India’s Concentrating Solar Power (CSP) journey under the JNNSM started in 2010 with a total of seven projects being awarded, amounting to a total capacity of 470 MW.
India’s Concentrating Solar Power (CSP) journey under the ambitious Jawaharlal Nehru National Solar Mission (JNNSM) started in 2010 with a total of seven projects being awarded, amounting to a total capacity of 470 MW. Four years have passed since Phase 1 and, to date, only one project (50 MW Godawari Green Energy) out of the seven was commissioned before the March 2014 deadline.
The reasons for delays are many:
Insufficiently accurate Direct Normal Irradiance (DNI) data
Expensive financing leading to very difficult financial closure
Unclear future of government subsidies
Difficulty securing land and water
The need for a local manufacturing
The tight profit margins and even tighter time limitations
The role of DNI uncertainty
The lack of accurate DNI data is seen as one of the main reasons, which has limited the growth of the Indian CSP market.
In 2010, when bidding for Phase 1 took place, it was assumed that the DNI solar resource in the country, especially in Rajasthan and Gujarat, was good enough for developing CSP plants. The earliest data available came from the Solar Radiation Handbook written by A Mani and published by the Indian Meteorological Department (IMD). The handbook included long-term solar radiation values for different cities in India and a solar radiation map of India.
Solar Radiation Maps of India were released by National Renewable Energy Laboratories (NREL) in 2009 and 2010. Since these were the first satellite-based solar maps of India and no ground measurements were available at the time, all project developers based their bids on solar radiation values from these maps. Soon after measuring solar radiation on their sites, it turned out that the solar resource values from the NREL-2010 maps overestimated the actual resources available. DNI values from NREL-2010 maps were 15-25% higher than the actual resources measured.
As shown in Figure 1, the impact of DNI on the economics of a CSP project is of paramount importance. Based on this, the reduction of 15-25% with respect to the initial DNI estimates used by developers can be translated into an estimated 15–30 % increased levelised cost of energy (LCOE) putting the financial viability of the projects is at a serious risk.
In November 2012, a solar resource assessment report titled ‘Solar resource assessment at MNRE site in Rajasthan’ was released by the Rajasthan Renewable Energy Corporation Limited (RRECL). In the report, the DNI was found to be 1676 kWh/m2/a, which is about 30% below the first results derived from NREL-2010 maps. The accuracy of the revised DNI value is questionable as the given uncertainty was 7%. The report suggested that DNI could be as high as 1793 kWh/m2/a, which although below the original estimates, is still adequate for an economically feasible CSP plant.
Concerns regarding DNI accuracy have arguably impacted the confidence of developers to submit CSP bids in India. In 2011, Rajasthan issued a bid for 100MW PV and 100MW of CSP capacity development under the Rajasthan Solar Policy 2011. Twenty five bids were received for PV, but no bids were received for CSP.
Decline in 2015 target
In April 2014, it was confirmed by the Ministry of New and Renewable Energy and the state-run Solar Energy Corporation of India that the target for CSP for 2015 was reduced from 1,080 MW to 100 MW.
The long-term outlook for CSP in India remains positive despite the above factors. First and foremost, India is still a country that is in high need for energy with a demand that has notably increased in the last few years. Cost of conventional fuel is increasing day by day, resulting in higher energy costs. In addition, difficulties to extract national coal are mounting along with their costs. Subsidies are required on conventional fuels to keep end consumer energy prices low. This has resulted in pressure on the governmental budget.
With these external conditions in mind and based on the lessons learnt from the projects in Phase 1 of JNNSM, the government plans to adjust the policy to make it more realistic, cost-competitive and achievable than Phase 1.
Several factors are identified as key points to improve and strengthen the foundation for a robust CSP-specific policy for India.
ADB-SECI innovation programme
The government of India has undertaken a number of positive steps to re-direct the promotion of CSP in the country and improve investor confidence in the market. The Asian Development Bank (ADB), together with the Solar Energy Corporation India (SECI), will be tendering two innovative 50 MW CSP pilot projects soon.
Better knowledge of DNI
The availability of DNI data in the country is improving with solar radiation measurement stations of the Solar Radiation Resource Assessment (SRRA) installed by C-WET from the Ministry of New and Renewable Energy (MNRE). In the Phase 1 of SRRA (2011), 51 stations were installed across India and have been collecting data for more than 2 years, according to Centre for Wind Energy Technology (C-WET). In the Phase 2 of SRRA (2014), another 61 stations will be installed across the country until the third quarter of 2014.
Another objective of the project is to create solar radiation maps of India which are expected to be released soon. Moreover, it is also anticipated that in the near future CWET/MNRE will provide an update to the solar resource assessment for Bodana site in Rajasthan, which was published in November 2012 by RRECL. Though it is unsure if DNI values will be increased to above the previous estimate of 1676 kWh/m2/a, it is expected that the uncertainty of the data would be reduced.
More recently, in July 2014, 3TIER was selected by the Centre for Wind Energy Technology (C-WET) and the Indian Ministry of New and Renewable Energy (MNRE) to develop a national solar atlas for India. The aim of the atlas is to secure adequate solar radiation data that will attract investment in solar energy.
As a result of the increased availability of more accurate DNI data, developers will be able to better design and price their future plants to adapt to real DNI conditions reducing risk and uncertainty.
According to Agriinfo.in, India is a vast country with 13% of barren land, representing 41 million hectares. Even if CSP is developed on 10% of this land, it represents around 1,000 GW of possible CSP installations. Until now, the development of CSP has mostly been restricted to the states of Rajasthan and Gujarat with only one project being located in Andhra Pradesh. The states of Rajasthan and Gujarat are home to the biggest deserts of India, the Thar Desert and the Rann of Kutch. Land availability in these states is not an issue.
According to the Department of Land Resources under the Ministry of Rural Development, Government of India, around 55 million and 28 million hectares of wasteland is available in the states of Rajasthan and Gujarat respectively. Both locations offer ideal conditions for CSP. The government has recently announced a 4 GW solar park at Sambhar salt lake which will be developed by the state owned Hindustan Salts Limited. This gives an example of how barren land can be used to develop multi-GW solar parks.
The CSP industry has seen many Indian manufacturers attempt to develop a local supply chain. Companies are starting to specialise in receiver tubes, frames, curved mirrors and other key components. This not only provides a strong cost reduction potential for developers but also offers a possible strong manufacturing base for key components to be exported, strengthening India’s balance of payments. This carries the provision that the components produced pass international standards testing, which some manufacturers such as Thermosol Glass are already following.
Recently, it has been reported that Rajasthan Sun Technics 125 MW Linear Fresnel CSP plant achieved up to 61-71% of local content manufacturing according to the Climate Policy Initiative (CPI) estimates. This also demonstrates the technology’s promise for meeting another of the Indian government’s goals: creating a CSP industry hub.
Revision of policy
If CSP is to succeed in India, various changes need to be made at policy level. If reverse auctioning is used for future scale-up of CSP in India, its design has to be improved to increase the chances that winning bidders actually implement their projects all the way through. Some of the key factors to focus on are:
Improving data on the available solar resource at the time of bidding
More realistic timelines for submitting bids and constructing plants
Stricter enforcement of penalties for missing deadlines
Strengthening requirements for participating in the bidding
Potential until 2024
Currently, the country has one 50 MW of CSP project in operation (Godawari), a 125 MW CSP project expected to come online in the coming weeks (Reliance/AREVA) and a 50 MW project (Megha) expected to begin commissioning within months. The remaining 250 MW of CSP plants awarded in the Phase 1 are still stuck development.
The 2014 CSP Today markets scorecard ranked India as the fifth most promising market for CSP compared to the first position the country held in the 2013 ranking. This captures the uncertainty seen in the market during the last year with ongoing delays and doubts about the viability of the projects awarded in Phase 1 of the JNNSM.
However, the increased availability of measured and accurate DNI data together with the increasing local manufacturing capabilities and changes at the policy level are expected to pave the way towards the successful deployment of CSP in the country allowing India to meet the conservative forecast scenario of 1.3 GW in 2024 defined in the 2014 CSP Today Markets Forecast.
CSP Today Global Tracker, July 2014, http://social.csptoday.com/tracker/projects
CSP Today Markets Report, 2014
Jennifer Muirhead works with CSP Today