Tracking The Sun! All You Wanted To Know About Solar Trackers

23 Aug, 2017 by Sneha Shah

What is a Solar Tracker

A Solar Tracker is a mechanical device which follows the movement of the sun as it rotates from the east to the west every day. Solar Trackers are used to keep solar panels oriented directly towards the sun, as it moves through the sky. The angle of rotation is very important as the relative position of sun changes daily from east to west. The angle of rotation varies from -60 degrees to +60 degrees (East-West direction), but for tropical countries like India, a single axis movement of -45 degrees to +45 degrees is enough for extracting the maximum gain. These days solar trackers are becoming increasingly important and major solar panel manufacturers like First Solar and Trina Solar are selling solar trackers as well. Solar trackers were mostly used in the U.S. market, but given its economic benefits, developers in India and China have also increasingly started using these trackers for their projects.

Components of a Solar Tracker

a) Tracker Mount – is the skeletal structure holding the panel in proper inclined position

b) Driver – used to control the rotation of the motor shaft based on the load

c) Sensors – detect relevant parameters induced by the sun and yields output

d) Motor – controls the movement of the tracker

e) Algorithm – used to calculate sun’s position from algorithms using the time, date and geographical location.

Also, read Impact of GST on Renewable Energy Sector in India

History and Development of Solar Trackers

During the early 2000s, there was much debate about whether tracker technology or fixed-tilt option was better for utilities. Developers were skeptical of shifting to a new technology largely on concerns of maintenance. However, tracker technology continued to develop as a viable alternative to fixed-tilt for utility-scale solar plants.

Various tracker components like motors, controllers, and sensors became smaller and smaller. The tracking systems were also optimized to reduce component requirements. Gears became smaller and efficient; sensors became more compact, using SCADA and monitoring technology. The whole setup became getting sleeker, simpler to install without the requirement of many specialized tools.

Solar trackers have continually evolved to become better and more efficient. From single axis to dual axis trackers, and from passive to active trackers, trackers today are equipped with smart features that guarantee better output. In India itself, solar trackers have features like weather proof mechanism, multimode intelligent operations, link tube with articulated joints, dust avoidance and rain mode. Some recent innovations also include simplified designs that have fewer motor parts and self-calibration. Through back tracking feature, solar trackers can also keep inter-row shading under check. These trackers are also capable of self-cleaning of the modules and hence do not require any routine maintenance.

Array Technologies CEO Ron Corio said. “The best possible outcome for solar is that you install a system and you don’t have to do much with it — it just produces power for 30 years.”

Types of Solar Tracker

There are two different drivers that dictate the motion of the trackers: passive and active.

I) Passive trackers – Depend entirely on the sun’s heat for the movement of the tracker using a hydraulic mechanism. A low boiling point compressed gas fluid is used that drives to one side or the other causing the tracker to move in response to an imbalance. They do not consume any power.

II) Active trackers – Uses a controller to monitor the sun’s movement in order to direct motors that move the trackers. Electrical circuits in the form of photo sensors are used. Active trackers thus use power.

Active trackers are more precise than passive trackers, hence more widely used where accuracy is required, for instance when concentrating solar collectors are used. Passive trackers are more widely used in normal solar PV applications.

The two basic categories of trackers are single axis and dual axis.

1. Single Axis Tracker:

These trackers have one degree of freedom that acts as an axis of rotation and they can have either a horizontal or vertical axis. The axis of rotation of single axis tracker is typically aligned along a true North meridian. They can be aligned in any cardinal direction with advanced tracking algorithms.

There are several implementations of single axis trackers:

i) Horizontal single axis tracker (HSAT)

ii) Horizontal single axis tracker with tilted modules (HTSAT)

iii) Vertical single axis tracker (VSAT)

iv) Tilted single axis trackers (TSAT)

v) Polar aligned single axis trackers (PSAT)

2. Dual Axis Tracker:

These trackers have two degrees of freedom that act as axes of rotation and these axes are typically normal to one another. These trackers have both horizontal and vertical axis and can move along the sun’s apparent motion.

The common implementations of dual axis trackers are:

i) Tip-tilt dual axis tracker (TTDAT)

ii) Azimuth-altitude dual axis tracker (AADAT)

Dual axis trackers are more complex, require additional land, more O&M and lower reliability as compared to single axis trackers, although power generation efficiency is higher.

Where Can Solar Trackers be used

Solar Trackers are mostly used in ground mounted solar farms of capacity more than 1 MW. It is difficult to use solar trackers on residential rooftop installations. The combination of energy improvement, lower product cost and lower installation complexity results in compelling economics in larger deployments. Solar Trackers are almost universally used in case of solar thermal technology because they make use of optics to generate high amounts of heat.

Advantages of Solar Tracker

The main reason to use a solar tracker is to produce more power by reducing the cost of energy. Using Solar Trackers increases the amount of solar energy which is received by the solar energy collector (solar panels) and improves the energy output. Solar Trackers can increase the output of solar panels by 15%-40%, which improves the overall economics of the solar panel project. A tracking system produces more power during peak demand hours compared to fixed mounted systems.

Trackers make immense economic sense and typically there is a payback of fewer than 3.5 years on tracker investment and an overall increase in the IRR of the project. They also lead to the lowest levelized cost of electricity (LCOE) in solar projects. The increase in output easily compensates for the higher costs associated with solar trackers. Solar Trackers are very effective in places where solar insolation and efficiency of solar panels being used is high.

India Solar Tracker Market

The costs have come down drastically over the years due to an improvement in technology and growing competition. It is estimated that almost 50% of the overall tracker market will be using trackers by 2022 which means almost 35-50 GW of solar trackers will be required annually by 2022. The overall market for solar trackers should grow to around $5-7 billion then, up from just $1 billion now.

Improvement in price has been mainly due to better technology and bigger scale. Steel has become the biggest cost component accounting for 70% of the cost of trackers. Steel prices should remain subdued given the huge structural overcapacity globally. China’s huge amount of idle capacity will keep steel prices capped and solar tracker costs in check. Just like Chinese solar panels, Chinese Solar Trackers are also much cheaper than that available locally. However, the operational history for most pure play Chinese tracker companies is not too long.

India’s solar market is 5GW of which only 20% is currently catered by trackers. This means the country still has a huge potential. Today India has 1GW of solar power plants equipped with trackers compared to none two years ago. India is expected to add about 3-4GW of single axis tracker installations per year as a result of its ambitious solar target of installing 100GW of solar by 2022. It is expected that more than 50% of the plants being installed after 2016 will use trackers in India. Compare this to the global markets, where 85% of the solar systems already use trackers.

Major Players in The Indian Solar Tracker Market

Most of the tracker manufacturers have been bought by the large U.S. solar developers like First Solar and SunPower, who have been integrating tracker options into their product offerings.

Solar trackers in India have seen a number of players entering the market. Some of the notable ones include Mahindra, Vikram and Waaree Solar. These firms are also large solar panel makers or EPC/developers which mean that they will use in-house products for their installations. Global players such as First Solar and NexTracker are also present in India and have supplied hundreds of megawatts of products to different solar projects across the country.

Major Indian solar tracker players are Mahindra and start-ups like Scorpius Trackers and SmartTrak Solar.

1. Scorpius Tracker is a Pune based startup backed by three angel investors who have an in-depth knowledge in the renewable energy sector. The company was incorporated in 2012 and grew revenues from INR 2.5 crore in 2014-15 to INR 17 crore in 2015-16. The company has installed over 300 trackers and structure designs for solar pumping, roof top, and other distributed system applications. This three-year-old company has signed MoUs worth 1,250MW and has firm orders for 500MW. Scorpius Tracker manufactures single axis trackers between 100 kW to 500 kW. A single tracker block is generally 500 kW. WiFi enabled inter-tracker controller and Wind station communication system are also available.

2.SmartTrak Solar manufactures both single and dual axis trackers, enhancing energy level by 25-35% and also provides direct and easy access to monitoring and control. SmartTrak also provides tracker control system which allows online monitoring and control and configuration of the tracking system at client’s convenience.

3. Mahindra is one of the largest EPC players in India. The company through its portfolio company Mahindra Susten manufactures MSAT100, an indigenously designed single axis tracker which is significantly gaining traction in the Indian market at affordable prices. The company has so far supplied over 500 trackers and installed more than 10MW trackers in Tamil Nadu, Andhra Pradesh, and Telangana. About 24% increase in the generation has been observed at installed sites.

4. Vikram Solar is a prominent solar panel manufacturer in India. The company also has a presence in the EPC market and recently entered the solar tracker market in a big way. The company launched HELITRAC which is an advanced solar tracker with intelligent operations and weather proof mechanism. The product is also easy to install.

5. Relyon Solar is India’s leading solar company established in 2010 and headquartered in Pune. The company manufactures single axis trackers which are proved to deliver average 20% more sunshine every day. The company claims its trackers to be the most flexible tracking solution with large tilt angle and stowage mode for the wind. They are more accurate with smart algorithm tracking. These trackers are maintenance free and have a cleaning mode for routine cleaning.

6. Ganges Internationale Pvt Ltd. is a major module mounting structure provider in India. Last year the company announced the launch of solar trackers in India in collaboration with American solar solutions provider SunLink Corporation. The tracking system will be an innovative world-class tested product in single axis tracking technology that is expected to increase energy generation by 15-20%.

7. NexTracker is the world’s largest solar tracker company and also has a large presence in India. The company has been taken over by one of the largest electrical and electronic OEMs Flextronics. NEXTracker designs and manufactures one of the world’s most advanced single-axis photovoltaic trackers that orient PV panels to maximize energy output. Other foreign tracker companies having a huge presence in India are Sun Track; and Power Way, Arch Tech and Patriot Solar of China.

While Array Technologies and NexTracker are still the biggest firms in this market globally, other players have started to enter making the field much more competitive. The top 5 international companies making solar trackers are Array Technologies, SunPower, First Solar, Nextracker and Soitec.

Price of Solar Trackers – India

Mounting structures typically account for 7% of the overall capital cost of solar PV power projects, as per the Central Electricity Regulatory Commission. The selection of tracker type is dependent on many factors including installation size, electric rates, government incentives, land constraints, latitude and local weather. Cost plays a major role in deciding the solar components, especially in India.

Trackers typically add upfront costs of 5%-10% on large utility-scale projects. The cost for solar trackers is ~INR 25-40 lakhs/ MW for single axis trackers in India. Dual axis trackers are more expensive than single axis trackers.

The tracking system should be designed in a way to be able to withstand years of harsh weather conditions. Single axis trackers have evolved a lot to what they are today but there is still room for improvement. For example, most of these trackers are installed with a limit switch which does not function in case of bad weather conditions and is also prone to improper installation and operating errors. At many locations, these switches are now replaced with mechanical hard-stops which overcome all these limitations and thus improve efficiency. But there are still small hurdles to a successful tracker installation. Challenges exist in the form of bad weather or windy conditions, maintenance, cleaning and the overall efficient operation of the whole system. Innovations so far have been fruitful and have addressed the concerns, but with a booming solar market in India, it will be interesting to see how the tracker market evolves over the next one or two decades.

Conclusion

Single-axis trackers are more beneficial compared to double axis trackers in the Indian scenario. India has set up an ambitious target of installing 100 GW of solar power by 2022. Both the market size and the market share of trackers is poised to increase at a rapid pace in India. Trackers will more than makeup for their modest increase in upfront costs over the lifetime of the project. In the past developers were of the belief that trackers will significantly add up to maintenance costs which were a big challenge for installing trackers. However, that perception is quickly changing with mass adoption and increased the overall efficiency of projects when using solar trackers.

India has 100% rural electrification plan which will increase the country’s overall demand for energy. Utility-scale solar is here to stay in India for long and continued improvement in performance and cost of all major components including modules, trackers and inverters is going to make it a competitive source of electricity going forward.

Note: The article is written by me and was originally published in a leading renewable energy magazine in India, SmartEnergy.

Impact of GST on Renewable Energy Sector in India

7 Aug, 2017 by Sneha Shah

India,Solar Energy

About GST & its Purpose

Goods and Services Tax or GST was implemented in India on July 1^st, to replace multiple central and state taxes and to bring a better uniformity in the overall indirect tax structure. Its intention is to smoothen the way business is done in India. The implementation of GST intends to improve the competitiveness of Indian goods and services in the international market and increase exports.

Implemented from the 1^st of July, GST is said to be the biggest tax reform in the history of independent India and has taken almost 18 years to be passed after it was first proposed in 1999 by the Vajpayee government. The new law is expected to help the overall economic growth as it will sharply reduce transaction costs while dramatically increasing tax compliance. A non-profit organization Good and Services Tax Network (GSTN) has been formed where returns and payments have to be filed. The complete movement of all tax related information and payments will considerably increase the government’s ability to crack down on tax evasion. The people of India are trying to adjust to the new scenario with challenges in compliance and implementation, but hope for more clarity with the passage of time.

Rate of GST on Renewable Energy

GST has been imposed uniformly on most goods and services barring a few that are exempted. The rate of tax also varies in between four tax slabs – 5%, 12%, 18% and 28%.

It is therefore natural that the booming renewable energy sector in India also comes under the scope of GST. However, to maintain the attractiveness of the sector and to encourage further installations, the government has wisely put the solar and wind sectors in the 5% tax bracket. This is a sensible move as renewable energy needs to be actively promoted by the government in order to meet its climate change commitments under the Paris agreement. Besides helping fight pollution, renewable energy also has a key role in reducing massive fossil fuel imports and improving India’s overall energy security situation.

Taxes on consumption or sale of electricity are exempt from GST. Hence, electricity generated from renewable energy sources would continue to be taxed by the respective State government. However, taxes on various capital goods and input services (capital cost and operation & maintenance costs) used for generation of renewable energy will fall under the GST regime. GST paid on the input side (eg. on procurements) would form part of the cost which cannot be offset against electricity duty.

Most other renewable projects and equipment including wind mills, waste to energy plants, tidal energy plants and bio-gas plants and even solar power based devices or generating systems have been classified under the 5% rate bracket.

Renewable energy developers had earlier expected total exemption from GST, but given the falling tariffs and improving dynamics of the sector, the government expects the sector to be self-sustainable on its own very soon. Hence it chose the lowest tax bracket for various solar and wind components such as:

1) Solar water heater and system

2) Renewable energy devices & spare parts for their manufacture:

a) Solar power based devices

b) Solar power generating system

c) Solar lantern/solar lamp

d) Wind mills and wind operated electricity generator

However, for very small installations in the residential sector of 100 kW in size, solar inverters will attract 28% GST. Similarly, services provided by wind equipment manufacturers (engineering services) to set up projects for developers will fall in the 18% tax bracket (up from 12% earlier). Also, solar projects involving civil and works contracts will be taxed at 18%.

You can check out MNRE explaining the tax structure for solar and wind – both for grid connected and off grid systems.

Impact of the new GST Law

Renewable energy is a sector which has so far been benefiting from numerous tax exemptions. Earlier solar components including solar modules were subject to concessions on value added tax (5% VAT which was ultimately waived off in many states) and exemptions from excise duties in most states. The new tax regime imposes a 5% GST on solar components.

The Wind and solar equipment were subject to a VAT of 5% and service tax on erection and construction services were 15%. After the implementation of GST, equipment would attract a 5% GST, whereas services would be subject to 18%.

As a result, capital costs and tariffs of various renewable energy projects are expected to increase. However, Mr. Piyush Goyal has reassured that a smooth transition process will be followed which will grant additional savings for the developers.

In contrast to solar and wind going up from 0 to 5%, the taxes on coal have come down from 11.69% to 5%. The government’s intention to put coal at par with solar proves that the country is moving towards grid parity.

Who will bear the Additional Cost

The companies would need to revisit their procurement strategies to minimize the loss of tax credits. It is expected that any increase in cost would be passed through to the buyer. A buyer can claim input credit of GST, once the same tax has been paid by the supplier. But given the complexities of power purchase agreements, DISCOMs will be reluctant to hike tariffs given that auctions are already happening at record-low levels and many states are facing a situation of power surplus. As a result of the imposition of GST, tariffs will increase but this will vary from state to state. For example, solar equipment was earlier exempt from VAT an entry tax in Rajasthan and Haryana but would be taxable now.

Solar bids have reached levels as low as INR 2.44 per unit while wind power is at INR 3.46 per unit, but this has resulted in single-digit returns. A higher cost as a result of GST may further erode margins in the short term. However, falling input costs are expected to neutralize the effect of GST on prices over the long term.

Missing Clarity on GST

There are many other small components required in a solar and wind power plant installation which has not separately been identified by the Indian government for the levy of GST. The clarity is still missing for the renewable energy sector.

According to a tweet by the Revenue Secretary, Dr Hasmukh Adhia, all solar equipment and its parts would attract 5% GST only.

All solar equipments and its parts would attract 5% GST only https://t.co/Dqcq2IctOQ

— Dr Hasmukh Adhia (@adhia03) May 28, 2017

Though GST will be applied to solar modules at a concessional rate of 5%, operational clarity for other capital goods used in solar projects is still lacking.

There is confusion in regards to the taxability of goods because many of the same components that go into a renewable energy project like cables, meters and the steel structures are taxed at higher rates (classified under the 18%-28% tax slab) for use in other industries.

For example, transformers used for solar projects are intended to be taxed at 5% but they are taxed at 18% for other applications. The developers are also not clear about how to claim the concessional 5% GST rate.

MNRE, as well as the finance ministry, need to come out with a mechanism to clear the air and resolve these vexing issues. In the absence of any specific notification for solar projects, capital goods such as inverters and module mounting structures will come under the 18% tax bracket whereas, cables and batteries will attract 28% tax.

Effect of GST on Prices of Solar Components

The proposed GST is expected to have an impact on over 10 gigawatts of solar energy projects. Project costs are expected to go up by 4%-5%, which seems reasonable given the drastic price fall in the Indian solar price (solar tariffs have dropped to as low as INR 2.44 per unit, becoming cheaper than the thermal tariffs). It is, therefore, expected that the tax structure will not have a significant adverse effect on the Indian solar industry. However, if only modules are taxed at 5% and other capital goods are taxed at rates between 18%-28%, the expected increase in total EPC cost would be around 6%.

An increase in operations & maintenance costs (O&M), components costs and civil work costs is expected, as a result of the imposition of GST. There might also be some issue around debt financing, refinancing and financial closure due to GST. The biggest negative impact of the price escalation may be on lenders unwilling to fund extra costs and projects getting canceled thereof.

Developers also fear that with prices becoming slightly higher, competition from the Chinese counterparts will further intensify. The prices of solar panels have hardened in the recent months with Chinese demand remaining strong as well as pull in from demand in the USA. Developers are stocking up on solar panels as higher solar import duties may be imposed in September due to the Suniva petition. This might, in turn, affect the profitability of the Indian solar developers who are already bearing the brunt of falling solar tariffs.

But given the rise in prices to be very insignificant in the long run and the improving dynamics of renewable energy in India, all these adverse effects should be transitory. There is almost no risk that India will not meet its 40% renewable energy capacity target by 2030. In fact, given that solar prices are expected to keep falling due to improving technology, the country might considerably exceed that target.

Effect of GST on Solar Operations

A little slack can be expected on the operational front as developers might have to look for additional funding for projects under construction, which might lead to delays in project completion.

As mentioned earlier, developers might face a tough time arranging for extra funds and might not be able to complete their projects on time. However, I doubt that given the rising popularity of solar in India and improving the price-performance ratio. The sector I feel that could be the most adversely affected is the residential rooftop solar sector in India. The rooftop segment has already been struggling to manifest in India. Various government schemes and policies to incentivize this segment have also failed to push growth in this segment.

Now additional price pressures in the form of GST could negatively impact the installation of solar rooftop on homes. India is a highly price sensitive market and given that a majority of Indians belong to the lower income strata, I foresee a lull in this segment.

Conclusion

MNRE is still working with the Ministry of Finance to come out with guidelines on improving the clarity regarding the imposition of GST in the renewable energy segment. India has set a mammoth target of installing 175 GW of renewable energy power by 2022 and has also made significant progress in this direction. The government would not want to slow down that pace as a result of GST. Almost 10 GW of India’s pipeline solar capacity will be impacted by an increase in indirect tax rates under GST and lack of clarity adds to the complexity.

Project delays, risk of litigation between project developers and DISCOMs and a slowdown in the rooftop solar market, are expected in the near future. Both costs and tariffs of wind and solar would increase over the short term. In the long run, GST provisions will not impact the long term prospects of the renewable energy industry. Any increase in tax rates will be offset by declining costs and as a result, GST will not have any material negative impact on the growth prospects of the industry.

In the long-term, the GST’s impact is likely to be evened out by falling costs. “We don’t need support of lower taxes to encourage renewable energy,” Goyal said on May 19. The Renewable Energy sector in India will also benefit from a faster growth in the Indian economy which will increase the overall demand for the Renewable energy ecosystem. The solar industry in India will face some short term pain but will gain in the long run.

Note: The article is written by me and was originally published in a leading renewable energy magazine in India, SmartEnergy. You can read the article on Page no. 44

Indian Distribution Utility Tangedco Fires First Shot Against Rooftop Solar In India

13 Jul, 2017 by Sneha Shah

India,Solar Energy

Tangedco Fights Solar!

The U.S. utilities have been waging war against rooftop solar energy systems in numerous U.S. states. In some states they have won by lowering the compensation for excess solar power fed into the grid, putting a fixed tax on solar systems and in general making life very difficult for rooftop solar energy developers and owners. Distributed energy source (DES) has been cited as an existential threat by utilities as it cut the demand for their main product – electricity. Now India will also see the same fight between the utilities and rooftop solar energy.

TANGEDCO which is the state-owned distribution utility for the southern state of Tamil Nadu has fired the first shot in this battle. The company has proposed a number of retrograde steps to slow down the growth of rooftop solar energy in that state. It proposes three measures against rooftop solar:

a) Reduce the FIT rate given to solar energy

b) Propose a tax on all rooftop solar energy systems

c) Cap the size of the rooftop solar energy system to 50% of the contracted demand

Also, read Why is power surplus Tamil Nadu going for another Solar Tender

These proposals are quite funny as rooftop solar energy has been a failure in India’s overall booming renewable energy sector. Despite numerous government incentives the sector has failed to take off as there is a lot of ‘on the ground’ issues mainly due to utility bottlenecks. As it is, rooftop solar has not even touched the 100 MW mark in Tamil Nadu where more than 90% of the installations are utility-scale solar energy projects.

Rooftop solar has massive potential in India and lots of benefits for all stakeholders except the utility. The government has been trying to incentivize the utilities to support rooftop solar energy but not with too much success.

I think this sets a precedent to how other utilities in the 30 odd Indian states will act going forward as rooftop solar penetration rises inevitably with cheaper prices. The reaction and rulings of the state regulation TNERC will also be interesting to watch.

You might also like Tamil Nadu gets 33% of its electricity requirements from cheap Wind power with better Forecasting and Transmission

Wind Energy Soaring High In India But Future May Not Be That Smooth

6 Apr, 2017 by Sneha Shah

India,Wind Energy

Wind Energy India – Future & Challenges

Indian Wind energy capacity jumped up by a whopping ~65% in the current fiscal year setting up a record 5400 MW between March 2016 and March 2017 (in India the fiscal year ends in March). This was not only the highest ever wind energy capacity installed in India but also 35% higher than the target set up by the Indian government of 4000 MW for FY 17. This means that the total wind energy capacity in India is now touching 30 GW. The huge jump in wind energy capacity came due to a number of factors:

1) Good IRRs from the feed-in tariffs available in major states such as Andhra Pradesh, Gujarat and Karnataka leading to a developer fueled boom

Also, read Andhra Pradesh has become a renewable energy hub in India.

2) The expiration of the GBI and AD incentives which mean that you needed to install the wind farm before March end 2017 in order to get these incentives

3) A pro-business government in states such as AP and Gujarat who encouraged renewable energy development in order to boost the business environment in their own states.

The Top Wind Energy States in India

Andhra Pradesh at 2,190MW, Gujarat at 1,275MW and Karnataka at 882MW accounted for almost 80% of the total wind energy capacity additional while previous year leaders such as Tamil Nadu and Madhya Pradesh installed much less wind energy capacity.

Wind Energy Future

Though the wind energy industry is celebrating now, the future does not look that bright. The major challenges facing the sector are:

1) Reverse auctions have changed the paradigm in terms of the subsidy given by the government as well as the returns. The record low price of INR 3.46/kWh means that high return guaranteed by the government in terms of high fixed electricity prices ranging from INR 4-6/kWh is a thing of the past. Gujarat and AP are not ready to sign PPAs with wind power projects under construction in their states. Other states will also not sign FIT PPAs from now on given their much higher cost.

2) AD and GBI incentives are probably gone for good and wind energy has to pretty much compete on its own against the fossil fuel aka coal power.

3) Solar energy prices keep falling with each passing month making wind energy less and less of an option for the government in meeting its green energy commitments.

4) Wind turbine and wind developer margins will be under high pressure due to the competition created by wind reverse auctions. Entry of foreign wind turbine companies such as Senvion is expected which will further increase competition and lower returns.

It is difficult to foresee the wind energy industry repeating its FY17 performance given the aforementioned factors. The wind industry will have to really pull up its socks in terms of cost cutting and technology improvement if it wants to remain relevant. Many other industries such as solar thermal have bitten the dust against the relentless onslaught of crystalline solar technology. Even coal is dying a slow painful death all over the world as solar PV technology has become cheap enough to challenge King Coal in terms of affordability.

With Increasing Solar Power Curtailment, Government Wants To Shield Developers Through Fixed Prices

15 Feb, 2017 by Sneha Shah

India,Renewable Energy

Solar Power Curtailment Set to Grow In India

Solar energy in India is rapidly increasing capacity with the 9000 MW milestone crossed. However, the overall power industry in India remains a mess with most state run distribution utilities still drowning in huge accumulated losses. Wind power in India has frequently faced power curtailment by utilities as they sometimes do not have money to pay these plants and sometimes due to excess power.

Given that wind and solar power are perishable goods and costs for these green sources is fixed, curtailing power purchases from solar and wind plants means losses for the producers. They cannot run the plants at low PLF, unlike gas and coal power plants. There is no fuel. Also coal and gas power plants have to be paid a fixed price even if no power is procured by the utilities. The power price has a fixed and variable component but solar and wind power does not have such a breakup. In case the utility stops buying power, it does not have to pay anything making them an easy and better target for power procurement curtailment.

While the central government has tried to bring pressure on the state regulators and Indian utilities to stop this practice, it has been unable to do so as of date. With the solar power expected to double this year making India the 3^rd biggest market, the risk of solar power curtailment is set to grow. There has been huge investor interest in India’s renewable energy, making it one of the prime reasons for the growth of this industry. The Indian central government does not want to kill this golden goose because of the vagaries of India discoms. The government plans to introduce a fixed component in the tariff paid to green power producers. This component will have to be paid by the discoms irrespective whether they buy the power or not. This will ensure that at least the debt part of the solar plant capex is serviced and the plant does not go into default. This will also put the solar and wind power plants at par with the coal and gas power plants which receive a similar treatment from the distribution utilities.

7 Cents Solar Plus Storage Price By 2022 Could Bankrupt Most Indian Power Utilities

1 Feb, 2017 by Sneha Shah

Solar Energy

Solar+Storage Set to explode in India

The capital costs for building a solar power plant is the cheapest in the world thanks to very low labor construction costs as well as super cheap Chinese imports of solar panels which makes up 60% of a solar power plant cost. While solar power prices have fallen to nearly INR 4/kWh, which is around 6 cents/kWh, the power utilities are still feeling secure given that solar remains an intermittent source and rooftop solar has not really taken off due to on the ground red tape in getting approvals for net metering.

However, things could take a drastic turn with storage entering the picture in a big way. Tesla has recently started production at its Gigafactory in USA and plans to reduce costs of lithium ion batteries by nearly 40% in the next 3-4 years. Other battery players will also get in, given that the technology is not restricted to the Panasonic Tesla combine. I soon expect similar gigafactories to be built in China and costs to plummet given the past track record of Chinese manufacturing. While these factories are primarily making batteries for electric cards, they will also be used for stationary storage applications.

Rooftop solar energy which is already cheaper than grid in a large number of places in India could soon see its biggest barriers dissolve as homeowners could simply switch off the grid at INR 5/kWh price (7 cents). Most of India’s urban consumers which accounts of a majority of power utility revenues pay around INR 6-10/kWh plus various associated duties and taxes. With power prices only going to increase, this means there will be a big differential between the grid price and the solar + storage price. In fact, utilities might go into a “death spiral” much before as the highest tariff paying customers will switch out much faster. Some commercial and industrial consumers pay horrendously high prices and they are already using solar power energy provided by private generators and electricity providers.

Solar energy has already reached grid parity along with wind power energy in India, with prices ranging around 6 cents/kWh. New thermal power plants are in the same range if not higher priced, while gas is out of the picture. Building nuclear and hydro plants not only takes a lot of time but causes a lot of environmental issues. This makes solar energy not only great from India’s climate change commitment perspective but also from the cost perspective.

While regulated utilities may get along for a while as the state government and regulators increase tariffs, the biggest risk will be for private utilities. Even their long term power purchase agreements will not be of much help given that if the prices become too high compared to the solar price at that point of time, the purchasing entity might go bankrupt or just renege on the long term contract.

I would be a very scared investor of a power utility given the inevitable march of renewable energy. More specifically if you are an investor in CESC or any of the private utilities better sell out your shares now and look for “greener” pastures.

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