Beehives or elephants? How should India drive its
solar transformation?
September 2014
Tobias Engelmeier
Ajay Goel
Tobias.Engelmeier@bridgetoindia.com
www.bridgetoindia.com
www.bridgetoindia.com
Ajay.Goel@tatapowersolar.com
www.tatapowersolar.com
Challenges with the
current scenario
India needs to look beyond coal to ensure its energy
security
Issues with expanding
coal based power
infrastructure in India
© BRIDGE TO INDIA, 2014
2
Cost trends
Cost of power from large scale solar is already at par
with imported coal
Highlights
• At the generation side,
the cost of solar power
for a utility scale
project is already at par
with the cost of power
from imported coal.
• Solar power will also
achieve parity with
domestic coal by the
year 2019.
• Even though storage is
expensive, the cost of
power with storage will
likely become
competitive with the
cost of power from
imported coal post
2017.
© BRIDGE TO INDIA, 2014
3
Scenario definition
We have modeled four distinct scenarios for solar
capacity addition in India
Solar power is unique as it can be deployed in variety of forms ranging from distributed generation
(residential & large rooftops) to centralized generation (utility scale & ultra-mega scale projects)
Comparison of four scenarios of 25 GW each
Distributed
generation
Centralized
generation:
© BRIDGE TO INDIA, 2014
4
Potential for solar
installation
India can add up to 145 GW of solar over the next 10
years
Highlights
Distributed generation
Centralized generation
• At 145 GW, solar could
contribute about 13%
to India’s power
generation in 2024.
• Most grid operators
today consider 20% of
power from intermittent
sources like solar
acceptable.
• We believe that the
“ceiling” will rise
substantially in the next
ten years as grids
become “smarter”.
• Therefore, we consider
13% generation from
solar plausible.
• The 144 GW would be
distributed across
different gridconnected system
types (“bees” to
“elephants”).
© BRIDGE TO INDIA, 2014
Total: 110-145 GW
5
LCOE vs. LCOP
Economics of solar power should be evaluated at
point of consumption than point of generation
Levelized Cost of Energy (LCOE)
Cost of evacuation
Cost of land/
+
of power
rooftop lease
+
T&D charges
and losses
+
Cost of smart meters/ Commercial losses / Additional cost of
+
+
energy accounting
theft of power
balancing the grid
Landed Cost of Power (LCOP)
From the consumer’s (and India’s overall) perspective, what matters more is the
LCOP at the point of consumption, rather than the LCOE
© BRIDGE TO INDIA, 2014
6
Cost trends
Detailed modeling shows interesting cost trends for
each scenario over next 10 years
Highlights
Unsubsidized LCOE and LCOP in 2015
• Large size projects are
more cost effective
today; however
rooftops would witness
steeper cost decline
over next 10 years.
• LCOE for rooftops
would fall by ~30%
whereas that for utility
scale by 17%.
Unsubsidized LCOE and LCOP in 2024
• Gap between LCOP &
LCOE is as high as Rs
2.00/unit for utility
scale compared to Rs
0.20/ unit for rooftops,
highlighting advantage
of distributed gen.
• The gap between
LCOP & LCOE would
still remain at Rs 1.50
/unit for centralized
projects after 10 years.
© BRIDGE TO INDIA, 2014
7
Job creation
6.75 Lakh total jobs can be created if 100 GW is
implemented across the four scenarios
Highlights
• Most jobs are created
in the small rooftop
market, which would
see a large number of
small installers and a
very diverse value
chain.
• Most solar jobs require
the regular addition of
new capacity to
sustain.
• Jobs in ultra-mega
projects will suffer most
from project related
ebbs and flows.
• The industry structure
will be characterized by
fewer (and probably
more professional)
players, the larger the
project size.
© BRIDGE TO INDIA, 2014
8
Speed of deployment
Speed of deployment is fastest for small rooftops and
slowest for ultra mega projects
Highlights
• For smaller rooftops,
smaller size & captive roof
space imply quicker
deployment of systems that
can be built in days.
• Large rooftops additionally
require contractual
agreements and thus
system can be installed in
few months.
• Utility scale projects need
longer time for land
acquisition & clearances,
hence they can be installed
in 6-8 months.
• Ultra mega projects require
a couple of years of time
frame for deployment;
increased time required for
planning, land acquisition,
evacuation infrastructure
development, financial
closure, etc.
© BRIDGE TO INDIA, 2014
9
Implementation
challenges
Implementation challenges are minimum for utility
scale projects due to already developed ecosystem
Highlights
• Financing challenges are a
common thread across all 4
scenarios.
• Small rooftop market is
fragmented & disorganized
and it needs to become
more organized with
standardized, ready for
installation solutions.
• Things are broadly in place
for utility scale projects as
there is a proven track
record; large rooftops are
gaining pace with netmetering gradually coming
in place.
• For ultra mega projects, the
ecosystem needs to be
developed esp. for land
acquisition & transmission
infra development.
© BRIDGE TO INDIA, 2014
10
Way Forward
The country should focus on providing broad based
support across scenarios
Creating dependable solar policies to encourage investments & easy implementation process
Highlights
• Similar to the diesel
gen-set market, solar
could become a
“default” rather than a
“design” market.
Financial
• Mindset of the
regulators and policy
makers needs to move
away from the current
school of thought
where power gen.
happens centrally.
Infrastructure
Ease of
business
• Existing regulations
and policies need to be
re-evaluated, with due
importance given to
generation being at the
point of consumption.
Regulation
•Incentives (GBI/ subsidy/ VGF)
•Setting up of “green funds” and solar/renewable focused NBFCs
•Single window clearance
•New substations
•Setting up of green corridors
•Weather and demand forecasting
•Demo projects in public places or government buildings
•Standards for system quality; Performance monitoring
•Stakeholder meetings
•Government backing of contracts to improve bankability
•Regulations for net-metering & smart grids implementation
•Long term clarity on regulatory & policy provisions
While the government should continue to encourage large scale projects to add to the power
generation capacity in the country, a much larger emphasis should be given to rooftop
projects
which will lead to a more organic growth of the sector.
© BRIDGE TO INDIA, 2014
11
Thank you for your attention
We are happy to support you in case there is any query
Contact
www.bridgetoindia.com
Follow us on
facebook.com/bridgetoindia
© BRIDGE TO INDIA, 2014