The biggest risk cited by developers and investors in India’s renewable energy industry is the ability of the distribution utilities to pay them for the power generated from the solar and wind power plants. While transmission capacity is another big risk, it is still manageable and a one time risk. On the other hand the 15-25 year PPA signed with discoms which have billions of dollars in accumulated losses is a giant risk.

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With many Indian states turning power surplus, there is little incentive to buy solar and wind power which is still expensive compared to the dirt cheap power available on the Indian power exchanges. Recently, India’s state of Punjab said it could not sell power form its thermal power plant despite selling it at just 3-4 cents a unit. Large Indian states such as Maharashtra have reportedly not paid developers for 12 months, causing the working capacity for developers to increase. Developers are also reluctant to build new RE capacity given the state of their existing RE capacity which is not getting payment on time. Lenders who generally provide 80% of the funding for these plants in the form of debt have also become reluctant to lend to this sector given the woes.

The Indian central government and its renewable energy ministry have little power to change things. The energy minister Piyush Goel had said that he would punish those states which are curtailing solar and wind power, but as we have said earlier he can’t do much. He can’t even act against states that are ruled by his party the BJP forget states which are ruled by the opposition parties. The biggest guilty parties are Rajasthan, MP and Maharashtra utilities. All the 3 states are directly ruled by the BJP but the Minister is mostly all sound and no action.

Accionia which is one of the biggest power developers in the world has reportedly said that it would need invest any more money into new wind power plants as almost 150 MW of its plants are either not getting any money from the utilities or do not have any PPAs signed with the state government.

“These discoms are paying conventional generators, but they haven’t paid wind from July 2015 onwards and are actively discriminating against wind generators,” said Sumant Sinha, founder of ReNew Power Ventures Pvt.

ReNew Power said 360 megawatts of wind power in Maharashtra, 150 megawatts in Rajasthan and 100 megawatts in Madhya Pradesh are affected by payment delays, impacting 35 percent of the company’s revenue.

The company with 86 megawatts of wind power in India and another 78 megawatts under development is the latest investor to complain that some Indian power distributors, known as discoms, are stifling investment and undermining Prime Minister Narendra Modi’s green-power ambitions.

Acciona had considered work in Maharashtra and Madhya Pradesh then decided to shelve its plans because discoms weren’t signing power purchase agreements for completed projects. Reccani said Tamil Nadu state has strong enough wind to support wind farms but also the same risk that payments would be curtailed at peak times.

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Solar energy in Sri Lanka

Sri Lanka an island nation does not have access to good quality fossil fuel resources to provide electricity to its citizens. The country which has around 4000 MW of electricity capacity mainly relies on thermal power for generating power. The biggest plant is the Norochalai thermal power plant of 900 MW capacity that was built by the Chinese. This plant was built using substandard materials by Chinese suppliers and frequently breaks down causing long blackouts in the nation and leading to a disastrous effect on the industry as well as commerce.

Fossil Fuel

 

The 900 MW Norochalai plant has run into controversy ever since it was conceived in 2006, with locals complaining of deception and fraud while building the plant. Despite the cheap quality inferior material and equipment being used in the plant, Sri Lanka could do little as the Chinese made fools out of the procuring department in Sri Lanka. They can’t sue back as they signed on buying these substandard equipment. So now the Sri Lankans are stuck with a 900 MW plant supplying almost a quarter of their electricity which breaks down most times.

The country mainly operates on diesel backup generators which is expensive to run and polluting as well. In a recent regional meeting, Narendra Modil of India offered the country to build a new power plant run by solar power. India has been a champion of solar energy and is the founder of the International Solar Alliance (ISA).  The country is expected to install 4-5 GW of solar power this year which may go up to 10 GW in the next 3-4 years. This would make it one of the largest users of solar power in the world. Though the country has almost negligible manufacturing of solar equipment, it has very experienced and skilled EPC and contractors who can rapidly build up solar power plants of large sized capacity in a very short time. This solar power plant will also replace India’s offer to build a a thermal power plant in the nation.

Sri Lanka has reportedly refused the offer, and instead asking the Indians to build a power plant run by LNG rather than solar energy. The CEB in Sri Lanka thinks that it can build a solar power plant by itself and wants India to build a LNG or a hydro powered plant. Note hydro is notoriously difficult to run in Sri Lanka because it is dependent mainly on rains which can fail in one year leading to large losses for the hdyro operator of the plant.

In January, CEB’s Technological Engineers Union blamed a Chinese firm for repeated technical failures at Norocholai, the country’s only coal-fired power plant, say they were either caused by sabotage or negligence by the operator. Most international businesses have their own backup generators to use during the outages, and it was not immediately clear how disruptive the July power cuts would be.

Reuters

The solar industry has been trying to achieve the holy grail of grid parity with other forms of energy for many years now. The sharp decline in solar equipment costs driven by strong competition and technological advances has made solar power achieve grid parity in most parts of the world in 2014 itself. With solar prices falling continuously, it has become cheaper in many segmetns and palces in India. This has made the major power generators in India rethink their plans of expanding thermal power capacity given that solar power will become not only cheaper than thermal, but have a substantial gap.

Workers clean photovoltaic panels inside a solar power plant in Gujarat, India, in this July 2, 2015 file photo. The likely collapse of SunEdison Inc's solar project in India, the first of 32 planned "ultra mega" complexes, could delay Prime Minister Narendra Modi's goal to increase renewable energy fivefold by several years and probably cost consumers more. REUTERS/Amit Dave/Files

This may cause many of the new plants to be built become stranded in no time, leading to billions of dollars in losses. While earlier, power utilites were building green power capacities to meet renewable purchase obligations imposed by the government, now economics may dictate that these companies build higher percentage of solar power as compared to other forms of power.Coal

NTPC which is India’s largest power generator with more than 40 GW of capacity already, has a mandate to build 10 GW of solar power capacity on its own and procure 15 GW on behalf of state distribution utilities. Now the company is thinking of expanding this capacity for solar power given that solar energy is becoming cheaper than coal.

It makes sense for the company to have a higher percentage of solar energy in the future as it has become quite cheap. India has the lowest equipment and proejcts costs for solar power in the world and would have the lowest tariffs too, if the interest rates in India were lower. However, India still is managing to produce solar power at around 6-7 cents/kWh which is competitive with new thermal power plants being built in the country. With prices of solar power expected to go to 3-5 cents/kWh by 2020, it would make sense for NTPC to plan for higher capacities. Besides being cheap, solar power can be installed fast and does not have to face environmental and social issues which result in huge delays for thermal power plants. These plants also have additional risks such as issues in procuring water for these plants as well as causing deadly mercury poisoning.

Will India achieve it Solar target?

India is going all gung-ho about solar power in the country. After its decision to install an aggressive 100 GW of solar energy by 2022, the country has racebeen working in all directions. Various states in India like Rajasthan, Gujarat and Tamil Nadu have already installed more than 1 GW of solar power till date. Many states like Andhra Pradesh have policies favouring solar energy. Though the country has been making all possible efforts to go solar, it still faces many challenges in its way and it has now become an interesting topic to debtae if Indis will touch the finish line of the solar race!

In a recent conference on energy and mining, the Indian Power minister Piyush Goyal vocalized the importance of using renewable energy in India. He urged the power generators to stop importing coal and start looking at employing a healthy energy mix to help India attain its goal of “One Nation, One Grid, One Price”. This program will help deliver grid connected power that will be affordable for the nation at large. He also stressed that it is still not the time when India could totally do away with fossil fuel generated power, but didn’t stop laying emphasis on the usage of renewable sources of energy.

solar panels india

The prices of solar in the country has already gone down by 40% in just one and a half years’ time. Price below INR 5/kWh (6 cents/kWh) has become the standard price for solar in reverse auctions in India and is no longer considered a low price. In another recent news, state run power company NLC India has abandoned its plan of setting up solar project in Rajasthan. The state’s DISCOM has refused to buy power at the estimated rates. The company had invited global tenders to set up four 65 MW solar projects in TN and Rajasthan and had estimated to finish commissioning by 2016 end. India faces a lot of challenges when it comes to the successful implementation and installation of solar power across the country.

Solar power is getting popular owing to its green and cheap credentials and a solar project coms up in just 12 months’ time. However Infrastructure and transmission hurdles, absence of land at affordable rates, reliance on thermal power and DISCOM reluctance to buy power are amongst the major problems that solar development in India face. It is still expected that most of the new power development from 2019-2020 onwards should be solar power, given its vast advantages.

The country still has hundreds of millions of people still leaving in darkness and faces huge pollution problems. It is now the need of hour to turn to solar power. A move in this direction was the country ratifying the Paris Climate change deal. The DISCOMs are facing additional challenges in India, with the country turning power surplus. Even though the Indian PM is turning no stone unturned and is coming up with innovative ways to spark the Indian energy mix, India still has a long long way to go when it comes to solar installations.

JSW Energy is one of India’s largest private power producers and is part of the Jindal owned JSW conglomerate. The company has been fortunate not to get into the problems being faced by the rest of the Indian power industry, as it did not build gas power plants or bid for large thermal power plants. This has allowed the company to buy power assets on the cheap from other distressed power producers. However, the company’s recent statement about thermal and solar power may make its investors think twice about investing in the company. Even as the whole world including India make a major shift towards renewable energy, the company is still banking on building new thermal power plants.

It is to be noted that solar prices in India are starting to converge with thermal power and may go lower than all other energy sources in the near future, given the big advancements being made continuously in solar panel technology.

The recent statement by its CEO – “Every developed nation in the world has developed on the basis of thermal power so it’s unfair for them to expect that India should try and develop on the basis of green power” makes no sense.

Stone age did not end because of a lack of stones and the thermal age will not end, just because coal is finished. It will end due to the availability of better substitutes and technology (read solar energy). Technology has changed almost every industry rapidly and you can’t expect a template of the past to create a success in the future. It is like saying that communication in the developed nations developed because of telephone landlines, so India also built landlines instead of focusing on mobile communication. Besides being competitive on costs, solar energy is non polluting and non killing like thermal power.

Though thermal power will be needed by poor nations like India for some more time, it does not make thermal power good. Every power producer needs a renewable energy strategy, as thermal and other polluting power sources are being phased out by public pressure and government taxes. Just banking on thermal power is one of the most foolish things you can do today, given the huge risks of running a thermal power plant for 20-25 years.

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The CEO of JSW says that solar energy tariffs are not viable. Though I would say that some of the bidding has been a bit irrational in India, saying it is not viable is nonsensical. In various parts of the world, solar is being bid for ½ the prices what they are being bid in India. Abu Dhabi saw a price of around 2 cents/ unit, while Mexico saw 3.5 cents/ unit, so how come the Indian price of around 6-7 cent per unit is not viable?

I would be very careful of putting my money in this stock where the CEO does not have the facts of his industry right and is even going public with these facts.

The sun is the most important source of heat and light in the universe. During primitive times, the sun was solely used for its heat and light for all day to day activities, when there was no electricity. With increased usage of fossil fuel and thermal electricity, there is now a risk of global warming. It is being feared that if Earth progresses at the rate at which it is currently moving on, there will not be much of resources left for our future generations. All this has led the world incline towards alternative sources of power. While wind and hydro energy are also making progress, it is solar energy that has become the favoured one amongst masses, mainly due to its increased affordability.

Also Read about Solar Cookers

What is a Solar Dryer

A solar dryer is another application of solar energy, used immensely in the food and agriculture industry. Though sun is still used as the direct source for drying food items and clothes in certain parts of the world. An indirect source of solar power can also be used for the same purpose in the form of a solar dryer. The main disadvantage of drying directly under the sun is contamination – dirt, animals, insects etc. Also there is a fear of sudden change in weather conditions like wind or rain.

When using a solar dryer, you do not have to worry about all this!

solar-dryerA Solar Dryer for drying cocoa seeds

Types of Solar Dryer

A solar dryer can most conveniently be classified as direct or indirect.

Direct Solar Dryer – The item to be dried is exposed directly to solar radiation through a transparent material that covers the structure. The heat generated from the solar energy is used to dry the crops or food items and also heats up the surroundings. The main disadvantage of using the direct mode is that the heat that will be absorbed by the item cannot be controlled. Available in many sizes, ranging from kilograms to metric tons, the simplicity of the product and its affordability are its USP.

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Indirect Solar Dryer – As the name suggests, this method does not expose the crop directly to the sunlight. The solar radiation is absorbed and converted into heat by another surface (like a black top) usually called the collector. Air that will be used for drying is passed over this surface and gets heated, which is then used to dry the food item inside the dryer. The main advantage of indirect mode of drying is that the temperatures can be controlled. The sizes can vary from kilograms to metric tons, but it is expensive and more complex to construct when compared to direct solar dryers.

solar-dryer-diyImage source

These are also commonly referred to as food, cloth or crop dryer, based on the items used for drying using the Solar Dryer. Many people can assemble/ construct a solar dryer with the help of DIY instructions available on the internet. The image shown above is self explanatory. Solar Dryer will find increased applications in the food, agriculture and plantation industries where food and crop items need to be dried before using. It helps in maintaining the quality of these items without contamination fears. In economies, where people hardly have power for their daily life, these devices will help a great deal in reducing the load on the main grid, and electricity from the grid can be used for other purposes.