quality checks.
Sanjay Chandra of Welspun Energy, developers of PV projects informed that 80 percent of system downtime is caused by inverter failure. Mean Time Between Failures (MTBF) often quoted for inverters only gives statistical indication of failure during its useful life period. It does not indicate the failure types as seen by the graph Chandra showed. Displaying the bathtub failure curve, he showed the failure rate during three phases of the system life: start-up problems, random failures and wear out failures. Hence, an accelerated life testing data using accepted tests like the IEC 61215 for modules for example, should be carried out. Hence, it calls for extensive modeling during the design phase to provide higher reliability.
While module manufacturing has already attained maturity in India, cell manufacturing needs to be enhanced in order to fulfill the mandate on use of domestic cells. However, there are limited options for inverter manufacturers. One of the most effective things that Balance of System (BOS) component providers can do to bring down the Levelized Cost of Electricity (LCOE) is to increase the reliability of their devices in solar plant applications. Such a program needs to start with an analysis of where failures can occur. The high cost of engineering, procurement and construction contractors (EPC) also needs to be addressed in order to make solar PV projects cost competitive.

Financing large scale projects

The highlight of the conference was the concluding session debating financing guidelines and stumbling blocks. The panelists included Deepak Chawla, Ernst and Young India, Rajan Srinivasan, State Bank of India, Srinivas Chakravarthy, TÜV Rheinland India and Pankaj Chaudhury, VDE Testing and Certification Institute. The phase one of the National Solar Mission targets 1,100 megawatts (MW) of solar power equally distributed between PV and thermal solar. Assuming average investment of INR 120 million/MW for thermal and INR 150 million/MW for PV, the phase one funding enables timely financial closures.
Srinivas Chakravarthy of TÜV Rheinland India listed system yield, performance degradation, operation and maintenance as well as mitigation as the core elements of bankability of any PV project. According to TÜV Rheinland, the revenue losses observed in several of the projects ranged from seven percent to 23 percent. Some of the root causes were as a result of mismatch losses, degradation, unclean modules, line losses, inverters, plant availability and deviation of effective power. Over voltage, technical damage and vandalism contribute to 70 percent of PV projects failure.
The Power Purchase Agreement signed by NVVN needs to clarify issues like penalty through liquidated damages and reduction in tariffs in the case of delay, in commissioning in non force majeure events, clarity on nature and applicability of payment security mechanism. Clarity is needed on the components of force majeure costs that are proposed to be reimbursed by NVVN to the developer and reduction in performance due to irradiance should not be attributable solely to the developer.
There were some commercial issues that evolved out of the debate. The tenor of loan was sought be limited to the higher tariff period since some state policies offered higher tariffs for first ten years and lower for subsequent years. Financial institutes also suggested upfront equity to be 100 percent due to shorter implementation period and less established developers. The competitive bidding has already sparked debates within the industry and developers of projects awarded expect highly competitive interest rates from banks. One grey area for the bankers was lack of sufficient on-ground performance of technology. They commonly articulated inability to decipher manufacturers data supplied due to in-depth lack of technical performances. This called for established and reputed equipment suppliers/EPC contractors who offer adequate long-term guarantees.

Indian glass

The trade fair, 2nd Glasspex India 2011, organized by Messe Düsseldorf took place parallel to the summit and is now an established trade fair for the glass industry in the country. It was held in collaboration with All India Glass Manufacturers Federation (AIGMF). More than 4,500 visitors visited the event. Prominently on display were Gujarat Borosil, Saint Gobain Solar India and HNG Float Glass, the main glass suppliers to the solar industry in India. India’s gross domestic product (GDP) growth in 2010 was 7.4 percent, across multiple sectors while the construction industry grew by 6.5 percent.
This rising demand in the construction segment and National Solar Mission are encouraging signs for the float as well as low-iron glass industry. On account of this, the Indian glass industry will continue to flourish in the future. The development of domestic solar PV market will produce a direct influence on the prospects of the PV industry and the direct demand for ultra-clear glass domestically. Presently the production capacity of glass for solar industry in India is close to 0.75 million square meters. To meet the National Solar Mission target of twelve gigawatts of PV power generation, assuming an average efficiency of 15 percent, this will account for 120 million square meters. Typically modules contain two glass sheets. Hence the demand for ultra low-iron -clear glass for PV itself will be 240 million square meters. Added to this is the area of 20 million square meters of low temperature solar thermal systems and assuming 70 percent of this will come by way of flat plate collectors, each collector requires two square meters of glass. The demand again would add up to 28 million square meters.
The raw materials for glass are silica sand, soda ash, calcite, and dolomite. These materials are available domestically, which makes the glass industry a natural and prosperous choice according to Shreevar Kheruka, Vice President of Gujarat Borosil. GBL has started production of 130 metric tons of iron glass (textured) per day at its state of the art factory in Bharuch, Gujarat. Saint Gobain Glass India, a subsidiary of Compagnie de Saint Gobain started its operations in 2000 in India and is the largest float glass producer in India with a 38 percent market share. Krishnamoorthy Sugan, Head of Saint-Gobain Solar India said that the Solar Mission has given the confidence to set up such a dedicated facility and will come handy to fulfill the mission goals. It is setting up 250 tons per day capacity at an INR six billion (approximately €100 million) raw glass manufacturing plant in Chennai in southern India catering to solar energy industry demand.
Although some of the manufacturers also expressed their opinion that imported products were sometimes cheaper, particularly from China, they came with a 14 percent anti-dumping duty which virtually wiped out the cost advantage. The manufacturers adapted to the situation by offered tempering solutions for imported raw glass. This, however, constitutes a mere one to five percent of the total glass business.

Conclusion

The 1st India Solar Industry Summit thus offered the unique opportunity to get an all-round impression of the current products on the solar energy market and the latest production technologies, all in one place, while meeting new contacts in one of the most important markets of the future. In future, grid connected capacities will witness exceptional growth, mostly driven by generation based incentives and capital subsidies extended on off-grid systems. However there are still issues related to inverters, EPC contractors and project bankability, which will be crucial in determining the future course of PV projects development in India. But it can certainly be said that India is all set to emerge as a prominent manufacturing base by 2012.