Even as the Government of India initiates efforts to aggressively promote renewable energy sources, it would do well to keep an eye on the experiences from across the world.
Countries like Spain have miscalculated hugely and make a headlong plunge into setting up solar plants with generous tariff incentives. The result is a number of poorly designed, low quality solar plants. The lavish subsidies meant that even inefficient and poorly designed plants made profits, and fuelled a speculative bubble in solar building permits.
Europeans have promoted solar and other wind power by using feed-in tariffs, under which governments pay a hefty premium for electricity from renewable resources. Feed-in tariffs are simply payments per kilowatt-hour for electricity generated by a renewable resource, and have been adopted in Spain, Germany, and France. In contrast, the regulators and governments in the US have favored indirect incentives like mandatory provisions on utilities and municipalities to buy a progressively rising share of their consumption from renewable energy firms.
Solar power generators are generally of two types - the ones using semiconductor photovoltaic (PV) panels to directly generate electricity and the thermal solar plants which typically uses hundreds of mirrors to concentrate the sunlight for boiling some type of liquid for producing steam, which then drives an electricity generator.
It has been argued that concentrating solar thermal parabolic troughs (CST) have a lower levelized cost of energy (LCOE) per kilowatt-hour (kWh) than PVs. However, since PV has a faster cost reduction curve than CST and concentrating PVs (CPV) are a distinct possibility in the future, PVs may emerge cheaper than CSTs. CPVs use mirrors or lenses to focus the sun’s rays on small, high-efficiency solar panels, and has the potential to deliver cheaper power than conventional photovoltaics, while using considerably less land than thin-film solar panels.
However, unlike PVs, CSTs have certain inherent advantages like the ability to generate during periods of high demand, including into the evening. With present technology PVs require approximately 1 km² for every 20–60 megawatts (MW) generated, whereas CST plants require far less area. CST projects can offer both better peak capacity characteristics, with 6-8 hour thermal storage, as well as a smoother short-term fluctuations. Intermittent clouds going over a PV system will cause output to spike widely. But with a CST plant, which has thermal inertia in the heat transfer fluids, an operator can have some warning of the clouds, slow the fluid flow rate, which increases the fluid temperatures, and ride through short-term cloud events.
There have been intense activity in the development of concentrated solar thermal plants which use power tower platforms where a field of swiveling mirrors reflects sunlight toward a central tower with a receiver. Companies like eSolar and BrightSource have been at the forefront of this race.
Last month, in a possible breakthrough deal for solar thermal technology, the United States Energy Department offered a $1.37 billion loan guarantee to BrightSource Energy of Oakland, California to build a 392-megawatt Ivanpah Solar Electric Generating System in the Southern California desert. This plant will deploy thousands of mirrors called heliostats that focus the sun on three towers that each will contain a water-filled boiler and the resultant heat creates steam that drives an electricity-generating turbine. Bechtel is building the plant. China has plans to build 2,000 MW of solar thermal power in collaboration with eSolar.
PVs are faster to install and can be deployed on residential and commercial rooftops as well as be mounted on the ground. Since they can be installed on the top of houses and other small vacant space close to the load center or consumption points, they offer huge potential for the development of a network of distributed generation systems (The Sacramento Municipal Utility District granted Southern California Edison permission to install 500 MW of solar on commercial rooftops). Distributed solar is faster on permitting, on environmental issues and interconnection to the grid. Apart from the cost of panels they do not require any expensive plant construction or recurring costs on fuels. Further, spurred on by the Chinese manufacturers and a boom in panel manufacturing, the cost of PV panels have been falling at a rapid pace.
One estimate of the costs of solar energy in the US has found that a small, residential solar-panel system costs about 40 cents per kilowatt-hour over the system's lifetime while larger solar-panel system would cost 20 cents per kilowatt-hour, while a solar-thermal power plant could cost 18 cents per kilowatt-hour over the power plant's lifetime, a figure that would include the cost of land. In comparison, electricity from coal-fired power plants costs about 5 cents to 6 cents per kilowatt-hour.
Last year, India unveiled its $19 bn Jawaharlal Nehru National Solar Mission that seeks to achieve 20 GW of solar power capacity by 2022 in three phases; create favourable conditions for PV and solar thermal manufacturing capability and fiscal incentives for local manufacturers; achieve 15 million sqm solar thermal collector area by 2017 and 20 million by 2022; and deploy 20 million off-grid solar lighting systems for rural areas by 2022. It contains a Renewables Purchase Obligation (RPO) that mandates all utilities and states to progressively increase their share of solar power from 0.25% in the phase I (2009-12) and to go up to 3% by 2022. The Central Electricity Regulatory Commission (CERC) has already been fixing feed-in-tariff every year for purchase of solar power based on current cost and technology trends.
It also proposes bundling of solar power along with power out of the cheaper unallocated quota of Central stations and selling this bundled power to state distribution utilities at the CERC regulated price. This is expected to bring down the gap between average cost of power and sale price of power. This bundling and re-sale will be done through the NTPC's trading arm, NTPC Vidyut Vyapar Nigam Ltd (NVVN). It will enter into PPAs with solar power developers in accordance with the tariff and PPA duration as fixed by the CERC and the Government will allocate to NVVN equivalent megawatt capacity, from the Central unallocated quota (from NTPC power stations) at the rate notified by the CERC for bundling together with solar power.
The push for renewables in India will suffer from major challenges. On the one hand, the artificially low prices of electricity means that high cost renewables start with an enormous disadvantage. Any carbon tax to neutralize the cost advantage of carbon fuels looks impossible to push through. The limited domestic manufacturing base for solar power components makes the industry dependent on imported parts and affects their cost-effectiveness. Proportionately higher feed-in tariffs will be difficult to justify given the wide differential with (the already very low) regular tariffs.
Update 1 (20/3/2010)
SolFocus, a Silicon valley startup, is building America's first concentrating PV (CPV) project, a one-megawatt solar farm northeast of Los Angeles. These panels, though more expensive than conventional solar cells, contain small mirrors that concentrate sunlight onto tiny, high-efficiency solar cells, and use a fraction of the silicon and land space to produce more electricity.
In conventional solar thermal plants, parabolic troughs focus sunlight on liquid-filled receivers suspended over the mirrors to create steam that drives an electricity-generating turbine. Now Alcoa are testing a new technology where the glass in parabolic troughs is replaced with the reflective aluminum and integrated the mirror into a single structure. They estimate that this all-aluminum Alcoa parabolic trough, which would replace the current solar troughs that use glass mirrors that are formed in the shape of a parabola and then attached to a support structure made of aluminum or steel, will cut the price of a solar field by 20% due to lower installation costs.