White hot
Though minuscule by world standards, India's solar efforts are attracting attention for their potential in the coming years.
With more than 9,000 delegates, over 250 speakers and 600 exhibitors from 50 countries, Delhi International Renewable Energy Conference, 2010, a solar industry event, was clearly the largest circus in town late in October. And, for Christopher Fark, Managing Director, Schott Solar CSP, a German solar products firm, it was well worth making his first trip to India.
India's National Solar Mission, which aims to add solar energy capacity of 20 gigawatt or 20,000 mega watt, in the next 12-odd years, makes the country a hotspot on the global solar map (after China, of course). It is in the process of bidding out the first tranche of projects.
The short-term target of 1,100 MW of solar capacity by 2013 may be puny by global standards but what has the global industry excited is the manner in which the present capacity could ramp up fast.
When that happens, Fark and his company would want to be ready. Schott Solar already makes glass tubes for pharma companies at a manufacturing site in Vadodara and hopes to convert that into a factory making concentrated solar power receivers in the not too distant future.
But what keeps global investors edgy is regulatory risk. The question whether the government's benign approach to the solar industry will continue even as the industry's economics changes. The world over, solar has prospered through government support because the industry is not yet competitive compared with traditional sources of energy. But after the economic slowdown and recession worldwide, such subsidies are being looked at closely.
For instance, countries such as Germany acquired sizeable solar installations and rose to leadership in the global industry after favourable legislation was adopted in 2000. But, those clauses are now being phased out for new projects.
Even by these examples, India makes for a strong case of government support for solar energy. For one, its energy needs are soaring - experts reckon up to one-fifth of incremental use of global energy resources will be by India - and the country gets good sunlight for over 300 days a year. There is an issue of air pollution and haze, which diffracts the sun's rays, but there are technology fixes to the problem.
Many believe that the National Solar Mission is sound in design. The policy aims to bundle solar energy with state-backed utility NTPC's coal-based power. This bundled power will be sold to state electricity boards and other distribution utilities. NTPC Vidyut Vyapar Nigam, the entity designated as the nodal agency, will enter into power purchase agreements with the developers and power sale agreements with the distributors. The Central Electricity Regulatory Commission will fix tariffs for the solar developers every year. The consultation process for the coming year, 2011-12, is on at present.
The plan places equal emphasis on two dominant solar technologies: one, solar photovoltaic (PV), which relies on generating electricity directly from sunlight. And, two, solar thermal generates heat using the sun's rays and then converting it into electricity. PV systems are most often used in smaller installations while solar thermal can be used in utility-sized projects.
Bidding for solar thermal projects is being done in one broad sweep while PV bids will be staggered. There is frenzied interest, as was evident from the initial bids of over 650 MW that came in for 150 MW capacity. The government plans to shortlist winning bids in November based on the highest discount offered on tariffs - Rs 17.91 a kilowatt hour for solar PV and Rs 15.31 for solar thermal - set by it.
Some worry about the quality of interest in the bids and say inexperienced players may not be able to put the projects on-stream. "Some of the players are assuming ridiculously low capital costs. Knowledge gap especially on the solar thermal side of the business can be very risky," says James Abraham, Managing Director and CEO of Sunborne Energy, a Gurgaon-based specialist in utility scale solar solutions that counts billionaire investor Vinod Khosla's eponymous venture firm among backers.
Still, most agree that the crucial issue at this stage is to get the industry going. For that to happen reassurance is key, says Dominic Waughray, Senior Director and Head of Environmental Initiatives at the World Economic Forum. "As you have seen in the first phase, international investors are wary due to political and institutional risk.
Solar is after all a very new asset class," he says. Waughray is bringing together international finance houses and multilateral organisations for projects in India.
Several variables - technology, land acquisition, demand, ability of distribution utilities to pay, and pricing - will play off each other as India wades towards a solar energy ecosystem. As Vinayak Mavinkurve, who heads project finance and principal investments at infrastructure financier IDFC, says, "The next year will be crucial.
India's National Solar Mission, which aims to add solar energy capacity of 20 gigawatt or 20,000 mega watt, in the next 12-odd years, makes the country a hotspot on the global solar map (after China, of course). It is in the process of bidding out the first tranche of projects.
The short-term target of 1,100 MW of solar capacity by 2013 may be puny by global standards but what has the global industry excited is the manner in which the present capacity could ramp up fast.
When that happens, Fark and his company would want to be ready. Schott Solar already makes glass tubes for pharma companies at a manufacturing site in Vadodara and hopes to convert that into a factory making concentrated solar power receivers in the not too distant future.
But what keeps global investors edgy is regulatory risk. The question whether the government's benign approach to the solar industry will continue even as the industry's economics changes. The world over, solar has prospered through government support because the industry is not yet competitive compared with traditional sources of energy. But after the economic slowdown and recession worldwide, such subsidies are being looked at closely.
For instance, countries such as Germany acquired sizeable solar installations and rose to leadership in the global industry after favourable legislation was adopted in 2000. But, those clauses are now being phased out for new projects.
Even by these examples, India makes for a strong case of government support for solar energy. For one, its energy needs are soaring - experts reckon up to one-fifth of incremental use of global energy resources will be by India - and the country gets good sunlight for over 300 days a year. There is an issue of air pollution and haze, which diffracts the sun's rays, but there are technology fixes to the problem.
Many believe that the National Solar Mission is sound in design. The policy aims to bundle solar energy with state-backed utility NTPC's coal-based power. This bundled power will be sold to state electricity boards and other distribution utilities. NTPC Vidyut Vyapar Nigam, the entity designated as the nodal agency, will enter into power purchase agreements with the developers and power sale agreements with the distributors. The Central Electricity Regulatory Commission will fix tariffs for the solar developers every year. The consultation process for the coming year, 2011-12, is on at present.
The plan places equal emphasis on two dominant solar technologies: one, solar photovoltaic (PV), which relies on generating electricity directly from sunlight. And, two, solar thermal generates heat using the sun's rays and then converting it into electricity. PV systems are most often used in smaller installations while solar thermal can be used in utility-sized projects.
Bidding for solar thermal projects is being done in one broad sweep while PV bids will be staggered. There is frenzied interest, as was evident from the initial bids of over 650 MW that came in for 150 MW capacity. The government plans to shortlist winning bids in November based on the highest discount offered on tariffs - Rs 17.91 a kilowatt hour for solar PV and Rs 15.31 for solar thermal - set by it.
Some worry about the quality of interest in the bids and say inexperienced players may not be able to put the projects on-stream. "Some of the players are assuming ridiculously low capital costs. Knowledge gap especially on the solar thermal side of the business can be very risky," says James Abraham, Managing Director and CEO of Sunborne Energy, a Gurgaon-based specialist in utility scale solar solutions that counts billionaire investor Vinod Khosla's eponymous venture firm among backers.
Still, most agree that the crucial issue at this stage is to get the industry going. For that to happen reassurance is key, says Dominic Waughray, Senior Director and Head of Environmental Initiatives at the World Economic Forum. "As you have seen in the first phase, international investors are wary due to political and institutional risk.
Solar is after all a very new asset class," he says. Waughray is bringing together international finance houses and multilateral organisations for projects in India.
Several variables - technology, land acquisition, demand, ability of distribution utilities to pay, and pricing - will play off each other as India wades towards a solar energy ecosystem. As Vinayak Mavinkurve, who heads project finance and principal investments at infrastructure financier IDFC, says, "The next year will be crucial.
