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Power bucket of the country, how much Solar Sector has attracting the investment through different routes and What would be the growth Trajectory for next couple of years.

Read more: International and Indian Solar Photovoltaic...

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The key drivers of lower LCOE (Levelized Cost of Electricity) of solar power is the result of combination of factors and the most important being:-

Cost Driver / Factor # 1 - Favorable Policy of GOI –

Decision by GOI to cover solar power by SECI under the ambit of Tripartite Agreement for payment security against defaults by State distribution companies. This has helped to eliminate the so called inherent risk associated with liquidity generated from power sale by the developers during the entire tenure of 25 Years mentioned in Financial Model

Cost Driver / Factor # 2 - Energy Yield –

Superior energy yield (eg: better solar resource at the site, and operational efficiencies) owing to approximately 7-10% higher yield in Rajasthan due to better solar radiation conditions. Rajasthan happens to be an excellent solar location, with high fraction of DNI (direct normal irradiance). Perhaps the use of mature single-axis tracker technologies that can tilt for a greater angle (e.g.: 55-60 degrees instead of 45 degrees) could enhance yield further. Lower ground coverage ratio (GCR), i.e. more land per MW Peak (MWp) could be additional factors. Use of shorter strings in the inverters could be a factor as well. Another possibility is the use of DC-optimizers in the architecture which would reduce balancing losses.

Cost Driver / Factor # 3 - CAPEX –

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Lower cost of CAPEX owing to drop in module prices in the international markets. Solar module (or photo voltaic panel) costs account for more than 50% of the entire project CAPEX costs in India. The CAPEX segregation mentioned here shows the relative costs estimate of Rs. 400 lakh / MWp. Note that all the non-module costs (Land, Civil & General Works, Mounting structure, Power conditioning unit, Evacuation lines & equipment, power electronics, cabling) are single digit or close to 10 %.

And if we compare this CAPEX segregation with that of many of the western countries then we find that module CAPEX is only about 25-30% of total CAPEX due to their higher standard of living cost and higher commodity cost leading to higher supply chain cost and human installation costs.

Needless to mention here the Chinese factor due to which solar PV module costs have fallen faster. This Chinese factor has been originated by the temporary overcapacity in China resulting from delayed projects in several key markets.

As with every emerging technology, the prices for solar cells are falling with the increase in series production and technological innovations. Because similar programs to the ones in the USA are also being launched in other countries like Japan, Germany, Spain, Netherlands etc., it can be assumed that the costs for solar power will continue to fall in the coming years.

Moreover, based on the experience curve, it can be concluded and interpreted that each time the total production quantity has doubled; the prices for solar modules on the world market have fallen by 20 %.

So the CAPEX factor can be concluded that the ACME and SBG auction at Bhadla Solar Park phase III (Which allows 11 months for the project to be built) allows locking in some of these price-declines, and hedging to capture future price declines over 11 month period. Therefore, it is interpreted that the decline of 40-47% e.g. Rs 4.63 / KWh to Rs 2.44/KWh, essentially financed by bleeding module makers from China.

We can see that innovations to reduce capital costs or increase energy yield are the key to bringing solar to coal fired without subsidies. Also note the important role played by the "Weighted average cost of capital (WACC)" or “Cost of capital” or discount rate and term (N). We can say that financial engineering innovations have been a big part of solar companies work to make solar affordable to all. For instance in the western countries like US, Japan, Germany, etc., financial innovations have allowed the “cost of capital” to drop significantly, having a huge impact on affordability of solar as 25% decrease in “cost of capital” reduces the LCOE by more than 5 %. We now need to make similar innovations at the technical and financial levels to enhance the solar penetration and also to bring solar affordably to the emerging markets and the poor.

Capital Cost as per the Draft CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2017( Dated: 16th February 2017)-

Capital Cost Norms (February 2017) - The Commission shall determine only project specific capital cost and tariff based on prevailing market trends for Solar PV project.

Capital cost as per the Central Electricity Regulatory Commission (CERC)’s proposal on Overall capital cost dated 23rd April 2016 –

Capital Cost Norms (April 2016) -

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Central Electricity Regulatory Commission (CERC)’s Norms on Overall capital cost during Financial Year 2014-2015. The table below indicates CERC determined benchmark cost for Financial Year 2014-15.

Capital Cost Norms (FY 2014-2015) -

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Cost Driver / Factor # 4 - OPEX –

OPEX is not likely to be significantly lower unlike CAPEX, though newly gained capabilities like robotic cleaning, drone-based image analytics (to catch quality/operational issues) are starting to be actively implemented at the commercial level that could reduce costs and revenue losses due to inconsistent operations quality.

In The Financial Model I have estimated OPEX improvement at 5.72% over last year. Also sunk CAPEX dominates OPEX in solar farms especially with high interest rates.

Accelerated Depreciation (AD) rules on CAPEX have tightened up in India since last year (allowing only 40% depreciation per year, down from 80%). This is a modest negative factor relative to 2016 and 2015.

As per the Financial Model, from an LCOE perspective, a net CAPEX drop of 40-47% (aggressive) will lead to a linear drop in LCOE of 40-47% from Rs 4.63/KWh to Rs 2.44/KWh

Cost Driver / Factor # 5 – Debt Equity Ratio (Leverage factor), Hedging Risk, Risk during tenure, Interest Rate, Debt Tenure –

Strengthening of Indian Rupee against US dollar amalgamated with Economies of scale is also a factor as it is a 200 MW / 300 MW plant.

The park capacity, cheap financing / capital options and the lack of any big tender are some of the other contributing factors.

Cheap credit owing to lower Interest rates, lower weighted average cost of capital, including lower risk premium, and longer loan tenure are important factor and this amalgamated with lower risk and higher leverage (i.e. debt-to-equity ratio) matters a lot in reducing the LCOE

As mentioned in my earlier article "Financial Model of 200 MW Solar Park" , A 8-10% decrease in after-tax cost of debt, reduces the LCOE from 2.6 to 3.0%

In the recent past, Infra projects IDC (Interest during construction) is squeezing because of decline of after-tax cost of debt.

Here in India, the long term interest rates for 12-25 year financing are higher than the short term rates and this can be substantiated by the MCLR of 7.5-8.5% by several nationalized and private banks of India.

Many argue on the point that overseas loan offered by Government financial institutions from Japan, Europe and by the World Bank are cheaper and therefore the financing should be sourced from that overseas financial institutions and banks. In spite of minimal interest rate (almost close to zero) associated to overseas funding, we should be aware that these money from overseas sources have the inherent currency risk owing to devaluing Indian currency and subsequent costs of hedging. And there are chances that the bidders have not fully hedged their exposures over the entire tenure of the financing. Therefore, bidders may have inherent risk through currency risks for their un-hedged exposures which will bleed them later unless these bidders and competent enough to be smart currency traders.

If the leverage ratios assumed to have increased beyond the industry standard of 70% debt / 30% equity to 85 % debt / 15% equity then the risk-adjusted interest rates derived from Weighted Average Cost of Capital (WACC) shall drop from 8.36 % to 7.15% under the condition that (i) Loan tenure is 25 years (ii) Beta is 1 (Assuming that in Rajasthan the sun rises every day and the yearly irradiance averages are relatively stable and solar PV equipment is relatively long lived) (iii) the risk free rate of return is 1.5% (iv) the expected market return is 14% and (v) after-tax cost of debt is 9%. All these has been estimated in the Financial Model

Cost Driver / Factor # 6 - Grid integration-

Grid connected solar power plant is a big hidden cost of renewables that is being absorbed by the government today. Currently we are more focused on decreasing LCOE (Rs/KWh) and now-a-days constantly decreasing quoted LCOE is considered a milestone for India. On the brighter side for the perspective of GOI, in future, we can see the movement from LCOE to balancing cost where this hidden cost shall be borne by developers.

Line Graph perception is that the solar power price has gone down by half since Q1 2016:-

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 ujjwal

About Author: Ujjwal Kumar Gupta, MBA - XLRI; B.Tech - IIT; Sectorial experience - Infrastructure, Energy, EPC, OEM, Power, Mining, Construction, Steel

Article Link:https://www.linkedin.com/pulse/bhadla-phase-iii-solar-park-key-cost-reducing-factors-gupta?trk=v-feed&lipi=urn%3Ali%3Apage%3Ad_flagship3_profile_view_base_recent_activity_details_shares%3BFPx8xq3ayL1Hibo37DbNYw%3D%3D

Author's Linkedin Profilehttps://www.linkedin.com/in/ujjwal-kumar-gupta-178221101/

Disclaimer: The author contributed to this article in his personal capacity out of the passion of writing as a hobby and also by doing judicious utilization of available free time. The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views or the official policy or position of the any entity, institution and organization. Assumptions made within the analysis are not reflective of the position of any entity, institution and organization. The author disclaim any liability in connection with the use of this information. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information.

Bhadla Phase-III Solar Park : Key trends indicating how solar become cheaper than coal fired power plant with LCOE of Rs 2.44/kWh

L1 Bid of Rs.2.44/kWh LCOE of Bhadla Phase-III Solar Park Project on 12th May’2017 by ACME Solar.

Solar Power LCOE of Rs 2.44/KWh-

If we look at the last six years, the tariff has been on the downtrend with an unprecedented drop of almost 80% across the world thanks to the aggressive bidding by global players including SunEdison. The few of the recent trends of L1 bid and quoted solar tariff in India:-

On 12 May 2017, Solar Power tariff dropped to 2.44 per unit during an auction of 500 MW of Bhadla Solar Park phase III

On 10 May, Solar Power tariff dropped to Rs 2.62 per unit during an auction of Bhadla Solar Park phase IV

In April 2017, solar power tariffs had fallen to an all-time low of Rs 3.15 per unit quoted by Solairedirect during the auction of a 250 MW project at Kadapa in Andhra Pradesh.

In February 2017, lower capital expenditure and cheaper credit had pulled down solar tariff to a new low of Rs 2.97 per unit (a basic bid of Rs 2.97 a unit) for the first year in an auction conducted for 750 MW capacity in Rewa Solar Park in Madhya Pradesh. However, The lowest tariff quoted by Mahindra Renewables Pvt. Ltd, for a grid connected solar power project before that stood at Rs 3.30 per unit i.e. the levelised tariff (LCOE) for 750MW Rewa solar park in Madhya Pradesh has worked out to be at Rs 3.30 per unit.

In January 2016, solar power tariff had dropped to a new low, with Finland-based energy firm Fortum Finnsurya Energy quoting Rs 4.34 a unit to bag the mandate to set up a 70-MW solar plant under NTPC's Bhadla Solar Park tender.

In November 2015, the tariff had touched Rs 4.63 per unit following aggressive bidding by US-based SunEdison, the world's biggest developer of renewable energy power plants.

 

bhadla img2


On 10th May (i.e. On Wednesday), the lowest bidder for the solar park in Rajasthan had quoted Rs 2.62 per unit for Bhadla Solar Park phase IV and after two days, on Friday May 12th, ACME Solar Holdings quoted lowest solar tariff at Rs.2.44/kWh for 200 MW followed by Japan's SBG Cleantech One at Rs.2.45/kWh for remaining 300MW during an auction carried out by Solar Energy Corporation of India Limited (SECI) for 500 MW capacity in Bhadla Phase-III Solar Park, Rajasthan. The solar park is being set up by Saurya Urja Company of Rajasthan Ltd, a joint venture between Rajasthan and IL&FS Energy Development Company Ltd. Respectful players like Acme, SBG, Vinnet Mittals – Avada, Hero, Renew Power, Shapporji Palonji etc participated in the bid and it is really heartening and charismatic to see that LCOE of Rs. 2.44 per kWh is not only a finance game but a big game of technology as well.

The projects are likely to be completed in about 12-13 months.

The quoted tariff is fixed for 25 years with no escalation and the bidders have sought no VGF (viability gap funding) from the government.

The entire solar power will be consumed in Rajasthan, and power sale agreement with the state distribution companies is already tied up.

The developers are responsible to connect to the pooling sub-station of solar park. The developers will be paying solar park charges of Rs 45.2 lakh per megawatt towards land, connectivity (from pooling substation to state network) and other infrastructural facilities.

bhadla img3


Winning bids for the solar power plant of 500 MW of Bhadla Solar Park phase III, were reportedly made by Acme Solar Holdings Pvt. Ltd (200 MW out of 500 MW plants each) and Japan's SBG Cleantech One (300 MW out of 500 MW plants each) at Rs. 2.44 per kWh and Rs. 2.45 per kWh respectively. ACME Solar Holdings quoted lowest solar tariff at Rs.2.44/kWh for 200 MW followed by Japan's SBG Cleantech One at Rs.2.45/kWh winning remaining 300MW

This news was remarkably in the limelight and the main reason of getting the world's attention was that this level of LCOE happens to be lower or close to the APPC (average power purchase cost)

Nevertheless, the reduction of Rs. 0.18- 0.19 /kWh compared to past bids of Rs 2.62/KWh is impressive.

bhadla img4


In essence GOI Policy, CAPEX, Energy Yield, Leverage factor, Hedging Risk, OPEX are the few key cost drivers responsible for the drop of LCOE from Rs 4.63 / kWh in November 2015 to Rs 4.34 / kWh in January. 2016 again to Rs 3.3 / kWh in Feb. 2017 again to Rs 3.15 / kWh in April. 2017 again to Rs 2.62 / kWh in May10. 2017 and recently again to Rs. 2.44 / kWh in May12. 2017. (LCOE is a ratio puts all costs both fixed and variable in the numerator, and divides it by energy yield in the denominator. Both numerator and denominator involving financial "discounting" using Weighted Average Cost of Capital to bring costs and energy yields from the future to the present)

ujjwal

About Author: Ujjwal Kumar Gupta, MBA - XLRI; B.Tech - IIT; Sectorial experience - Infrastructure, Energy, EPC, OEM, Power, Mining, Construction, Steel

Article Link: https://www.linkedin.com/pulse/policycapexleveragehedging-key-cost-drivers-behind-lowest-gupta?trk=v-feed&lipi=urn%3Ali%3Apage%3Ad_flagship3_profile_view_base_recent_activity_details_shares%3B4C8co0ZKQ2qqKYnNk48%2Bwg%3D%3D

Author's Linkedin Profilehttps://www.linkedin.com/in/ujjwal-kumar-gupta-178221101/

Disclaimer: The author contributed to this article in his personal capacity out of the passion of writing as a hobby and also by doing judicious utilization of available free time. The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views or the official policy or position of the any entity, institution and organization. Assumptions made within the analysis are not reflective of the position of any entity, institution and organization. The author disclaim any liability in connection with the use of this information. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information.

The Dubai Electricity and Water Authority (DEWA) announced on 4 June the prices offered from four consortia for the 200-MW fourth phase of the Mohammed bin Rashid Al Maktoum solar park. The lowest bid for the Solar Thermal Electricity (STE) project came in at 9.45 US cents/kWh (approx. 8.4 €cts/kWh).Participating consortia were [ACWA Power (Saudi Arabia), Shanghai Electric (China), BrightSource (USA)]; [Alfanar (Saudi Arabia), Suncan (China)]; [Engie (France), SolarReserve (USA), Power China (China), Sepco3 (China)] and [Masdar (UAE), EDF (France), Abengoa (Spain), Harbin Electric (China)]

Although DEWA will announce the winner in one month, following its assessment of last technical and economical features, a first key aspect is that three of the best bids offered by multi-national players are hitting or even below 10 €cts/kWh while the installed capacity in STE worldwide is just around 5 GW compared to nearly 500 GW for wind and 300 GW for PV. In other words, STE costs were divided by 3 in just 10 years (2007-2017) with just 1% of the market volume for wind and less than 2 % of the market volume of PV!

This comes already after SolarReserve offered 6.54 US cts/kWh in Chile in August 2016 for a STE 120-MW plant, where in addition to the best solar resource in the world, the country’s stable financial status along with US dollar denominated power contracts results in excellent financing and investment terms.
There is no longer any doubt that STE needs now to be seriously considered in any energy transition strategy.

ESTELA already pointed repeatedly to the still-untapped, high cost reduction potential for STE also in Europe – provided that governments would deliver suitable frameworks and credible STE deployment programs also in Europe. This would bring to light the full complementary of STE to the more deployed technologies such as wind and PV as well as STE as the best option for a sustainable and affordable deployment of renewables (solving the storage/ flexibility challenges).

Such cost levels are achievable also in Europe. The offers in Dubai and Chile demonstrate that:

• there is a decisive impact on costs of any clear deployment program driven by credible policies (so in Dubai, adding 1000 MW in STE as support to 4000 MW PV is set to achieve a solar installed capacity of 5 GW in 2030 is coherent with Dubai’s clean energy strategy of generating 75 % electricity from clean energy by 2050 showing balanced ration between variable and manageable resources);

• Southern Europe is absolutely competitive also because of the solar resource quality: the solar resource in Southern Spain is better than in Dubai (only 10% losses due to atmospheric transfer performance between heliostats and tower compared to some 25% in Dubai);

• Size matters: a 200-MW unit would result in even lower costs than with 2 x 100-MW power blocks;

• The local content delivered by STE is of high added value in Europe, Morocco, or Chile, but not all countries value local content such as industrialization and/or business opportunities in the same way: the UAE do not;

• STE at a cost level of about 8 €cts/kWh with up to 15 hours of storage is in Southern Europe clearly both competitive and complementary towards PV and wind, the more STE does not have to consider degradation issues associated with batteries or the repowering of plants – and even more against “clean” fossil generation technologies especially in countries that need importing the primary resource.

“Besides urgently needed ambitious measures to preserve EU technology leadership in STE opening business opportunities for many European companies and jobs for European citizens, European governments and EU institutions should duly acknowledge this development and properly include STE in all transition scenarios towards the Energy Union,” said Dr. Luis Crespo, ESTELA President.

 

Chinese PV industry stays in PV world at a position of producing 140% of worldwide demand (110GW vs.80GW esp. cell and module), consuming 40% of WW demand (30GW vs. 80GW), crushing competitors in US/EU even with 30-50% AD/CVD tariffs.

Read more: China PV installation toward 2H2017: time points...

At the end of 2016, China National Energy Administration (NEA) published “PV Development Program for National 13th Five-Year Plan”, aiming to make solar energy grid parity, at consumer side, by 2020.

Read more: How far is China PV from Grid Parity?

Originally set up by the London Stock Exchange in 1995 as a platform for small growth companies to gain access to capital, down the years, the success of the Alternative Investment Market (AIM) has made a meaningful contribution to job creation and GDP growth in the UK. Successive governments have remained supportive of AIM, offering incentives such as tax reliefs as a means to stimulate investment and to compensate investors for the higher risks associated with investing in smaller companies.

Although known as the ‘junior market’ of the London Stock Exchange, AIM has matured a lot over the years, with the types of businesses choosing to list on AIM also changing considerably. Back in 2006, companies making an initial public offering through AIM had an average market capitalisation of £17 million. Today, this average is nearer £75 million. Well-known brands such as Hotel Chocolat, Joules and Comptoir Libanais have all floated on AIM in recent months, and it will continue to attract very profitable, successful businesses.

Using AIM portfolios for estate planning

The step change for AIM has been the decision to allow AIM shares to be held in Individual Savings Accounts (ISAs). This meant that for the first time, individual investors could access portfolios of AIM-listed shares within the UK’s most popular tax wrapper. But while traditional ISAs offer valuable tax benefits during an investor’s lifetime, the benefits effectively cease on the death of the ISA holder. ISAs are subject to inheritance tax if the beneficiary is anyone other than their spouse. Unfortunately, many ISA holders may not even be aware that when they die, their ISAs are treated as part of their taxable estate.

Thanks to the 2013 rule change, investors can undertake inheritance tax planning within the ISA wrapper by investing in AIM-listed stocks that are expected to qualify for Business Property Relief (BPR). Shares that qualify for BPR fall outside of the scope of inheritance tax as long as the shares have been held for two years and are still held at the time of death. Therefore, offering investors an estate planning solution within a tax-efficient ISA wrapper has proven very popular. Since we launched the Octopus AIM Inheritance Tax ISA in the same year as the rule change, we’ve opened more than 4,000 portfolios on behalf of investors.

Investment approach

We try to keep our investment approach simple. We aim to create good growth portfolios for clients who have an appetite for equity risk. We look to invest in good, solid, predictable businesses where we have a high degree of confidence that they will deliver. We take a long-term approach. We don't trade in and out of AIM companies, but become long-term ‘co-owners’ as they embark on their growth journey. Of the 47 companies we currently hold within our AIM inheritance tax portfolios, we have been investors in more than half for ten years or longer. The average market capitalisation for our portfolio companies is over £400 million. These are businesses that are quite established. Moreover, some of the risks associated with investing in AIM-listed smaller companies may be managed by taking that long-term horizon, which some people naturally do with our inheritance tax planning investment services.

A number of the companies we invest in have been around for over 100 years, and for good reason. They exist because there is a purpose for them, and they do what they do extremely well. There’s a good chance that these companies will be around for another 100 years, and that's the point. In attempting to manage risk within our inheritance tax portfolios, we aim to find good, successful companies that are proven. We don't want to invest in disruptive new technologies that may or may not prove to be successful – we want to be able to understand what the growth is potentially going to look like.

Are AIM-listed companies concerned over Brexit?

Over recent weeks, we've spent a lot of time talking to the companies in which we're invested. ‘Brexit’ has been the main focus of media attention in the UK since the outcome of the European Union referendum was announced in June. However, what you’re reading in the newspapers is not what we're hearing from the businesses themselves.

Recent trading statements from the companies we invest in have confirmed that management teams remain confident about future prospects. Around 50% of the companies in our AIM inheritance tax portfolios earn more than half of their earnings overseas, so the recent weakness in sterling has been a benefit. The more domestically based companies in the portfolio are more defensive in nature – for example, CVS Group (veterinary surgeries), Young & Co Brewery (freehold pubs), Restore (document storage) and Renew Holdings (engineering services). In addition, equity markets have continued to operate effectively despite the increased uncertainty. GB Group and Restore have raised £25 million and £35.2 million, respectively, in recent weeks in order to complete earnings-enhancing acquisitions.

Assessing the risks of AIM

It’s important to be upfront about the risks associated with investing in AIM-listed companies. Capital is placed at risk and investors may lose money. In addition, the shares of companies listed on AIM can be more volatile, which means their value can fall or rise by greater amounts on a day-to-day basis. No matter how well an investment or market might have performed in the past, this is not a guide to its future returns.

There are also specific risks around BPR-qualifying investments. Not every AIM-listed company will qualify for relief, and changes in a company’s trading activities or composition could mean it ceases to qualify for BPR in the future. It’s important to understand that inheritance tax exemption is assessed by HM Revenue & Customs on a case-by-case basis when an investor dies. Until this happens, it cannot be stated for certain that a particular company, or even a portfolio of companies, will qualify for BPR.

Summary

The Smaller Companies team at Octopus manages approximately £920 million of assets across several AIM-focused mandates, and it has been managing BPR-qualifying AIM portfolios for more than a decade. During this time, our investment approach has remained constant. We’ve witnessed AIM’s maturation, attracting larger, more established companies looking to list. This means that for us, the pool of potential investments – profitable, established, dividend-paying growth companies – has perhaps doubled compared to five years ago.

We will continue to focus on high-quality growth companies demonstrating characteristics that suit the AIM inheritance tax mandate. Companies with high levels of recurring revenue, companies with a niche or proprietary product or service and companies with a predictable roll-out plan are well suited to delivering consistent earnings and dividend growth over a number of years.

Rueil-Malmaison (France), May 23, 2017Neoen, the premier French independent power producer and Schneider Electric, the global specialist in energy management and automation, have signed a 750 MW Conext SmartGenTM multi-year framework agreement on three continents.  The scope includes: conversion stations composed of 1500V inverters, medium voltage switchgear, transformers, and complete monitoring and control system, as well as lifecycle maintenance services.

Neoen and Schneider Electric welcome this collaboration as a major joint initiative in providing more affordable and reliable clean energy.

Neoen decided to enter a framework agreement to secure electrical design, launch grid impact studies at an early stage in the development process, and leverage volumes.  “We selected Schneider Electric after a global competitive process based on the best LCOE[1].  Having worked with Schneider Electric on the Cestas 300 MW project we were pleased with Schneider Electrics’ level of involvement, responsive service team, and track record of their high performing operating plant solutions,” explained Xavier Barbaro, CEO of Neoen.

“With a global footprint and long-term commitment in Solar, Schneider Electric delivers projects and long-term service contracts for solar power plants worldwide in an efficient way, which will continue to benefit international solar businesses such as Neoen. We decided to set-up a dedicated service team to support Neoen and their EPC partners to increase reactivity and support in this very dynamic market,” said Robert Immele, Solar Business CEO at Schneider Electric.

[1] Levelized Cost Of Energy

About Neoen

Founded in 2008, Neoen is an independent producer of electricity from renewable sources (solar, wind and biomass) and is the first private French company to attain 1000 MW of installed power. Neoen operates in France, Australia, El Salvador, Mexico, Zambia, Mozambique, Jordan, Jamaica, Portugal and Ireland. Neoen’s main shareholders are Impala SAS (owned by Jacques Veyrat), the fund Capénergie II (managed by Omnes Capital) and Bpifrance. Neoen aims to attain at least 3,000 MW by 2020.

See www.neoen.com for details

About Schneider Electric

Schneider Electric is the global specialist in energy management and automation. With revenues of ~€25 billion in FY2016, our 144,000 employees serve customers in over 100 countries, helping them to manage their energy and process in ways that are safe, reliable, efficient and sustainable. From the simplest of switches to complex operational systems, our technology, software and services improve the way our customers manage and automate their operations. Our connected technologies reshape industries, transform cities and enrich lives. At Schneider Electric, we call this Life Is On.

www.schneider-electric.com

Hashtags:  #Solar #ConextSmartGen

Read more: Neoen enters framework agreement with Schneider...

Indian solar tariffs are in a state of free fall. New record lows are created in the recent round of auctions of 500MW solar projects.

 

ACME Solar emerged as the lowest bidder followed by SBG Cleantech. The auction was a very tightly fought one with Hero Solar Energy and Renew Power missing out by 0.02 paise and 0.03 paise respectively.

Here are the details

 

Bidder's Name Tariff Bidders Quantity
ACME Solar Holdings Private Ltd 2.44 200
SBG Cleantech One Ltd 2.45 500
Hero Solar Energy Pvt. Ltd. 2.46 300
Renew Solar Power Pvt. Ltd. 2.47 500
Awaada Power Pvt. Ltd. 2.6 200
Shhapoorji Pallonji Infrastructure Capital Company Pvt. Ltd. 2.65 400
RatanIndia Solar 3 Pvt Ltd.  2.87 100
Duroc Solar 2.88 100
Orange Renewable Power Pvt. Ltd. 2.95 200
Lightsource Renewable Energy Holdings Ltd. 2.98 100
Solairedirect Energy India Pvt. Ltd. 3.08 300
Mahoba Solar (UP) Pvt. Ltd. 3.14 300
Aditya Birla Renewables Ltd. 3.18 200

 

Here is the complete list of solar parks in India along with their implementing agencies.

 

State

Solar Park Implementation Status

Name / Locataion

Capacity (MW)

In-principle Approval (Date)

Implementing Agency (SPPD)

A and N Islands

A&N Solar Park, South Andaman Dist at 1. Mithakhari, 2. Havelock Island, 

3. Neil Island, 4. Garacharama (Attam Pahar), 5. Chidiyatapu

100

21-08-2015

NTPC

Andhra Pradesh

Anantpur Ultra Mega Solar Park, Location: N.P.Kunta and P.Kothapalli, N.P.Kunta Mandal, Ananthapuramu District.

1500

28-11-2014

 AP Solar Power Corporation Pvt. Ltd. (APSPCL), A JV of SECI, APGENCO & NREDCAP

Kadapa Solar Park, Thalamanchipatnam, Ponnampalli, Rama Chandraya Palli, Dhondiam and Vaddirala villages of Mylavaram Mandal of Kadapa District

1000

28/07/2015 & 09/10/2015

Kurnool Ultra Mega Solar Park, Gani and Sakunala Villages of Kurnool Distric

1000

28-11-2014

Ananathapurumu II Solar Park, Talaricheruvu & Aluru vill. of Tadipatri Mandal of Ananthapuramu District.

500

14.01.2016

Arunachal Pradesh

Lohit Solar Park, Lohit Dist

100

29-04-2015

Arunachal Pradesh Energy Development Agency (APEDA)

Assam

Amguri Solar Park, Amguri & Sibsagar District

69

28-08-2015

JV of Assam Power Distribution Company Ltd. (APDCL), Assam Power Generation Corp. Ltd (APGCL)

Chhattisgarh

Rajnandgaon

500

29-09-2015

Chhattisgarh State Renewable Energy Development Agency (CREDA)

Gujarat

Radhanesda Solar Park, Radhanesda Vill. Vav Tehsi, District Banskantha 

700

01-12-2014

Gujarat Power Corporation Limited (GPCL)

Haryana

At Bugan in Hisar Dist., Baralu & Singhani in Bhiwani Dist., Daukhera in Mahendergarh Dist.

500

15-01-2016

Saur Urja Nigam Haryana Ltd.(SUN Haryana), A SPV between HSIIDC and HPGCL

Himachal Pradesh

Kaza Solar Park, Spiti Valley

1000

09-04-2015

HP State Electricity Board Ltd.

J&K

Mohargarh and Badla Brahmana, District Samba

100

29-09-2015

J&K Energy Dev. Agency (JAKEDA)

Karnataka

Tumkur Solar Park Vallur, Ballasamudra, Tirumani, Rayacherlu & Kyataganacherlu of Nagalamadike Hobli, Pavagada Taluk, Tumkur Dist

2000

19-03-2015

Karnataka Solar Power Development Corporation Ltd. (KSPDCL) A JV of SECI & KREDL 

Kerala

Kasargod Solar Park At Paivalike, Meenja, Kinnoor, Kraindalam and Ambalathara Villages of Kasargode Dist

200

19-03-2015

Renewable Energy Corporation of Kerala (JVC of SECI and KSEB)

Madhya Pradesh

Rewa Ultra Mega Solar Ltd.

Vill.- Badwar, Itar Pahad, Ramnagar, Barseta Tehsil- Gurh Dist- Rewa

750

01-12-2014

 Rewa Ultra Mega Solar Ltd. A JV of SECI & MPUVNL

Neemuch-Mandsaur Solar Park (Neemuch-250 MW & Mandsaur-250 MW)

500

08.06.2016, 15-01-2016 & 06-10-15, 28-09-15

Chhatarpur Solar Park at Chhatarpur Distt.

500

08.06.2016, 15-01-2016

Agar-Shajapur Solar Park (Agar-250 MW and Shajapur-250MW)

500

08.06.2016

Rajgarh-Morena Solar Park (Rajgarh-250 MW & Morena-250MW) 

500

08.06.2016, 15-01-2016

Maharshtra

Pragat Mega Solar Park, 

Taluka Sakri, District Dhule

500

29-09-2015

M/s. Sai Guru Mega Solar Power Pvt. Ltd (name changed)

Dondaicha, Dist. Dhule

500

17-12-2015

MAHAGENCO

Patoda Solar Park Taluka Patoda, Dist Beed

500

17-12-2015

M/s. Paramount Solar Power Pvt. Ltd. 

Meghalaya

Suchen & Thamar Solar Park

 Suchen & Thammar Village, East & West Jaintia 

20

04-09-2015

Meghalaya Power Generation Corporation Ltd (MePGCL)

Nagaland

Nagaland Solar Park, Ganeshnagar-Dimapur Dist (35 MW), Zhadima- Kohima Dist (20 MW), New Peren-Peren Dist (5 MW)

60

29-04-2015

Directorate of New & Renewable Energy, Nagaland

Odisha

Odisha Solar Park

Balasore, Boudh, Deograh, Kalahandi and Keonjhar

1000

28-10-2015

Green Energy Development Corporation Of Odisha (GEDCOL)

Rajasthan

Bhadla Phase II Vill.- Bhadla, Tehsil- Bap, Jodhpur

680

02-12-14 & 19-06-15

Raj. Solar Park Development Company Ltd. (RSDCL), A subsidiary of RRECL

Bhadla Phase III Vill.- Bhadla, Tehsil- Bap, Jodhpur

1000

12-12-2014

Saurya Urja Company of Rajasthan Ltd (SUCRL), A JV between GOR & IL&FS

Essel Phalodi-Pokran Solar Park 

(Phase 1A (Phalodi)- 400 MW at Distt Jodhpur & Phase-1B (Pokaran)-350 MW at Jaiselmer)

750

30/116/2015-16/NSM 

17-12-2015

Essel Surya Urja Com.of Raj Ltd. (JV of GOR & Essel Infraprojects Ltd)

Bhadla Phase IV, Village Bhadla, Tehsil Bap, Jodhpur

500

29-09-2015

Adani Renewable Energy Park Raj. Ltd. (A JVC between GOR & APEPRL)

Dawada & Rasla, Tehsil Fatehgarh and Village Nedan, Tehsil-Pokaran, Jaisalmer

421

01.02.2016

Adani Renewable Energy Park Raj. Ltd. (A JVC between GOR & APEPRL)

Tamil Nadu

Ramnathpuram Solar Park

500

11-12-2014

NF

Telangana

Gattu Solar Park Ghattu Mandal, Mehboobnagar Dist.

500

17-12-2015

Telangana New & Renewable Energy Development Corporation Ltd. (TNREDC)

Uttarakhand

Solar Park at 2 Location namely Sitarganj and Khurpia farm in U. S. Nagar Distt.

50

16-12-2015

State Industrial Development Corporation Uttarakhand Ltd. (SIDCUL)

Uttar Pradesh

UP Solar Park Jalaun, Allahabad, Mirzapur & Kanpur Dehat Districts of Uttar Pradesh

600

02-12-2014

Lucknow Solar Power Development Corporation Limited (JVC of SECI & UPNEDA)

West Bengal

Purab Medinapur, Paschim Medinapur, Bankura

500

14-07-2015

West Bengal State Electricity Distribution Company (WBSEDCL)

20000

 

Sl. No. State Solar Park Implementation Status
Name / Locataion Capacity (MW) In-principle Approval (Date) Implementing Agency (SPPD)
0 A and N Islands
A&N Solar Park, South Andaman Dist at 1. Mithakhari, 2. Havelock Island, 
3. Neil Island, 4. Garacharama (Attam Pahar), 5. Chidiyatapu
100 21-08-2015 NTPC
1 Andhra Pradesh Anantpur Ultra Mega Solar Park, Location: N.P.Kunta and P.Kothapalli, N.P.Kunta Mandal, Ananthapuramu District. 1500 28-11-2014  AP Solar Power Corporation Pvt. Ltd. (APSPCL), A JV of SECI, APGENCO & NREDCAP
2 Kadapa Solar Park, Thalamanchipatnam, Ponnampalli, Rama Chandraya Palli, Dhondiam and Vaddirala villages of Mylavaram Mandal of Kadapa District 1000 28/07/2015 & 09/10/2015
3 Kurnool Ultra Mega Solar Park, Gani and Sakunala Villages of Kurnool Distric 1000 28-11-2014
4 Ananathapurumu II Solar Park, Talaricheruvu & Aluru vill. of Tadipatri Mandal of Ananthapuramu District. 500 14.01.2016

5

Arunachal Pradesh Lohit Solar Park, Lohit Dist 100 29-04-2015 Arunachal Pradesh Energy Development Agency (APEDA)
6 Assam Amguri Solar Park, Amguri & Sibsagar District 69 28-08-2015 JV of Assam Power Distribution Company Ltd. (APDCL), Assam Power Generation Corp. Ltd (APGCL)
7 Chhattisgarh Rajnandgaon 500 29-09-2015 Chhattisgarh State Renewable Energy Development Agency (CREDA)
8 Gujarat Radhanesda Solar Park, Radhanesda Vill. Vav Tehsi, District Banskantha  700 01-12-2014 Gujarat Power Corporation Limited (GPCL)
9 Haryana At Bugan in Hisar Dist., Baralu & Singhani in Bhiwani Dist., Daukhera in Mahendergarh Dist. 500 15-01-2016 Saur Urja Nigam Haryana Ltd.(SUN Haryana), A SPV between HSIIDC and HPGCL
10 Himachal Pradesh Kaza Solar Park, Spiti Valley 1000 09-04-2015 HP State Electricity Board Ltd.
11 J&K Mohargarh and Badla Brahmana, District Samba 100 29-09-2015 J&K Energy Dev. Agency (JAKEDA)
12 Karnataka Tumkur Solar Park Vallur, Ballasamudra, Tirumani, Rayacherlu & Kyataganacherlu of Nagalamadike Hobli, Pavagada Taluk, Tumkur Dist 2000 19-03-2015 Karnataka Solar Power Development Corporation Ltd. (KSPDCL) A JV of SECI & KREDL 
13 Kerala Kasargod Solar Park At Paivalike, Meenja, Kinnoor, Kraindalam and Ambalathara Villages of Kasargode Dist 200 19-03-2015 Renewable Energy Corporation of Kerala (JVC of SECI and KSEB)
14 Madhya Pradesh
Rewa Ultra Mega Solar Ltd.
Vill.- Badwar, Itar Pahad, Ramnagar, Barseta Tehsil- Gurh Dist- Rewa
750 01-12-2014  Rewa Ultra Mega Solar Ltd. A JV of SECI & MPUVNL
15 Neemuch-Mandsaur Solar Park (Neemuch-250 MW & Mandsaur-250 MW) 500 08.06.2016, 15-01-2016 & 06-10-15, 28-09-15
  Chhatarpur Solar Park at Chhatarpur Distt. 500 08.06.2016, 15-01-2016
16 Agar-Shajapur Solar Park (Agar-250 MW and Shajapur-250MW) 500 08.06.2016
17 Rajgarh-Morena Solar Park (Rajgarh-250 MW & Morena-250MW)  500 08.06.2016, 15-01-2016
18 Maharshtra
Pragat Mega Solar Park, 
Taluka Sakri, District Dhule
500 29-09-2015 M/s. Sai Guru Mega Solar Power Pvt. Ltd (name changed)
19 Dondaicha, Dist. Dhule 500 17-12-2015 MAHAGENCO
20 Patoda Solar Park Taluka Patoda, Dist Beed 500 17-12-2015 M/s. Paramount Solar Power Pvt. Ltd. 
21 Meghalaya
Suchen & Thamar Solar Park
 Suchen & Thammar Village, East & West Jaintia 
20 04-09-2015 Meghalaya Power Generation Corporation Ltd (MePGCL)
22 Nagaland Nagaland Solar Park, Ganeshnagar-Dimapur Dist (35 MW), Zhadima- Kohima Dist (20 MW), New Peren-Peren Dist (5 MW) 60 29-04-2015 Directorate of New & Renewable Energy, Nagaland
23 Odisha Odisha Solar Park
Balasore, Boudh, Deograh, Kalahandi and Keonjhar
1000 28-10-2015 Green Energy Development Corporation Of Odisha (GEDCOL)
24 Rajasthan Bhadla Phase II Vill.- Bhadla, Tehsil- Bap, Jodhpur 680 02-12-14 & 19-06-15 Raj. Solar Park Development Company Ltd. (RSDCL), A subsidiary of RRECL
25 Bhadla Phase III Vill.- Bhadla, Tehsil- Bap, Jodhpur 1000 12-12-2014 Saurya Urja Company of Rajasthan Ltd (SUCRL), A JV between GOR & IL&FS
26
Essel Phalodi-Pokran Solar Park 
(Phase 1A (Phalodi)- 400 MW at Distt Jodhpur & Phase-1B (Pokaran)-350 MW at Jaiselmer)
750
30/116/2015-16/NSM 
17-12-2015
Essel Surya Urja Com.of Raj Ltd. (JV of GOR & Essel Infraprojects Ltd)
27 Bhadla Phase IV, Village Bhadla, Tehsil Bap, Jodhpur 500 29-09-2015 Adani Renewable Energy Park Raj. Ltd. (A JVC between GOR & APEPRL)
28 Dawada & Rasla, Tehsil Fatehgarh and Village Nedan, Tehsil-Pokaran, Jaisalmer 421 01.02.2016 Adani Renewable Energy Park Raj. Ltd. (A JVC between GOR & APEPRL)
29 Tamil Nadu Ramnathpuram Solar Park 500 11-12-2014 NF
30 Telangana Gattu Solar Park Ghattu Mandal, Mehboobnagar Dist. 500 17-12-2015 Telangana New & Renewable Energy Development Corporation Ltd. (TNREDC)
31 Uttarakhand Solar Park at 2 Location namely Sitarganj and Khurpia farm in U. S. Nagar Distt. 50 16-12-2015 State Industrial Development Corporation Uttarakhand Ltd. (SIDCUL)
32 Uttar Pradesh UP Solar Park Jalaun, Allahabad, Mirzapur & Kanpur Dehat Districts of Uttar Pradesh 600 02-12-2014 Lucknow Solar Power Development Corporation Limited (JVC of SECI & UPNEDA)
33 West Bengal Purab Medinapur, Paschim Medinapur, Bankura 500 14-07-2015 West Bengal State Electricity Distribution Company (WBSEDCL)
21 States and 34 Solar Parks 20000

History is created today, as the record low tariffs achieved in the auction concluded on 09.05.2017 for Bhadla Phase-IV Solar Park, Rajasthan has been broken, with even lower tariff of Rs. 2.44 per unit discovered in the auction carried out by Solar Energy Corporation of India Limited (SECI) for 500 MW capacity in Bhadla Phase-III Solar Park, Rajasthan. The park is being set up by M/s Saurya Urja Company of Rajasthan Limited, a joint venture between the Govt. of Rajasthan and M/s IL&FS Energy Development Company Limited. This tariff is fixed for 25 years with no escalation and the bidders have sought no VGF from the Government. The winners are M/s ACME Solar Holdings Pvt. Ltd. (200 MW) at a tariff of Rs. 2.44 per unit and M/s SBG Cleantech One Ltd. (300 MW), quoting a tariff of Rs. 2.45 per unit.

The entire solar power will be consumed in the State of Rajasthan and power sale agreement with the State Distribution Companies is already tied up. The developers are responsible to connect to the pooling sub-station of solar park. The developers will be paying solar park charges of Rs.45.2 lakh per megawatt towards land, connectivity (from pooling substation to state network) and other infrastructural facilities. The projects are likely to be completed in about 12-13 months.

The earlier lowest tariff of Rs. 2.62 per kWh, was discovered recently in the auction conducted by SECI for 250 MW Bhadla Phase-IV Solar Park in Rajasthan.

It is understood that this fall in solar tariffs is the result of combination of various factors, most important being the decision of the Government of India to cover solar power by SECI under the ambit of Tripartite Agreement for payment security against defaults by State distribution companies. Other factors contributing are about 7-8% higher yield in Rajasthan due to better solar radiation conditions, drop in module prices in International market, and strengthening of Indian rupee against US dollar.

For the present bid, the bids were submitted by 24 bidders for a capacity of 5500 MW which is 11 times of the bid capacity. Bid received overwhelming global response including developers from Finland, France, Saudi Arabia, Singapore and Japan. This became possible only due to constant endeavor at SECI to streamline the bidding process with highest level of transparency and integrity under the guidance of Ministry of New and Renewable Energy.

Post COP21, India’s commitment to a low carbon economy has been demonstrated via several changes at policy level which have paved a path for quickening the pace of RE adoption in India.

Read more: Expediting Renewable Energy Adoption India

Domestic solar cell and module manufacturing is way behind the country’s demand for the equipment, going by data collated by the Ministry of New and Renewable Energy (MNRE) in January end. Under the National Solar Mission, the government targets achieving an indigenous manufacturing capacity of 4-5 GW by 2020.

India’s import of solar cells and modules is more than 35 times its export, as per a recent study by Mercom Capital Group. Till December 2016-end, the country’s installed solar cell manufacturing capacity stood at 2,953 MW, including the 1200MW Mundra project by Adani Group. Further, the operational capacity of solar cell manufacturing is 1,448.05 MW in December-end, marginally higher than the 1,123.05 MW in June-end last year.

As far as solar module manufacturing capacity is concerned, MNRE’s data pegs the installed capacity at 8,113 MW while operational capacity is 5,286.55 MW as on December-end. This has grown from 5,848 MW of installed capacity and 4,307.55 MW of installed capacity in June 2016-end. Here too, 1,200 MW, a major chunk of the growth is attributed to the uncommissioned Adani project.

A majority of solar power projects in India will continue to prefer cheaper cells and modules from China. India imported solar equipment worth $2.17 billion (Rs 14,630 crore) in the 10 months between April 2016 and January 2017, its exports were just $60.3 million (Rs 404 crore). 

Indian solar modules comprise of only 5% of the domestic installations. Britain is the biggest importer of Indian solar modules, accounting for 31% of India’s solar exports ($18.84 million), followed by Italy and Belgium. India’s primary export markets include those which have anti-dumping laws against the Chinese manufacturers. 

Chinese modules are generally priced 20% lower than India-made modules making it difficult for Indian module manufacturers to compete with them. The further fall in the solar module prices has also been fuelling the recent free fall in the competitive biddings.

Analysts say that with a slowdown in the Chinese market, the prices are expected to fall further by 20% over next year.

 

Domestic solar cell and module manufacturing is way behind the country’s demand for the equipment, going by data collated by the Ministry of New and Renewable Energy (MNRE) in January end. Under the National Solar Mission, the government targets achieving an indigenous manufacturing capacity of 4-5 GW by 2020.

 

India’s import of solar cells and modules is more than 35 times its export, as per a recent study by Mercom Capital Group. Till December 2016-end, the country’s installed solar cell manufacturing capacity stood at 2,953 MW, including the 1200MW Mundra project by Adani Group. Further, the operational capacity of solar cell manufacturing is 1,448.05 MW in December-end, marginally higher than the 1,123.05 MW in June-end last year.

 

As far as solar module manufacturing capacity is concerned, MNRE’s data pegs the installed capacity at 8,113 MW while operational capacity is 5,286.55 MW as on December-end. This has grown from 5,848 MW of installed capacity and 4,307.55 MW of installed capacity in June 2016-end. Here too, 1,200 MW, a major chunk of the growth is attributed to the uncommissioned Adani project.

 

A majority of solar power projects in India will continue to prefer cheaper cells and modules from China. India imported solar equipment worth $2.17 billion (Rs 14,630 crore) in the 10 months between April 2016 and January 2017, its exports were just $60.3 million (Rs 404 crore).

 

Indian solar modules comprise of only 5% of the domestic installations. Britain is the biggest importer of Indian solar modules, accounting for 31% of India’s solar exports ($18.84 million), followed by Italy and Belgium. India’s primary export markets include those which have anti-dumping laws against the Chinese manufacturers.

 

Chinese modules are generally priced 20% lower than India-made modules making it difficult for Indian module manufacturers to compete with them. The further fall in the solar module prices has also been fuelling the recent free fall in the competitive biddings.

 

Analysts say that with a slowdown in the Chinese market, the prices are expected to fall further by 20% over next year.

Why is this issue important?

Amid growing concerns over climate change and pollution, solar power is the key to solving fossil-fuel dependency With over 65 percent of installed generation capacity in India attributable to thermal power, the production of large quantities of greenhouse gases (GHG) has raised public health concerns. And with limited domestic coal production, new thermal power plants are inevitably dependent on price-volatile coal and gas imports, leading to energy insecurity. To sustain the country’s rapid economic growth while addressing concerns about climate change and pollution, in recent years India’s federal and state governments have taken steps to tackle the growing energy crisis through the judicious use of abundantly available solar energy resources.

Read more: Implementing Rooftop Solar Projects:...

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The 100 GW by 2022 target has created an urgency driving up the solar capacity of the country. Besides highlighting India’s step to curb carbon emissions in the UN, this move towards green energy shift has also given India the opportunity to bridge its continuously increasing gap between energy generation and demand. India’s electricity consumption per capita has reached to 1010 kWh in 2015. And with booming population, (1,326,801,576 in 2016) the power demand is expected to rise significantly in 2017. In this scenario, trusting green energy rather than limited reserves of fossil fuel can help develop India into an energy rich country. However, regardless of the environmental benefits, solar has to match the pricing structure of conventional energy to win the race, encouraging common man to opt for green energy.

Grid Parity: Current Scenario

panel 2

Solar panel prices have fallen by more than 80 per cent since 2008, and it has given the leg up for more installations. Drastic price fall of solar panels has also helped India in reaching cost parity with conventional energy sources. With technology getting cheaper, and involvement of new subsidies and incentives, solar installation will continue to get traction in the future.

However, the turning point for the Indian energy scene would be when solar would be able to generate electricity at the same or lower price than thermal power. And such a scene is not a far flung theory anymore, as solar tariff in India continues to fall below USD 0.07/ kWh. The reducing cost has made solar the preference of power companies. However, there is the question of sustainability and return on investment if the solar tariff continues to fall. With growing demand for solar, it is easy to understand that a stabilized solar tariff can attract power companies as the shift towards large-scale solar projects, increase in efficiency, and improvement in technology promises a better pay out for developers.

150kW B S Abdur Rahman Univ-1

Rooftop solar industry has also shown incredible growth contributing to raising awareness and reaching grid parity of solar. Rooftop solar growth reached more than 100 per cent in 2016 (crossing 1 GW capacity), than that of 2015, helping India to now cross 10 GW mark. New tenders amounting to 900 MW for rooftop solar systems have been introduced to be completed within 2017. Commercial and Industrial consumers are surprised to see that energy bills can be saved between 20-30% by adopting rooftop solar. And this revelation has increased Commercial and Industrial consumers in the solar sector, amounting to 63 per cent of the total solar energy consumers in 17 out of the 19 largest states in India. Although, states like Tamil Nadu, Gujarat, and Maharashtra have huge rooftop capacities (involving Commercial and Industrial consumers), the Government’s pursuit to progress on installing solar on Government buildings is also adding to the capacity nationally. Rapid demand and development in this sector is creating cost competitiveness with solar and conventional energy.

The influx of clean energy targets, pursuit towards energy decentralization, strong government-backed policies and subsidies, and technical innovation in the solar industry are leading the solar sector to ultimately reach grid parity by 2020. However, to keep the growth on track and to supplement it for a faster adoption of green energy, focus on domestic manufacturing, stabilizing solar tariff, and easy financing choices are needed.

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Read more: The Grid Parity Race: Will Solar Make It

Insights Form Solar Marketplace: More Quotes Result In Greater Purchase Probability

Latest analysis of EnergySage Solar Marketplace data reveals accelerating decrease in solar prices, and how more quotes results in a greater probability of purchase. EnergySage published its fourth semiannual Solar Marketplace Intel Report™, providing a comprehensive analysis of consumer behavior, demographics, and preferences, as well as a complete account of industry trends in the U.S. residential solar market in 2016.

This latest edition of the industry-leading report presents several new datasets and analyses including an expanded list of new states, a review of the community solar landscape, and greater insights into solar shopper demographics. According to EnergySage data, the typical solar shopper is a mid-career male in his mid-40s with interests in real estate, financial services, and home services in addition to solar energy.

This most recent report also features a new section analyzing residential solar data by utility territory. EnergySage compared the levelized cost of energy (LCOE) of solar to today’s electricity rates in territories served by Commonwealth Edison Co., Consolidated Edison (ConEd), Dominion Power, Florida Power & Light Co., Southern California Edison, and Xcel Energy. In all service areas, the LCOE of solar is lower than the 2016 residential electricity rate offered by the utility, affirming the comparative benefits of solar as a low-cost energy source.

Profile of the Typical Solar Shopper

EnergySage compiled Solar Marketplace demographic data and user preferences to develop a profile of the solar-interested consumers in 2016. The typical solar shopper is a mid-career homeowner and is interested in a variety of real estate products & home services. More than three-quarters of solar shoppers are male.

Typical EnergySage solar shopper is a mid-career homeowner, interested in financial and home services 71% of solar shoppers on the EnergySage Solar Marketplace in 2016 were between the ages of 25 and 54. In addition to the solar category, users were also in-market for a variety of products and services, including financial and investment services, residential real estate, home improvement products, and home appliances – revealing a customer segment that is extremely valuable to a range of industries.

Three out of every four solar shoppers are male 77% of 2016 users were male, a significant disparity indicating that the solar product category, while growing rapidly, still has a ways to go before it can reach true mass-market appeal in the United States.

chart

Solar prices are falling at accelerating rate

Between H1 2016 and H2 2016, gross cost per watt on EnergySage dropped by 6.25%. That is more than triple the rate of decline from the first EnergySage Solar Marketplace Intel Report from July 2014 to June 2015, and the greatest rate of decline measured in any of the reports to date. This trend may reflect improved operational efficiencies at solar companies, lower customer acquisition costs via online channels like EnergySage, increased competition, and the low cost of solar panels and inverters.

chart2

graph2

 

More quotes result in more sales

Consumers who receive offers from multiple solar installers are significantly more likely to complete a solar purchase. EnergySage users who received 5+ quotes in 2016 were nearly eight times more likely to buy than those who received only one quote. These results offer a clear message: quotes from multiple installers will increase consumer confidence, and solar shoppers should be encouraged to seek multiple quotes.

graph4

Solar shoppers are mostly male

EnergySage used Solar Marketplace demographic data to develop a profile of today’s solar-interested consumers, and found that three out of every four solar shoppers (77%) are male. This gender imbalance presents an opportunity for the solar industry to develop new messaging and outreach strategies to attract more female shoppers, and expand the product category to achieve true mass-market appeal.

“This latest report speaks to the importance of transparency and comparison-shopping in residential solar,” said EnergySage CEO and founder Vikram Aggarwal. “For the consumer, getting more quotes empowers them to make better-informed decisions. For the installer, more quotes results in increased consumer confidence, which in turn results in a higher likelihood of purchase. Comparison-shopping platforms like EnergySage make win-win situations like this possible.”

EnergySage is a leading online comparison-shopping marketplace for rooftop solar, community solar, and solar financing, and is uniquely positioned to share solar market insights. This report furthers EnergySage’s mission to support the healthy growth of the solar industry via consumer education and empowerment, price transparency, and greater information sharing among all stakeholders.


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India’s pursuit towards green energy, upholding solar as the tool to build an energy rich future has translated into nearly 12 GW cumulative installed solar capacity in 2017. Considering, that the country stood at 5 GW of capacity in 2015, it is commendable how Indian solar industry has progressed more than doubling the capacity within a bit more than a year. With set targets being achieved, India is constantly trying to increase the capacity of installation for faster green energy transition. It is a smart decision considering the demand for solar in the whole world to save the environment and reduce raising energy cost.

Solar Can save The Environment

panel 1

Global energy supply through fossil fuels have reached from 6,100 million tonnes of oil equivalent (Mtoe) in 1977 to 13,700 Mtoe by 2014. Moreover, alongside China, and the United States of America, India is one of the top coal-related CO2 emitters, speculated to contribute more than 70% of global CO2 emissions cumulatively in future. Research shows that energy-related CO2 emissions in the world will increase from 32.3 billion metric tons in 2012 to ultimately reaching 43.2 billion metric tons in 2040, if we continue using fossil fuels.

On the other hand, utilizing renewable energy has helped Japan to phase out fossil fuel usage, displaying a decline in CO2 emission by 0.4%/year. Research also suggests that increase in renewable energy (mainly solar) has reduced fossil fuel share by 22 per cent. In the same breath we need to highlight that 1 KW of green energy can reduce more than 3,000 pounds of CO2 annually. So, it is pretty clear that green energy shift is the only thing that can protect us for a dystopian energy starved future.

Pollution Curbing Solar Growth

plane

Although solar is growing globally, a new study has revealed that dust and particulate matter (PM) may be reducing energy yield by 17-25 per cent annually in Northern parts of India. The dust particles create a barrier between sunrays and the solar panels, reducing the exposure to the sun, thus declining energy yield. Since the simple enough technology of solar panels depend on ambiance to capture and harvest energy, ambient pollution can create significant problem for solar yield generation.

In the same breath, we can highlight that similar issues have been identified around the world. For instance, solar panels in Baghdad were seen to be producing less and less energy due to dust particles blocking the sunrays and creating a layer over the panel. Even a fine layer of dust, practically unnoticeable on the solar panels are shown to decline the energy generation by 18.74% annually. Studies also show that poor air quality was the reason behind 15-25% yield loses in Singapore in 2013.

The Solution

PANEL

At this point of discussion, it is crystal clear that pollution is not just an eminent threat to our environment, it is also halting solar growth, which is the only viable option for us to build an energy rich future. In order to ensure continued efficiency of performance for the solar power system, the best possible solution would be to frequently clean the panels, wiping out the barrier created of fine dust particles that are rarely visible to the naked eye. As studies show a whopping 50 per cent increase on energy generation after every clean up, the process would be more than enough to solve the yield reduction problem.

In an ideal world, we all would have taken aggressive steps to phase out fossil fuel much sooner than expected, to help clean, green, solar grow. But in the present circumstances, the best alternative would be to increasingly adopt solar energy with a futuristic outlook, and bearing in mind the broader benefits that it would entail, including the environmental implications. Hopefully, with the phenomenal growth of solar and renewable energy across the globe, the use of fossil fuels could become a distant memory in time, for green energy (mainly solar) to acquire the mainstay position.

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Read more: Solar Energy Can Save the Environment but...

India Ratings and Research (Ind-Ra) estimates that INR560 billion out of total debt of INR1,730 billion could be refinanced at a lower borrowing cost across various infrastructure sub-sectors in its portfolio till FY19. Also, there could be a shift in the type of instruments issued for the purpose of raising capital in the sector largely to the capital market instruments, namely bonds, from the conventional term loans.

Ind-Ra estimates that for each 1% reduction in interest rate, the incremental surplus as a % of cash flow available for debt service would be highest in toll roads, followed by solar and wind energy. This could mainly be because the interest burden on these sectors is high as most of these projects are in the ramp-up stage.

Solar energy projects owing to their stable revenue profiles and better counterparties and toll road projects with reasonable track records and stronger sponsors and longer tail period, than other sub-sectors, appear to be the ideal candidates for refinancing. Though Ind-Ra expects a replacement of banks loans by bonds, traction will be witnessed through infrastructure investment trusts.

Also, Ind-Ra observes that the benefit of interest rate reduction will be the least for the annuity sector, followed by the thermal power sector, because refinancing risk has already been factored in at the time of initial funding for the former and due to minimal improvement in persistent issues in the latter.

An estimated INR45 million/project/year is projected to be the surplus for FY18, based on the average interest rate reduction of around 65bp witnessed for Ind-Ra rated entities across various infra sectors. The debt service coverage ratio is likely to improve 0.04x in FY18 across infra sectors.

The strong payment security mechanism from the counterparty in the recently concluded auctions for 750 MW of solar projects in Rewa Solar Park, Madhya Pradesh, will enable fund raising at competitive rates, says India Ratings and Research (India Ratings). The agency believes that the reduced risk from the counterparty because of payment security mechanisms is one of the levers for the steep fall in tariffs quoted by the bidders.

The new payment security mechanism includes the state government payment guarantee, payment security fund (about 35-40% of revenue at plant load factor of 22%) and a deemed generation compensation for the grid unavailability, in addition to the regular letter of credit. Low tariff will also incentivise the offtakers to pay on-time. Notwithstanding the new payment structure, in the event of the tariffs not being commensurate with the capital cost - reminiscent to the aggressive bids seen in the road sector – will stress the coverage ratios of these projects. Thus the cost of funding and lower solar panel prices (fallen by ~28% yoy) are critical factors for the sharp fall in solar bids.

While the state guarantee and payment security fund (PSF) provides a cushion,however it is imperative to know the terms for invocation of the guarantee and the replenishment of PSF. In the event of guarantee invocation or tapping of PSF after a substantial delay in payments – beyond 60 days – the players could be forced to avail working capital facilities and bear the related financial costs.

In another development, Solar Energy Corporation of India (SECI) is now included as a beneficiary in the tripartite agreement with the Reserve Bank of India, Government of India and the states. This development will allow withholding of central assistance to states in case of a default to SECI. As a result, SECI’s future bids are likely to fall to lower tariffs than earlier. The reduced counterparty risk will aid in curtailing the borrowing costs for these projects.

Evolving Security Mechanism A Positive

Though solar projects relatively enjoy stable receivable days from most counterparties, the underlying risk from the weak financial profile of most distribution utilities remain. Certain distributionutilities however exhibit different payment days for different generation assets (thermal and wind) and this pattern among discoms provides limited comfort in assessing the reliability of the offtakers. Thus the inclusion of SECI as a beneficiary in the tripartite agreement gains significance in providing reliability of collections.

Threat of Grid Uncertainty Partially Addressed

In light of grid curtailment faced by wind projects in few states and also by solar projects in Tamil Nadu, the development of providing deemed generation benefits for grid non-availability is a positive development. India Ratings had highlighted this in the report ‘Market Wire: Grid Curtailment Contagion Puts Pressure on Credit Profiles of Renewable Energy Projects’.

However, Ind-Ra believes that it may be unsustainable for the off-takers to carry this risk as the distribution utilities do not operate the grid. The responsibility of grid operation lies with the loaddespatch centres within the constraints posed by the transmission infrastructure and load-generation balancing. Thus, the onus of enabling evacuation also lies with the open access provider and network operator. Clarity in responsibilities and contractual incentives and penalties will ensure that all the stakeholders (including off-takers, open access providers and network operators) are aligned towards the goal of uninterrupted evacuation for renewable power.

Bids Reach New Lows

Auction for implementing 750MW in Rewa Solar Park was concluded at INR2.970-/kWh, INR2.979 and INR2.974 for three units of 250MW each, with 5 paise per year escalation for first 15 years. Offtakers are Delhi Metro Rail Corporation and Madhya Pradesh Power Management Corporation Ltd. The previous low in terms of tariffs of INR4.34/kWh was offered by Fortum of Finland was exactly a year ago in January 2016. Rewa Ultra Mega Solar Limited, which is developing the Rewa solar park, is a joint venture of SECI and Madhya Pradesh Urja Vikas Nigam Limited. Land acquisition and evacuation are the responsibility of the solar park, thus mitigating significant risks for the project developers. The low tariffs discovered makes the solar projects highly competitive in merit order, as the variable charges of marginal power for most states lie above INR3.5/kWh. - Contributed By ICRA

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Indian solar industry has scaled great heights surpassing 10 GW in 2017, from a meagre 10 MW in 2010. Even without huge industrial muscles that other countries keep on flexing, India braved all odds showing continued growth in the solar vertical. From 2015 to the beginning of 2017, Indian solar sector has successfully doubled its solar capacity (5GW in 2015- 10GW in 2017), earning commendations in the global podium and inspiring developing countries to venture ahead. Obviously, Hon’ble Prime minister Shri Narendra Modi created the urgency in the green energy shift by announcing development of 100 GW solar-installed capacity by 2022, which served as the ignition for upward growth that the Indian solar sector is displaying. And it is easy to understand that this much needed boost will bring numerous opportunities.

However, the obvious question surfacing from this equation is- ‘whether the opportunities will be for domestic manufacturers or not?’ The legitimacy or relevance of this question is absolute, since Indian solar reliance and the foundation of an energy rich future is closely tied to the improvement of domestic manufacturers (for details on how domestic manufacturing and Indian solar success is connected click here). Therefore, it is important to understand how this growth is shaping our future.

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Understanding the Glitches

Subsidies and rebates on capital expenditures, additional one-time allowance, tax-free grants, and acceptance to foreign investments have helped domestic manufacturing to flourish in India. And continuous support from the Indian Government (through a plethora of policies) has led these initiatives into success. However, India is spending more in importing solar modules (USD 980 million) than gaining from exporting them (USD 50 million, Sept 2016). This is surprising since India wants to claim a sizable portion of the global solar market and kick back the profits (of exports) for socio-economic reform. Chinese module suppliers have increased their market share in Indian PV market to 75 per cent from 50 per cent last year. And recent market analysis reveals that 8 out of top 10 module suppliers in the Indian market are Chinese. All of this points towards growth devoid of domestic manufacturing progress, which is another way of saying ‘a sound yet unstable solar energy future for India’.

China can produce and sell solar modules at a price range cheaper by INR 5-6 per panel than domestic products (aggressive pricing is the main reason behind India importing Chinese modules), because of volume scale, cheap energy and access to low-cost capital. Additionally, the lack of a uniform quality control for solar modules in India makes it easier for China and other foreign suppliers to introduce low quality modules in our energy mix. Low quality imported modules will untimely add extra expenses in repair or replacement processes, slowing down ‘power for all’ initiatives and affect the trust on the green energy shift.

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The Remedy

To ensure India’s vision of self-reliance besides reaching 100 GW target, Government should consider placing MIPs (minimum import price) on imported solar modules. Foreign solar players are selling their modules in India at a lower rate than their actual (global) price. And as India lacks a uniform quality assessment regulation, importers are finding it very easy to dump low quality modules in the market. This practice is recognized by the industry leaders as ‘e-waste dumping’. Having scale and Government subsidies, Chinese solar players can afford to sell their modules at a lower cost than domestic companies do; ultimately, curbing demand for domestic modules and shrinking Indian solar growth.

However, making sure that imported modules cannot be sold in the Indian market below a certain price limit, can bottleneck low quality product access in the country; and help domestic manufacturers to compete on a level playing field. We can look at EU’s MIP imposition on imported solar equipment for example. European Union has changed the MIPs from time to time, going back and forth from 0.56 Euro/Wp to 0.53 Euro/Wp to maintain a healthy demand for domestic manufacturers.

India uses MIPs to regulate the access of imported steel in its market, to safeguard the domestic manufacturers and sellers. Moreover, judging from domestic steel manufacturers’ recent request to Government for continuation of MIPs, we can speculate that it has benefited the industry. The same can be done for the solar industry, mirroring EU’s steps to utilize International trade and competition rules to create a standard quality for import modules and assuring a better future for nation’s solar industry.

Imposing MIP is just one of the many remedies that can help India’s internal solar growth to centralize industry within borderlines. Current growth has paved a path for a better future, but domestic manufacturing is needed to turn the possibilities into reality.

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Read more: Setting MIP for Imported Solar Modules in India...

Schneider Electric Energy Storage Solutions

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At its core an Energy Storage System (ESS) is comprised of three major components each bearing equal importance. The battery which is the energy container; the Power Conversion System (PCS) or inverter which interfaces the DC battery system to the AC power system; and the Power Plant Controller (PPC) which governs, monitors and executes the intended functions of the energy storage application.

Although we have no choice but to accept that the battery is the consumable component, the balance of system of an ESS should not be regarded as such. While heavy emphasis is typically placed on the choice of battery technology, it is important to understand that poor selection of the other two core components can severely impact the performance, lifetime and return on investment of the ESS. In this article we will seek to shed some light on the importance of the PCS and the PPC.

The Power Conversion System (inverter)

The PCS can be subjected to brutal utilization as it may be expected to handle varying power levels in both directions 24 hours per day. The stresses imparted on the PCS can easily make it the weakest link.

When procuring a PCS, system owners should select power conversion technology that is designed for high reliability and availability, and up to three decades of service life. It is also essential that the equipment can be operator maintained, tracked, and managed. The PCS should be designed with grid support functionality and should facilitate upgrades as the energy ecosystem advances.

Owners and operators should favor flexible and easily transportable architectures that can be repurposed as needs evolve. Most importantly, they should choose suppliers that will stick around for the long haul.

 The Power Plant Controller

Many are of the opinion that an energy storage control system is not difficult to implement. This outlook is based on assumptions that the hardware can be assembled from off-the-shelf components, and that there is an abundance of skilled software programmers to create algorithms. Energy storage is a critical power application and as such controlling it is by no means a trivial task.

Some argue that since ESS controls is a new technology sector, there are no real industry experts or veterans. On the contrary, those with experience in critical industrial and power systems controls are indeed the experts who can utilize equipment and best practices from those applications to create solid energy storage control platforms. It is imperative that control system providers have the means and experience to address important factors such as redundancy and cybersecurity.

All considered, system owners should select the ESS control provider based on demonstrated success and experience in related critical power control systems and industrial automation. They should also consider the longevity and staying power of the provider they choose.

The bottom line is that the PCS and Plant Controller are just as important to the ESS as is the battery. A poor choice of one or both of these two core components can result in an unprofitable and dysfunctional ESS that will be fraught with recurring repair and replacement costs.

For more information about Energy Storage, visit us at booth 520 at Energy Storage North America 2016 in San Diego from October 4-6.

Want to learn more about Energy Storage? Watch the video here.

Read more: Energy Storage Systems: more than just the battery

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Living at the edge of the grid, a distant community in Western Australia experienced severe power quality and uptime issues. Bush fire, a natural disaster common in the area knocked down the poles and overhead lines, with a high cost for the local utility to restore and maintain. Thomson Solar and Schneider Electric partnered to create a solution by powering the community with a standalone off-grid system. This solution is replicable to all small and mid-size dwellings living at the edge of the grid suffering from power-quality issues and where utilities must invest a large amount to maintain the commitment of reliable power for a small customer base.

As the homeowners were electing not to reconnect to the local utility grid, the system had to meet certain operating standards. The goal was to generate electricity on-site independently of the grid, using storage to assist in operating large three-phase loads while also providing power at night and during cloudy conditions. The system was designed to provide grid autonomy, yet with no undue inconvenience for the homeowners.

Schneider Electric provided a solution at a fraction of the cost of replacing power poles and overhead lines. The entire system is self-contained, and was deployed in a short time frame to restore power to the site. It shows that solar energy can be more cost-effective. This, in short, is the promise of standalone energy systems.

Read our full case study to learn more about this project, and why the Conext XW inverter charger was chosen for this project.

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Read more: Going off-grid instead of living at the edge of...

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No decision has more impact on the system cost and performance than the choice of inverters as this dictates design constraints for much of the balance of system. Today, system designers have more options than ever when architecting solar systems. While this may seem like a great advantage, these options necessitate an ever-growing number of decision points in the design process.

Before selecting brand or model the designer must first choose the macro level class of inverters, central or three phase string inverters. Until recently, the normalized price of string inverters (as measured in $/W) was much higher than central inverters, making the decision to use central inverters for utility-scale quite straightforward. That unit price gap has greatly diminished, resulting in a heightened debate on the relative merits of central and string inverters, often without empirical data to support the arguments.

The jury is still out on which is the so-called “best solution” and likely for good reason as the overall system size has such a significant impact on the relevant answer. In my article for Renewable Energy World, I analyzed the relative merits of central and string inverters in a typical system in North America.

The analysis is limited to the relative costs of central and string inverters for utility-scale projects in North America in three areas: CAPEX, inverter service life and true cost of service.

Read article on RenewableEnergyWorld.com or view in-depth version with further analysis of utility-scale system performance requirements and operating efficiency here.

Read more: Comparing Central Inverters and String Inverters...

Renewable energy, for three years running, has accounted for more new power generation capacity installed worldwide than all other sources combined. In 2015, over USD 270 billion were invested in solar PV and wind power, boosting capacity by 47 GW 63 GW respectively. This capacity is expected to only grow and efforts are now focusing on implementing an innovative enabling framework to integrate these technologies at the scale needed. But that is not a simple task and questions still remain: what technologies and tool are part of the power sector transformation? What still needs to be developed? And how can IRENA assist?

Adnan Z. Amin, IRENA Director-General“[For developing countries] I think the only solution is a renewable solution”— Adnan Z. Amin, IRENA Director-General“The transformation of the energy sector towards a renewables-based one is moving forward at an accelerated pace. Nowhere is this revolution more evident than in the power sector,” said Adnan Z. Amin, IRENA Director-General, at the opening Ministerial Roundtable, Towards an Economy Fuelled by Renewable Power: Innovation for the Next Stage of the Power Sector Transformation, held on 14 January 2017 at IRENA’s 7th Assembly.

Government officials from around the world gathered to discuss the ongoing power sector transformation, and converse with prominent executives from the energy industry on its future development and outlook.

New challenges

Francesco Storace, CEO of Enel“An average 10-year-old wind farm in Europe would produce 50-70% more power with today’s technology” — Francesco Starace, CEO of Enel

Integrating high shares of variable renewable energy in power systems, is a challenge not only from the perspective of securing the power supply, but also from the perspective of how to manage the surplus power from these sources.

Peder Andreasen, President of ENTSO-E“Don’t wait for future renewable technologies, go for it today. We can easily reach fifty, sixty, seventy percent of variable renewables in the energy mix” — Peder Andreasen, President of ENTSO-E

In some countries at certain times, variable renewable power generation exceeds demand. Windy days in Denmark can produce 116% of the domestic power demand, and a share as high as 140% was reached in July 2015. In Portugal, wind power produced up to 65% of domestic power demand on some days in December 2015. On 8 May 2016, 95% of Germany’s domestic power demand was supplied by solar PV and wind power, and exports of electricity surged.

Innovative flexibility options

Rainer Baake, State Secretary of Germany“We need flexibility, and storage is one flexibility. New storage technology that can bridge periods of two weeks.” — Rainer Baake, State Secretary of Germany

Energy experts and country representatives agreed that a holistic innovation approach is needed to tackle this challenge. Innovations ranging from technology to market design and business models all have a role to play. Part of the solution lies in implementing innovative flexibility measures in the power system, including additional cross-border interconnections, electricity storage systems, demand side management strategies, and advanced weather forecasting.

Luiz Augusto Barroso, President of Empresa de Pesquisa Energética“We like renewables because their short construction time is a hedge against economic uncertainty” — Luiz Augusto Barroso, President of Empresa de Pesquisa Energética

Luiz Barroso President of Brazil’s Energy Research Company, explained the country’s use of renewable energy auctions and biofuels, and highlighted how hydro and renewables can be used to leverage both technologies, something recently explored in IRENA’s market analysis of Latin America.

Barroso highlighted that although financing is available, risk allocation and business models are everything to tap these resources. “We like renewables because their short construction time is a hedge against economic uncertainty,” he told the Ministerial Roundtable, while explaining that currency risk can be an issue in emerging economies.

The outcomes of the Ministerial Roundtable was reported back to the Assembly, and will further feed into IRENA work, particularly IRENA’s two alternating biennial activities regarding the power sector transformation; the IRENA Innovation Week, which was last held in 2016; and the Innovation landscape report for the power sector transformation, which is expected to come out later this year. They will highlight not only technological innovations, but the market, regulatory, and business model changes that are making the up-scaling of variable renewables possible.

To learn more about innovation, check out IRENA’s innovation outlook reports on offshore wind power, advanced liquid biofuels, and renewable mini-grids.

Read more: Transforming the Power Sector, at IRENA...

Spurred by ambitious national commitments, international agreements and rapid technological progress, governments are increasingly choosing renewable energy to expand their countries’ power infrastructures. In 2014, renewables provided 23% of power generation worldwide, and with the adoption of more ambitious plans and policies, this could reach 45% by 2030.

Amid this accelerating transition, the variability of solar and wind energy — two key sources for renewable power generation — presents new challenges. It also raises questions, like ‘How do you power a country when the wind isn’t blowing or the sun isn’t shining?’ and ‘How does variable power fit with the delivery of reliable electricity?’

“Energy planners have always had to deal with variability and uncertainty to some extent, but the challenges that variable renewable energy (VRE) poses to the power sector are in many ways distinct,” says Dolf Gielen, Director of IRENA’s Innovation and Technology Centre. “Pro-active planners, in both developed and developing economies, should aim to address these challenges directly, starting with today’s long-term investment choices.”

IRENA’s new report, Planning for the renewable future: Long-term modelling and tools to expand variable renewable power in emerging economies, released during the 2017 World Future Energy Summit, offers guidance to energy decision makers and planners on large-scale integration of variable renewables into the power grid. It also advises energy modellers on practical VRE modelling methodologies for long-term scenario planning.

Modelling reality

“Various modelling tools are available to support long-term scenarios, defined as periods covering 20 to 40 years into the future, and we discuss these tools in depth in the report,” says Asami Miketa, a programme officer for Energy Planning at IRENA’s Innovation and Technology Centre. “Energy policy-making has always benefited from quantitative scenarios created with modelling tools, as they help define long-term policy goals and determine optimal economic investment pathways.”

Solar PV power and wind power for a summer and winter week in Europe, compared to a time slice approximation with 16 time slicesSolar irradiance has distinct daily and seasonal patterns. This is less the case for wind, particularly on a daily basis, as its patterns are often influenced by the prevailing local meteorological conditions at a given time.

The report’s first half, which is devoted to guiding decision makers in the transition to VRE, underlines the need for an internally consistent approach — with clear parameters and policy goals that are aligned across planning priorities over different time horizons. “Feedback among planning processes as well as different stakeholders must be taken into account when assessing high shares of VRE in a power system,” says Miketa. “This is to accommodate for spatial and operational issues that could change the cost-effectiveness of long-term planning scenarios, like the need for greater flexibility in a system or even additional transmission capacity.”

Long-term models used for planning VRE are covered in the report’s second half. Models need to account for a wide range of long-term investment implications of VRE deployment. Practical approaches, tools and data have already been developed in some markets to address issues like generation adequacy, flexibility, location siting, and the stability of a power system. The report advises countries to start simple with VRE planning and to take a strategic approach to advance the scope and quality of their models.

“Though solar and wind power have now become cheap, taking advantage of these technologies requires careful planning and modelling,” says Miketa. “This report, and IRENA’s guidance, should help emerging economies to set themselves on a path towards sustainable development with renewables.”

To learn more about variable renewable energy planning and modelling, read the report on IRENA’s website.

Read more: Planning for Solar and Wind

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