Low Solar prices in Rajasthan

When low solar prices were bid in Madhya Pradesh (central India) last year, everyone was taken by surprise that a developer could afford to bid as low as INR 5/kWh (around 7 cents) . Everyone thought that this was a flash in the pan and would be just be seen once. However, INR 5/kWh has become a standard price for solar in recent reverse auctions in India and is no longer considered a low price. Rajasthan in a recent tender saw a price of INR 4.34/kWh, which is the same price that was achieved by Finnish developer Fortum in a solar park JNNSM tender some time back. This 6 cents/kWh price had been considered to be irrationally low and expected to lead to bad returns for the project developer. But a new NTPC tender has seen three of India’s biggest and most reputed solar developers and investors putting the same price of INR 4.35-4.36/kWh in Rajasthan. These prices are also not for solar park land but for independent land parcels that the developer will have to acquire on their own. This is also a major reason why the foreign developers were not seen to be too aggressive in their bids. Indian developers generally win where the uncertainty and land acquisition is left to the developers themselves.

Read more about the low solar price trend in India.

Rajasthan has huge tracts of land at cheap prices and also gets a lot of radiation which makes it ideal for solar project development.  I think that 6 cents/kWh has become the new standard price at least in Rajasthan for solar development. Given that thermal power is now being sold in the open market from new plants at around INR 4.5-5/kWh, this marks a new competitive paradigm for the Indian power market where solar power starts competing not only with wind but also with coal power. Given that a solar project comes up in 12 months and does not face environmental and pollution issues, solar energy has become the dominant source in the Indian energy sector. While thermal power plants will still be needed for balancing and peaking purposes, it will become extremely hard for thermal power going forward as solar prices continue to decline with improving technology.

It is quite probably that most of the new power development from 2019-2020 onwards will be solar power only given the huge advantages that solar possesses now over other forms of generation.

Of the 130 MW on offer, 50 MW was won by Shapoorji Pallonji Infrastructure Capital and 60 MW by Mahindra Susten, both offering to sell electricity produced from their projects at an identical Rs 4.35 per kwH. The remaining 20 MW was won by Prayatna Developers of the Adani Group at Rs 4.36 per kWh.

Source – ET

Components of a Rooftop Solar System

A rooftop solar system comprises of:

a) Solar Panels/ Modules – The most important component of a rooftop system are solar panels. They are the nucleus of the system and everything Rooftop Projectrevolves around them. Solar modules comprise almost 50% of the total cost of the system. Different types of solar modules will give different results, for example thin film modules though very suitable for the Indian climate, require more installation area when compared to a crystalline module.

b) Inverters – Are the powerhouses of the entire system that store the excess energy generated by the panels and can be used later when there is no sun. Approximately 25% of the total rooftop system cost comprises of inverters.

c) Balance of Systems – These include accessories like wires, cabling, mounting structures, junction boxes etc.

d) Installation cost – This cost depends upon the type of panel, its efficiency and varies from panel to panel. Generally fewer panels are required to generate the same amount of electricity in case of a panel with higher efficiency and hence the cost of installation will be lower, when compared to another panel.

Types of a Solar Rooftop Installation

A solar rooftop system can be divided into three types on the basis of its grid interactions/ connections.

  • Customer owned – This is the oldest type of rooftop installation, wherein the customer is the owner and installs the system with his own equity or debt. The power generated is used for self-consumption and excess can be fed to the grid. The customer may use the entire power generated (captive/ off grid), feed all energy generated to the grid (Gross feed) or use a part of power generated and supply the extra power to the grid (Net metering).
  • 3rd Party owned – In this type of rooftop installation, third parties install these systems on the rooftops of its customers, either through solar leasing or power purchase agreement. The customer foregoes high capital investment for lease payments to these installers, who are the owners of this system installation.
  • Integrated with utility – In the third type, utilities will install solar system on the rooftop of the customers and the power generated is fed to the grid.

Though the first two are more prevalent types around the world, the utilities have started entering the rooftop space in some parts. This shows how mainstream solar power is getting that utilities are also shifting towards solar. In India only the first tyoe is commonly seen, wherein the customer introduces funds either through equity or debt or a combination of both.

Size of a Rooftop Installation

Some important equations to determine the size of your rooftop installation:

  • 1 watt of solar panel gives 4 watt hour of power per day.
  • A typical 5 kW solar power plant which can comfortably power most of the needs of an urban 3 bedroom house, takes up only about 450-500 sq ft of area.
  • 1 standard solar panel area requires an area of 0.56 square meters.

Important considerations before installing a Solar Rooftop system

It is very important to first know your energy requirement, the type of appliances that can run through a rooftop solar system and hence the size of the system. The dimensions and weight of the panels and mounting structure, panels with different efficiency levels – all affect the calculations. Care should be taken to choose the mounting structure wisely as it is going to hold the panels. The amount of sunlight your roof gets is another very important factor that can determine the efficient working of a rooftop system. It is important to do your math before installing a rooftop PV system.

Also read 5 Important Factors to consider before buying a Solar Panel.

rooftop india

Prudence must also be exercised in choosing your vendor and checking his bankability, since servicing, maintenance of panels will also be required from time to time.

Read Best Solar Panels to buy for rooftops in India.

Capital subsidies and incentives like accelerated depreciation, tax holidays, excise duty exemptions in India are other important considerations before installing a rooftop system. USA’s investment tax credit has been played a vital role in boosting solar installations across USA.

 You can read about subsidies on Solar Rooftop here.

Benefits of using a Rooftop Solar System

1) Long Delays in Permitting, Environment Clearance, Land Siting – Large Solar Farms have to go through a myriad of regulations and clearances. There have also been instances of lawsuits against solar thermal and solar PV plants in California by wildlife and environmental groups as well as local Indian tribes. This problem is non-existent in case of a rooftop installation. Free area of your home’s rooftop can be easily utilised for installing a rooftop.

2) Electricity Transmission Costs – Grid Connection leads to additional costs for solar farms, while rooftop solar can use existing transmission infrastructure.

3) More Grid Stability – A large part of distributed solar is consumed locally, while farms supply 100% to the grid. That makes managing the grid difficult when solar penetration increases. A rooftop installation leads to a more balanced grid.

Cost of a Rooftop System in India

A typical 1kW rooftop system should cost anything in between INR100,000- 125,000 (cost includes that of panels, inverters, batteries, cabling and installation). In addition to this, one is also entitled to various subsidies and incentives as discussed above. Approximately 50% of the cost can be saved through capital subsidies and AD.

 

Rooftop Solar Panels in India

India’s solar rooftop market is set to explode in the coming years. The cost-effectiveness of solar power, rising electricity bills, and the high cost of land in India are all propelling rooftop growth in India. The Indian capital city New Delhi alone has the potential to install 2 GW of solar generation capacity by 2025. As such there will be a huge demand for rooftop panels in India.

Not only the Indian players but Chinese solar panel manufacturers also demand a major marketshare in India. First Solar too, has a dominant share in the Indian market. Its thin-film efficiencies is sharply increasing, with average module efficiency expected to increase to reach 16.7% by the end of the year. Other than the major Indian panel manufacturers like Tata Solar, Su-Kam, Indosolar, Vikram Solar and Waaree Solar, there are many Chinese players like Trina Solar, Canadian Solar, Jinko Solar and ReneSolar present in the Indian markets.

Compare and buy the best selling Solar Panels in India here.

 

Rooftop Project

Entrants expanding in the Indian Panel Market

i) Adani Group – the Adani group is planning to set up a gigawatt size panel and solar cell manufacturing plant. They will invest $2 billion in the project and have also got necessary approval from the Gujarat government. 1200 MW manufacturing capacity is expected to be commissioned this year.

ii) Trina Solar – Tier 1 Chinese panel manufacturer and the largest global module supplier in 2015, Trina Solar is too making in India. The company will soon be opening its solar cell factory in Andhra Pradesh.

iii) JA Solar too has plans to set up manufacturing capacity in Andhra Pradesh, however there has been no recent update on the same.

Foreign Solar Rooftop Panels in India

First Solar – The thin film solar panels are best suited for the Indian climate and with improving efficiency levels, it looks like First Solar is here to stay for long. Last year, the company started the commercial operation of its 20 MW solar plant in Telangana in India. The policy which was meant to support India’s domestic solar panel companies, through a “domestic content” provision helped First Solar become the undisputed leader in capturing a leading marketshare in India.

Canadian Solar and ReneSola are other module suppliers in India. Since India has revised its targets to 100 GW of solar installations by 2022, many international companies have been trying to expand in the country. This and PM Modi’s ‘Make in India’ have proved to be beneficial in promoting solar in India.

Read about the Major Challenges for Rooftop Market in India.

Major Indian Rooftop Solar Panel Suppliers

Many companies like Moser Baer and Lanco Solar have now been out of the solar landscape. Recently Sunedison was also out of the competition.

i) Tata Power Solar – Backed by the Tata Group in India, the company is engaged in manufacturing and EPC services. Tata Solar is trying to increase solar awareness in the remote parts of India. The company has commissioned 175 MW of EPC projects, 43 MW of solar rooftop projects, and exported 600 MW of modules till date. Tata Solar has presence in industrial, commercial, both on-grid and off-grid solar projects and residential.

ii) Su-Kam – is the largest solar inverter manufacturer in India. It is India’s largest power solutions company. Su-Kam also has presence in the residential EPC market in India. The company has a global presence in more than 70 countries. Su-Kam was the first sine-wave inverter manufacturer and has launched hybrid solar inverter that is perfect for every home.

iii) Indo Solar – manufactures solar cells and modules, located in Greater Noida Uttar Pradesh. The current manufacturing capacity is 450 MWp, with an average efficiency rating of 17.4%. They manufacture 36 celled polycrystalline silicon panels, with 5 years workmanship warranty.

iv) Vikram Solar – Vikram Solar is a manufacturer of PV solar modules. The manufacturing plant has a 150 MW installed capacity in West Bengal. They manufacture polycrystalline modules and are available in six series under the name Eldora.

v) Waaree Solar – The company has a 250 MW solar panel manufacturing unit in Surat, having presence across the solar power value chain. These are monocrystalline/multicrystalline silicon solar panels. The company has an experience with solar thermal and EPC utility grid projects.

1366 Technologies to ramp up Wafer Manufacturing

Crystalline silicon technology has taken over the solar industry decimating other technologies such as CIGs, a-Si, solar thermal technology etc. Other technologies have become niche ones with a limited market and a limited number of players. Crsytalline silicon technology has also seen its supply chain get standardized with polysilicon manufacturing, followed by ingots, wafers, cell and finally panel production. 10 years ago, there was a vast variation in technology and process between the major solar companies. However, most of the Top 10 solar companies have become similar in terms of technology, processes, material and costs. The equipment suppliers to these companies have also reduced, as the industry has matured.

However, a new startup called 1366 Technologies threatens to upend the existing supply chain and instigated disruption in the industry. While the company has been around for a while, it is only now that it is raising funds for serious commercialization of its technology. 1366 has raised over $10 million in investment from solar giant Hanwha Solar. The money will go towards providing exclusivity to Hanwha for a certain number of years, besides going towards prepayments towards solar wafer supply.

Note, the mainstream process of producing wafers is by casting polysilicon into large ingots and then using wire saws to slice the ingots into wafers. This leads to a long two-step process while causing wastage, because silicon is wasted as kerf material. While costs have come down for wafer manufacturing due to process improvements such as larger ingot sizes, recycling etc., 1366 proposes a dynamically different technology. It proposes to directly transform polysilicon into wafers, without going through motions of ingots and slicing. This will reduce the production time and costs. Hanwha will also check 1366 by testing the wafers and using the normal cell production processes, to see if 1366 wafers can easily be converted into high efficiency solar cells.

If 1366 succeeds, then the wafer companies such as GCL Poly, Green Energy Technology, Comtec, Renesola etc will lose the most. Large integrated solar companies such as Jinko Solar, Trina Solar will also lose out, as their wafer operations become obsolete and they would have to write off those segments. While I do not see an immediate impact, as 1366 will take a long time to ramp up to the world’s demand for almost 60,000 MW of wafers, it will certainly impact the normal solar wafer companies as they see reducing demand.

China exceeds Japan’s Annual Solar installation target in Q1’16

China continues to surprise with the scale and speed of its renewable energy power generation capacity additions. The country added a whopping 7.1 GW of solar power capacity in the first quarter of 2016, which is a growth of over 48% year on year. This is astounding given that the world’s 3rd biggest solar market Japan will install 7 GW for the whole one year. China has been making new record in both solar and wind energy generation, as the country looks to lower its reliance on polluting thermal power generation. One of the key reasons behind the surge is the lower prices of solar power generation, as well as the impending cut in feed in tariff in June 2016. This is pushing developers to install most solar power capacity in the first half of 2016.

Read about China’s Solar Industry here.

solar farm

However, China has not increased its full year target which will be around 15 GW. This may mean that there would be a pressure on solar panel prices going into the second half. USA has also extended its ITC policy to 2020, which means there will be no huge rush to get solar projects finished in 2016. Japan is going to see lower installs in 2016 with lower feed in tariffs. Both China and Japan are also suffering from grid constraints, as their large utility scale solar projects have put strains on the electricity grids which are not built to handle large amounts of intermitted solar power electricity. China does not even have enough transmission capacity from the western parts of China to the major consumption centers on the eastern seaboard.

The solar panel prices remain subdued as new capacities are being added around the world with stability seen in the last couple of years. However a major drop in prices may not be feasible, given that solar panel makers are already operating at thin margins. A price war may lead to the winnowing of the weak players who are supplying equipment to the larger companies on an OEM basis.

India’s Solar Power capacity

India’s energy minister Piyush Goel said that the country is well on track to achieve solar power capacity increase of over 10,000 MW over the next one year. This is based on the successful implementation of over 20 GW of solar power tenders that were released over the past one year. Most analysts and consultants do not think that even half of the target can be achieved. The main concerns in reaching the target are:

  • There is not enough transmission capacity to move the power from the generation to the demand centers. Developing the grid in such a short time may not be possible.
  • Financial constrains as 10000 MW will require an investment of about $5 billion. (Personally, I don’t think this will be an issue, given the huge investor interest in India’s RE sector and low rates being seen).
  • Skepticism about the execution given that India has a spotty record in developing infrastructure be it road, railways, ports etc.
  • The low bidding prices seen in the tender may not give adequate returns to developers who may find it difficult to get debt financing, given the low equity returns which are expected.

solar panels india

On the other hand, Piyush Goel has been one of best ministers under the new government. In coal and power generation he has made impressive strides, with coal production increasing the fastest in recent times and an energy deficit India turning into an energy sufficient India in the last one year. Thermal power plants now have the happy problem of a coal surplus.  Piyush Goel has also made impressive efforts in the areas of renewable energy and energy efficiency. He has distributed around 100 million LED bulbs in the last one year, leading to a price drop of over 60%.

India has also achieved a record breaking 7 GW of renewable energy capacity addition in the last one year, exceeding the target which had been set earlier. If there is a good focus on execution and removal of process and regulatory impediments, then there is a good chance that India could get very near to that target making India the 3rd largest market in the world, after USA and China.