THE CONCENTRATED SOLAR POWER (CSP) OPPORTUNITY IN INDIA

Mr. Lavleen Singal is the Founder of Acira Solar, a solar thermal power producer. Acira Solar has technology partnerships with international technology companies that have been involved in the development and operation of solar thermal power projects. Mr. Singhal also advises BRIDGE TO INDIA on CSP.

Falling costs of concentrated solar power (CSP) development make India a promising opportunity for this industry. However, to realize this opportunity, some challenges need to be overcome.

Globally, CSP technology is competing with falling cost of PV technology However, India is one of the countries that hold most promise for CSP; it is believed that costs can be driven down significantly in India

Unavailability of data is a significant challenge that hinders pre project preparation – considered necessary for CSP projects

The Government of India did well to kick-start India’s ambitious National Solar Mission (NSM) to install 20,000MW solar power projects by year 2022. The Indian CSP industry responded with equal enthusiasm. In the first phase, 66 bids for an aggregate capacity of 2,911MW were received against a requirement of 470MW capacity. The LCOE of selected bidders ranged from INR10.49 (EUR0.16) per kWh to INR12.24 (EUR0.18) per kWh against a price of INR15.31 (EUR0.23) per kWh recommended by the central regulator. It signaled a welcome phase for CSP of falling costs and sustained deployment.

Seven projects totaling 470 MW are under implementation, with most site development work completed, installation of solar field components commenced and all equipment ordered from the respective vendors. Although the date for completion and commercial generation is March 31st 2013, it is unlikely that projects will start supplying electricity to the grid by then.

The NSM document envisages construction of up to 9,000MW grid connected capacity by 2017. In its 9th plan document to the Planning Commission, the Ministry of New & Renewable Energy (MNRE) has sought funds to provide Generation Based Incentive (GBI) for 2,500MW of capacity and the NVVN has offered to ‘bundle’ 1,500MW of this capacity. The balance capacity is likely to be met through a strong Renewable Purchase Obligation (RPO) with a ‘bankable’ Renewable Energy Certificate (REC) scheme.

However, globally, these are difficult times for CSP. This is due to the declining costs of PV modules. With better viability, simpler technology, easier construction and maintenance, many developers have preferred to convert their CSP projects to ones with PV technology. From a present deployment of approximately 2,000MW to an anticipated 20,000MW capacity for CSP by 2020 seems highly unlikely under the current scenario.

Nonetheless, India is one of the few countries that hold the maximum promise for CSP projects. We can expect a deployment rate of a minimum 1,000MW per year until 2017 as well as about 500MW of pilot demonstration projects. Additionally, Indian states are likely to implement an additional 100MW of CSP projects per year in select states where the solar resource is good.

Policy makers in India view CSP favorably due to its ability to ‘store’ and generate electricity when needed; hybridization with coal, gas and biomass; and the fact that smaller plants with storage meet the needs of rural India where it is technically and economically not feasible to supply ‘conventional’ electricity. Developers and planners also strongly believe that the Indian industry has the capability to drive down the costs of CSP faster than the international market. It is already known that site development, civil works, construction, installation and commissioning costs are significantly lower than the rest of the world. As a result, it may be possible to implement a fully optimized CSP project within EUR2/W without storage. A typical 100MW plant ought to cost less than INR13.5billion (EUR195m) with an expected electricity output exceeding 200GWh/year using parabolic trough technology (without storage) at the right locations.

Anticipating a further reduction in costs, especially for thermal storage, CSP projects could become more feasible than at present, once the on-going projects have been implemented and their performance gauged. It is for these reasons that the Indian market for CSP holds the maximum promise at this juncture. This, however, is only part of the story. Pre-project work is an absolute necessity while planning CSP projects, particularly in India. Solar radiation data, particularly DNI data is simply not available. Without solar resource characterization it is nearly impossible to optimize the solar field and thermal storage size to achieve the lowest levelized cost of electricity. Therefore, proper site selection, land acquisition, installation of solar meteorological stations (measuring data for at least one year), pre-project feasibility; identification of Indian vendors and assessment of their quality, cost and performance are some of the key pre-project issues that must be addressed. Proper pre-feasibility studies would lead to an accurate assessment of the ‘bid price’, but more importantly a ‘letter of comfort’ from financial institutions for non-recourse debt financing could be one of the key metrics to the successful development of CSP projects.