Solar AC in for INR 90,000 in India

Solar products have remained niche entities till now as companies have not produced or marketed them effectively in the Indian market. Most of the solar products such as solar lamps and solar street lights are sold through government programs and there is hardly a big enough private market. However, things may be changing rapidly in the Indian market with major electronics producer Videocon launching a solar air conditioner for the Indian market.

solar AC

The company is selling 2 products of 1 and 1.5 ton priced at INR 90,000 ($1,300) and INR 1,39,000 ($2,000). Though the price may look high, the savings for the entire life cycle would be higher than the normal air conditioners sold in the Indian market. Given the relatively high electricity prices in India, air condition bills cost a bomb especially in the very hot summer months when they are used extensively.

Also read Top Solar Products that can reduce your bills this summer.

While solar air conditioners are not new, the recent sharp fall in solar panel prices has made the products affordable. However, I think that the companies which will be successful will have to launch an installment plan as not many Indian consumers are willing to pay a high price upfront. The prices of these air conditioners will be at least 4x times that of a normal AC which means that the companies will have to educate the consumers on the long terms savings potential.

You can check out the solar AC here.

Types of Solar ACs

1) Direct Current Solar Air Conditioners

Household Appliances mostly run on alternating current (AC) while solar power generated is direct current (DC). The conversion from DC to AC is done through a solar inverter which leads to increased cost and loss in efficiency of about 15-20%. In direct current solar air conditioners that AC is directly powered by solar energy without conversion leading to power savings.

2) Passive Solar Air Conditioning

In this type of cooling the design of buildings is done in such a way that it  slows the rate of heat into a building in the summer, and improves the removal of unwanted heat. It involves a good understanding of the mechanism of heat transfer. Passive solar cooling is much easier to achieve in new construction than by adapting existing buildings.

3) Solar closed-loop absorption and adsorption Air Conditioning

Active solar cooling uses solar thermal collectors to provide thermal energy to drive thermally driven chillers. Solar thermal energy heats the heat transfer fluid within the system. The generated heat is then used in conjunction with absorption chillers to provide a renewable source of industrial cooling.

4) Photovoltaic (PV) Air Conditioning

This is mainly used in residential air conditioning. The power generated from the solar panels is used to drive conventional compressor-based or adsorption/absorption-based systems. PV cooling cost effectiveness depends largely on the cooling equipment and  the efficiency in electrical cooling methods is quite poor.

China Power Generating Capacity By Energy Type

Solar energy was the second largest source of energy installed in 2016 in China overtaking other prominent mainstream source such  wind energy, nuclear and hdyro energy. In fact it was not far away from coal energy either. China installed a gargantuan 34 GW plus of solar energy capacity in 2016 far ahead of wind energy at 19 GW. Though the Chinese government wants to go slow on solar energy installed in the future reducing its 2020 target from 150 GW to 105 GW, the sheer momentum behind solar energy, the falling costs and the pollution issues which has kept most Chinese cities under a constant winter haze of smog means that it is almost certain that the 105 GW target will be exceeded.


China power-generating capacity by type of energy, 2016
Type of energy Capacity added in 2016 Cumulative capacity at end of 2016 Y/Y
Thermal 48.4GW 1,053.38 6.3%
Hydraulic 11.7GW 332.11 3.9%
Wind 19.3GWp 148.60GWp 13.2%
PV 34.24GWp 77.42GWp 81.6%
Nuclear 6.38GW 33.64GW 23.8%

Source: NEA, compiled by Digitimes, January 2017

The growth in solar energy was also far ahead of its peers at 81% with others recording much lower growth figures. Nuclear and wind also recorded double digit growth figures. Thermal energy at 48 GW was the largest energy but China has recently sharply curtailed its plan to build more coal powered plants as the government receives a severe backlash from citizens against the problem of coal generated pollution.

Solar Energy at 77 GW capacity is relatively small compared to the more than 1000 GW of coal power which means that solar energy capacity has a huge room to expand to come even close to coal power. Wind Energy also remains on a strong wicket with 19 GW making China the largest installer of wind energy capacity in 2016 and having the largest cumulative capacity of wind turbines in the world as well. China has become the world leader in both wind and solar power capacity in a few short years as it massively increases the investments in these clean sources of energy. A giant manufacturing base of wind turbine and solar panel manufacturing further support the growth of the green twins.

Will Solar Power Tower Ever be Successful

A Solar Power tower is a tower used to receive concentrated solar power. It is usually surrounded by heliostats or flat movable mirrors that capture the sun’s rays and reflect it to the Solar Tower in the middle. Below you can watch a video of the tallest Solar tower being constructed in an Israeli Desert. This tower is encircled by 50,000 heliostats and should reach a height of 250 meters once completed.

Source: Telegraph

However, whether these power towers will ever become successful? We at Greenworldinvestor had sounded the end of the solar thermal technology years ago, saying that the technology was no longer competitive with silicon solar PV technology. Today the prices of mainstream silicon has fallen and is already competitive to the prices of traditional sources of power. Many of these towers are being replaced with solar PV technology.

The Ivanpah Solar Power plant which was constructed in California by Brightsource Energy costed $2.2 billion is already running into trouble. The power tower has failed to generate the required power as per the contract with Californian utilities. These power towers are still a niche technology and on top of it is the falling solar PV costs, which makes this technology look even worse.

Here are some of the Disadvantages of Solar Thermal Energy

 1) High Costs – Solar Thermal Energy costs at least Euro 3.5/watt and has not declined too much in the last 3-4 years. However these costs are too high  when compared to solar PV technology which has witnessed rapid falls in prices lately and should continue to do so in future.

2) Future Technology has a high probability of making CSP Obsolete – Solar energy has become a hotbed of innovation with daily news of some new breakthrough in materials and process in PV Technology. This has made PV solar the popular choice amongst masses.

3) Water Issue – Solar Thermal Plants use lots of water which is major problem in desert areas. Using non-water cooling raises the cost of CSP projects too much. While using sea water has been proposed it remains to be seen if it possible to implement this solution.

4) Ecological and Cultural Issues – The usage of massive arrays of mirrors is noted to heavily impact the desert  wildlife harming the endangered species. The mirrors create an effect of water bodies, which naturally attract birds and animals who eventually die because of high temperatures in the vicinity.

5) Limited Locations and Size Limitations – Solar Thermal  Energy can only be built in places which have the high amount of solar radiation. They can be built in deserts mostly and require a large land area. This means its not possible to build them in populated areas. Solar Thermal Energy also can only be built in large sizes which are at least 50 MW in size to be economical. This contrasts to Solar PV which is sold in sizes as low as 5 Watts.

6) Long Gestation Time Leading to Cost Overruns – The gestation time for permitting, financing, drilling etc. can easily take 5-7 years to develop a concentrated solar thermal power plant. Compare this to 6 months for a small wind farm or 3 months for a Solar PV plant.

7)  Financing – is the biggest problem in developing projects particularly for small solar thermal developers in this industry.

The Solar Power towers are still in a conceptual stage and we shall wait for the technology to find its foot hold in niche areas of power generation.

Where will Solar Industry Go From Here…

Solar energy has been witnessing an overwhelming response from all around the world. The technology has not only been successful on grounds of its green credentials, but also a sharp decline in its prices. The solar panel prices have plunged almost 40% in the past few quarters. Much of it could be attributed to a slower demand from China. The country has also been facing grid issues leading to chaos in the transmission of this generated solar power. The Chinese government is now lowering subsidies.

File photo of workers cleaning photovoltaic panels inside a solar power plant in Gujarat

The first half of the year witnessed China installing a gargantuan 20 GW of solar power. This rush was solely due to the fact that only solar projects that were operational by June 30, 2016, would be eligible for a ‘feed-in tariff’ by the Chinese government. While the installations beyond June 30th would get a lower tariff rate (lower than 15 US cents/ kwh). The Chinese NEA has also reduced its solar installation target to 110 GW from 150 GW as planned earlier. This has affected the demand and supply economics of the global solar industry.

First Solar (NASDAQ:FSLR) recently announced phasing out an entire series of its S5 modules to conserve costs and also to launch a much more competitive S6 series which would be better designed to handle peer competition. While its Chinese counterparts like Trina Solar, Canadian Solar and Jinko Solar have been increasing capacity and feeding the over supply, I think First Solar made a strategic and important decision, which should help the company stride through this downturn.

In India, a solar panel now costs close to 36-37 cents per unit from 43-44 cents per unit a quarter earlier. While a dip in panel rates could help developers and solar power utilities bid at lower rates, many large companies like First Solar have ruled out signing contracts in India on grounds of economic viability of such projects. The solar power tariff have now reached a historic low of INR 4 per unit. India has also reduced the reference rate for grid solar power to just USD 6 cents/kWh.

China has a goal to increase renewable energy’s share to 15% of the overall energy mix. India too has an ambitious target to install 100 GW of solar power by 2022. India’s solar energy capacity has grown by more than 130% since the last one year. Now the Donald Trump led USA is also an additional point to factor in the global clean energy scenario. Trump has called climate change a hoax and favors the thermal industry to the clean stocks. The solar industry is set for another major consolidation under these conditions and it remains to be seen who would survive this slowdown.

First Solar not launching Series 5

Solar panel prices have crashed by around 30% globally in 2016 which has made every major producer rethink their strategy with respect to expansion and growth. Many of the solar stocks have seen their prices fall by 40-80% in 2016, as a massively oversupplied market has resulted in prices going below costs for most companies. First Solar which is a thin film solar panel leader has made impressive gains in efficiency over the last few years. Its solar panels have reached an efficiency of 16.5%, making it equal to the multicrystalline solar panel efficiency. This has made First Solar remove its biggest disadvantage with respect to mainstream silicon solar panel companies such as Trina Solar and Jinko Solar. First Solar also claims to have a far better advantage in terms of energy generation in high temperate climates such as India and the Middle East. However, the recent crash in solar panel prices has made go back to the drawing board.

Thin Film Solar

The company which was about to unleash its next generation Series 5 module with a very large form factor is being forced to rethink its plans. It is now thinking whether it would make sense to just move from Series 4 to Series 6.

Also read First Solar and Sunpower could be the biggest beneficiaries if Mrs. Clinton wins

This will be done to reduce costs making it products more competition in this fiercely competitive market. Chinese solar companies have repeatedly surprised the market with their rapid cost and price reductions. This has made solar energy extremely competitive with other forms of energy and has wiped out competing solar technologies such as solar thermal and most thin film technologies. First Solar with its rapid technology improvements had thought that it has finally made it, but the sharp crash in solar panel prices has made it defer most of its solar system projects. The company has also stopped competing for a lot of solar panel supply contracts because it cannot make adequate margins. The company reported decent 20% plus margin this quarter, however the stock fell by more than 15% as the company reduced its full year guidance by more than $1 billion.

First Solar has managed to survive in this industry for more than 15 years, even as other leaders such as Suntech, Q-Cells and Yingli Green Energy have become bankrupt. It has done so by nimbly moving into high margin segments. Unlike the Chinese, it does not have unlimited amounts of debt financing that it can use to keep on running its factories at a loss. DOE programs have helped the company in the past but it won’t help it now. While First Solar continues to be run well with a great R&D team, it does face headwinds in the next year or so as a massive price war takes out a lot of companies.

The international agency IEA which is considered as the “authority” on energy globally has proved itself foolish by being extremely conservative on solar growth, despite being proved wrong repeatedly. Even in the past, analysts and market watchers have castigated IEA for being way below the mark in predicting solar growth figures. Even this time IEA has been conservative on predicting solar growth despite being proved wrong.

Also read Indian wind developers get the short end of the stick form defaulting Indian utilities

It recently raised its forecast of renewable energy capacity from 29% of capacity growth in the next 5 years to 42% of the capacity. This happened after RE capacity increases have become almost 60% of the total capacity growth in developed markets. Even large developing countries such as India and China have been installing huge capacities in solar and wind energy recently. The global blowback against coal continues to grow as the pernicious effects on pollution and climate change makes it a pariah in developed markets. Even developing markets are trying to reduce thermal power capacity as much as they can.

However, IEA most probably because it is held hostage by the fossil fuels lobby continues to downplay the importance of solar and wind energy growth. Though IEA says that they are becoming important it does not give very accurate figures for the growth of these two main RE sources.

Even for 2015,  IEA has given a very low figures for solar capacicty additions while other reputable agencies such as IHS are almost 20-30% higher. Don’t know why these people at IEA smoke or research. Even a high school student should be able to do better research than these guys.

Annual installed PV figures

2013 2014 2015
IEA 37.6GW 38.7GW 49GW
IHS 38GW 45GW 59GW