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Old 25th January 2016, 00:03   #1
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Default India's Power Scenario

I thought of starting this thread on discussing the power scenario in India specially the renewable energy sector. There has been so much action on this front of late, that it merits a discussion.

Let me start by mentioning the lowest bid accepted for solar power generation last week in Rajasthan at Rs 4.34 per kwh. Is this kind of over enthusiasm? Is it sustainable in the long run? Will it bring ROI to the promoter? I or anybody as this time don't have answers but lets hear your perspective.

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Old 25th January 2016, 09:30   #2
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Technology, economies of scale, shared risks, competetion, growth appetite, entry strategies, sops - take your pick. Yes, ROI would be decent. Sustainability? Contractual obligations- yes. Equipment - we don't know. PLF / PAF - yes, as far as sunlight related is concerned. Technology- would change. Offtake- mandatory as per contractual obligations, but cheaper sources would bring up excuses as we have seen in the past. Changes in policy and /or rules & regulations - possible.

The main challenges according to me are transmission, storage, PLF. Next g thing would be storage devices and improving PLF.

We started with Rs 17 plus a few years back and now we are at Rs 4.34. I feel that there is scope of further reduction.

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Old 25th January 2016, 11:15   #3
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Who pays for the land in PV solar complex? Who takes care of the land acquisition etc?
###
I am sure technology will continue to get cheaper with time.
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Old 25th January 2016, 14:04   #4
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Default re: India's Power Scenario

A couple of years back when solar was still trading at over Rs.10/KwH, we were talking about solar grid-parity by 2020. Come 2015, with Supreme Court rulings, coal block de-allocations, newer technological advancement in green energy, falling PV prices, etc. we already have pseudo grid parity.

We have managed to create multiple policies & regulations on clean energy but failed to enforce any on a widespread commercial scale, yet. And until we do that, it will be difficult to comment on the sustainability (& ROI) of this sector in the near & medium term.
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Old 25th January 2016, 14:37   #5
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Default re: India's Power Scenario

With Capex cost coming down to around INR 6.5 cr, foreign currency funding (USD) at all inclusive (including hedging) cost of 8% and with Income Tax depreciation benefit (only!), a solar farm of mega size of say around 500 MW may be definitely viable at this tariff. As against capex cost of around $2 per watt of solar panel in 2009/2010, the present cost is less than 45 US cents. I feel that with depreciation benefit, this would definitely return a decent IRR.
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Old 25th January 2016, 15:23   #6
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The game changer is advanced energy storage systems (li ion, flow cell batteries) that will reduce the need for back up plants in case of fossil fuels and store energy for night time use.

Most new telecom towers are being setup without diesel generator backups.

The speed of renewable deployment will be reduced to an extent due to cheap oil. But geopolitical reasons will ultimately push policy towards renewables around the world.

India though is going to fuel its next decade of growth with cheap coal and cheap oil.

Solar is better suited for decentralised application in India where the grid isn't as developed already.

The next trend in utilities in India is going to be smart pricing of electricity /water/gas by smart meters.
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Old 25th January 2016, 17:15   #7
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Default Re: India's Power Scenario

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Originally Posted by drsingh View Post
The next trend in utilities in India is going to be smart pricing of electricity /water/gas by smart meters.
I hope the folks don't make it a political issue by asking "why different price for different scenarios" and then give examples that are being given against Freebasics.

Anyhow, gas smart pricing CANNOT happen in the next 10 years. There is no smart infrastructure (and I am sure the smart infrastructure doesn't exist even for Electricity) and neither is there any will shown by the current Gas sellers.
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Old 25th January 2016, 18:47   #8
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Default Re: India's Power Scenario

As on date, the levelized cost of energy for solar PV is around Rs. 9 per kwh. The company which bid the lowest price for the power project is a Canadian multinational and they did it to gain an inroad into the Indian market. For most PV manufacturers, in the next 10 years, PV is a big opportunity. The GW scale operations planned by the Government are a welcome step in the right direction.
However, the problem is that PV alone cannot solve any problem. If we look at Germany, even at its current rate of PV adoption (which has tapered off recently but was very fast, driven by subsidies), the country won't get more than 10% of its electricity from the sun in 2030. That is provided the existing rate of adoption continues, which is unlikely to be the case. Wind is going to be the major contributor to the grid in Europe once Biomass is replaced.
Coming back to India, PV is good but not on a major scale. I work in PV and still I am saying this because unless a very good regulatory framework is present, it is very difficult to establish the long term performance of the modules-we are talking over 20-25 years here and many of the companies that install the modules won't exist then. For other energy generation sources the quality framework that suppliers must adhere to is very well defined and stringent, for PV it is still a work in progress.
Also, the variability introduced into the grid is something that cannot be taken lightly. You have peak generation in a day when it is sunny and when it is slightly cloudy the generation drops by 20-30 %. Also, unless you clean the modules regularly and ensure that there is no water leakage through the panels, safety is a concern, especially in solar farms that don't invest in trained manpower. It is also true that the land needed for PV farms is not going to be available in urban areas-roof top solar is yet to take off in India, presumably because of issues in feeding to the grid.
Nuclear , wind and PV is the best mix for the country. China is moving in the that direction.
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Old 25th January 2016, 19:29   #9
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Originally Posted by alpha1 View Post
Who pays for the land in PV solar complex? Who takes care of the land acquisition etc?
In most of the cases, govt went for solar parks, similar to IT parks, where govt will provide land, transmission and evacuation lines, access roads, availability of water and others. See this link. This policy change made the foreign solar guys rushing to our shores.

There are still some old school model projects planned where the solar developer has to procure his own land. This has not seen much traction.

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Originally Posted by viv_cal View Post
We have managed to create multiple policies & regulations on clean energy but failed to enforce any on a widespread commercial scale, yet. And until we do that, it will be difficult to comment on the sustainability (& ROI) of this sector in the near & medium term.
I think the policies are setup or modified in the right direction by the present govt. It will take a few years to show results.
The ambitious goal of generating 175 GW renewable power by 2022 is a very positive change in outlook. Out of this 100GW solar, 60GW wind, 10GW small hydro power and 5GW from biomass projects.

I am just a little worried that in their over enthusiasm they do not throw all caution to the winds.


Quote:
Originally Posted by Gokrish View Post
.. As against capex cost of around $2 per watt of solar panel in 2009/2010, the present cost is less than 45 US cents. I feel that with depreciation benefit, this would definitely return a decent IRR.
Lets hope so. I read a interview where the SunEdison boss mentioned that one of their main concerns in IRR is the fluctuation in currency.

Quote:
Originally Posted by drsingh View Post
The game changer is advanced energy storage systems (li ion, flow cell batteries) that will reduce the need for back up plants in case of fossil fuels and store energy for night time use.

Solar is better suited for decentralised application in India where the grid isn't as developed already.

The next trend in utilities in India is going to be smart pricing of electricity /water/gas by smart meters.
Agree energy storage will be game changer, but at this time none of the solar developers are into it. This again will be such a capital intensive step that I am afraid when its time comes they will ask the govt to reimburse them.

As of now, how will they balance the grid with so much daytime solar power coming into it will have to be seen, especially when we have so old grid infrastructure.


One more step in the positive direction is rooftop solar. Bangalore has seen lot of action in this front. Bescom (Bangalore electric utility) has provided lot of incentives for people to go for it. With netmetering in place, one can sell excess power from rooftop solar to Bescom at a price of Rs 9.56 per kwh.

But I fail to understand the economics behind it. Bescom is financially not very well off and resorts to load shedding in rural as well as urban areas because it cannot afford to buy power from power plants at 4-5 rupees per unit. How are they managing to buy power from solar rooftops at 9.56 and selling at 5 per unit (domestic average unit selling price). This does not make business sense.

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Old 25th January 2016, 21:30   #10
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Quote:
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Agree energy storage will be game changer, but at this time none of the solar developers are into it. This again will be such a capital intensive step that I am afraid when its time comes they will ask the govt to reimburse them.

As of now, how will they balance the grid with so much daytime solar power coming into it will have to be seen, especially when we have so old grid infrastructure.
Read about Tesla powerwall and its industrial application in large scale power storage by utilities. The idea is to have a smart grid that can maintain regular energy supply as per demand. The solar energy is stored in scalable li - ion battery packs and released to the grid as required.

Recently PM Modi visited the Tesla Gigafactory in the USA and expressed interest.

The Tesla goal is to build a number of these around the world as per demand. The one being built is going to double the li - ion capacity of the world by 2020. And make it cheaper.

I see diesel generator sets becoming obsolete. And the expensive lead acid battery based solutions becoming obsolete down the road. Flow cell batteries are already replacing diesel gen sets in remote areas in India.
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Old 26th January 2016, 16:28   #11
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Default Re: India's Power Scenario

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Read about Tesla powerwall and its industrial application in large scale power storage by utilities. The idea is to have a smart grid that can maintain regular energy supply as per demand. The solar energy is stored in scalable li - ion battery packs and released to the grid as required.
I know about that Tesla thing, its called Powerpack not Powerwall. Powerwall is for home purpose.

What I meant is, the current set of solar power generators did not take the energy storage in their plans. And as far as I know neither do our our govt has any plans about how to offset this day / night power imbalance.

Energy storage batteries for utilities will help even the conventional fuel fired peak load plants to close down.

Quote:
Originally Posted by drsingh View Post
Recently PM Modi visited the Tesla Gigafactory in the USA and expressed interest.

The Tesla goal is to build a number of these around the world as per demand. The one being built is going to double the li - ion capacity of the world by 2020. And make it cheaper.
Lets not bring PMs visits into these discussions. Because businesses are run from a profit perspective. Mr. Musk said just a few days after PMs visit that they do not have any plans to build a Giga factory in India.


Quote:
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I see diesel generator sets becoming obsolete. And the expensive lead acid battery based solutions becoming obsolete down the road. Flow cell batteries are already replacing diesel gen sets in remote areas in India.
I admit I do not have any idea about flow cell batteries. Can you point to some relevant matter? Also links about the rural India flow cell projects will help this discussion.
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Old 27th January 2016, 02:21   #12
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Default Re: India's Power Scenario

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I admit I do not have any idea about flow cell batteries. Can you point to some relevant matter? Also links about the rural India flow cell projects will help this discussion.
Great thread! I am an avid watcher of Solar in india and would be a future customer so i have a couple of queries. First like the quote above, would be interested in the Flow cell batteries.

Second: Tesla has way too many projects going on simultaneously. I am not an early adopter for any of their battery plans, but would look at it in the long term after customer reviews. My reasoning is because the company finances are bad and with all this investments, a slight dip in the economy can spell doom.

Third: How much is the cost of a private user, setting up a residential solar unit on his rooftop. I am looking at a 5kwh of panels, and connected to the grid. Can i get net metered or do i need to have batteries? As that would add to costs. I am from Rural karnataka, under Mescom.

Four: Of the 100GW of solar by 2020 by the current government, 40GW is going to be Rooftop. Currently it doesnt seem to be going anywhere. What needs to done differently to get this going.

Five: Finally we have various new projects coming at a really low cost, but on the other end we have projects which have been signed by utilities from Rs7-Rs20 on long term PPA's. Would these projects end in the red or be drawn to unwanted litigation if there is a unfavorable government?

Lastly a lot of projects are banking on a lot of financial jugglery. Get loans in $, buy panels from China, Get land from state govt and federal subsidies and finally show it as a CSR project. It gets too confusing for a lay man. Can someone explain, as some of the terms needs either a CA or a Lawyer(corporate as a criminal lawyer will not get it ) explain this?

Hope someone of you has the patience for this questions.

PS: Wind seems to be a silent Messaiah and winner in this when Solar is taking all the credits. Do check out the amount of Wind projects in pipe line in india and the current growth rate.

Maddy
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Old 27th January 2016, 11:01   #13
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Quote:
Originally Posted by fordday View Post
One more step in the positive direction is rooftop solar. Bangalore has seen lot of action in this front. Bescom (Bangalore electric utility) has provided lot of incentives for people to go for it. With netmetering in place, one can sell excess power from rooftop solar to Bescom at a price of Rs 9.56 per kwh.

But I fail to understand the economics behind it. Bescom is financially not very well off and resorts to load shedding in rural as well as urban areas because it cannot afford to buy power from power plants at 4-5 rupees per unit. How are they managing to buy power from solar rooftops at 9.56 and selling at 5 per unit (domestic average unit selling price). This does not make business sense.

Fordday.
Can't open the dratted website, but luckily go hold of the 2013 financials.
http://bescom.org/wp-content/uploads...ts-2012-13.pdf
It is a loss making enterprise funded by the Govt.
The Govt makes money via taxation and pumps it into such enterprises.
If you jump over to the P&L, I find something really funny:
Revenue from Operations = 10783 cr
Purchase of power = 10787 cr !!!

When Govt and politics are involved nothing makes any business sense.
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Old 27th January 2016, 12:34   #14
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Well this government has set a target of 100GW by RE by 2022. I think solar is mandated to achieve 65 GW of that power. We have at present about 14-15 GW of installed capacity in solar. The question is how much of that is being purchased by the end customers? i.e state utilities?

State utilities are mandated to purchase RE through purchase obligations. But the utilities don't have the financial muscle to pay for all the solar power that can be potentially generated and also importantly, there are huge grid connectivity issues too.

There is, I find, somewhat of a flow in the government's policies to promote solar power. Almost all the installed capacity in solar is coming through utility scale projects, it has to come through small scale (roof top) - like home use etc. Thats where Germany - the most advanced in terms of solar power generation - has succeeded. Unless, roof top solar takes off in India, we as a country will not succeed in solar.

Btw, the conspiracy theorists say that weak oil and gas prices and the reluctance of S. Arabia to cut its output is infact targeted to thwart fledgling investments in RE in developing countries like India and in Africa. Though its difficult to agree with the statement completely. One thing, I feel is certain that weak oil and gas prices- if they persist for a couple of years - will cause untold harm climatically, politically and economically.

Quote:
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.

PS: Wind seems to be a silent Messaiah and winner in this when Solar is taking all the credits. Do check out the amount of Wind projects in pipe line in india and the current growth rate.

Maddy
I disagree. Wind is no more an area of opportunity. Accelerated depreciation and Generation based incentives powered independent investments in wind 5 years ago. Thereafter theses incentives were withdrawn and the investments fell and now they have been reinstated. The problem with wind is - there are huge grid connectivity issues due to the intermittent nature of wind power, 2) Wind energy potential in India is mostly centred in Southern and western states 3) Potential sites where a lower height wind turbine tower is needed has mostly been exhausted - and for new sites a taller wind tower maybe required, which requires more investments - impacting ROI and thus energy prices.
As regards to pipelines, the soft commitments in solar are a staggering 78GW and comparatively for wind are around 16GW

Last edited by rrsteer : 27th January 2016 at 12:44.
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Old 27th January 2016, 12:51   #15
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As long as peak load problem isn't solved I don't think solar will make a big dent in our power generation infrastructure.

Coal power plants are selling power at 1.5₹/unit base load AFAIK. They are also seriously looking at increasing thermal efficiency of current coal plants to bring this down further.
What will be a game changer is probably bio mass based power generation. We generate 600 lakh tonnes of agri waste each year, that's a lot of energy being burned in the fields right now. The current govt is silently pushing this in a big way.
Let's see if it works out.
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