So, it is official now that the falling PV price is not due to any technology break through or due to higher scale of operation, as claimed by renewable energy 'experts". It is purely an economic jumble of taxes / incentives by China.
Those who were claiming that the PV panel prices are "falling" and who were projecting the panel prices based on this "falling trend", please understand the engineering reality.
Solar radiation is free but the intensity is so weak, that it takes lot of efforts to get energy out of this low intensity radiation source. The Solar Cells are made by purifying the Silicon to 99.9999% purity level. Purifying solids to this level is highly energy consuming activity and hence the Solar Cells are costly. Also, we need to use lot of structural materials due to the large area in which the panels have to be spread.
All these make the Solar power not so cheap that it can compete with other sources to be eligible for grid connectivity with reasonable level of subsidy.
@periasamykandasamy - To a certain extent, I agree with your inference. The current low prices are artificially deflated owing to manipulation by the Chinese. But that is not to say that there have been no significant price reductions. I think we can safely say that solar modules (crystalline) are at about or slightly less than $1/Wp, legitimately, which is still awesome.
The 60 cents/Wp will most likely wont last. I think the price will stabilize at around 80-90 cents/Wp in about 6 months from now, and that will be a fairly good reflection of the actual costs...
At 90 Cents / Wp, the cost per MW works out to Rs.4.95 Cr / MW ( 0.9*55*1000000). Normally, the Cell cost is about 50-60% of the PV Solar plant cost after installation. Hence, the overall cost / MW of installed capacity will be about Rs.9.0 Cr/MW.
With a PLF of about 20%, we can expect 0.175 Crore Units per year. Interest for investment at 12% works out to Rs.1.08 Crore. The interest cost alone works out to Rs.6.17 per Unit. ( 1.08/0.175).
With a life of 20 years, the depreciation works out to Rs.2.57 per unit [ 9/(20*0.175) ] . These two items put together comes to Rs.8.74.
Still we have operating cost to be added, though there may not be much of maintenance cost.
It is not clear how the PV cost can be Rs.6.20 per unit as claimed by some of the industry people.
Well, if we can get cheap interest finance at say 6% for the entire Rs.9 Cr, then it may be break even at Rs.6.20 per unit.
Power Finance Corporation, IREDA etc I believe offer project loans at lower rates like 6%. However, I agree, it is not a feasible project otherwise. The 20 year performance is also not guaranteed. In large scale, Solar projects are still not viable, in my opinion. India needs more rooftop and other self-reliant solar systems, than this grid-dependent solutions.
In my estimate, the total capital cost per MW will be about Rs 7 crores by end 2014. Add to this, the following: Accelerated depreciation is available (80% first year). It is also possible to get loans at about 8% (adding exchange rate and other risk premia) through financial institutions if the developer uses modules from countries such as US or Germany...also, there is a 10 year tax holiday if I remember right.
The lifespan is 25 years, acceptable at least for crystalline...
Opex is less than Rs 0.4 per kWh for large scale power plants
All these together, I think we can expect the sustainable cost of solar power to be around Rs 6.5 per unit beginning 2015...
So, for the solar power cost of Rs.6.50 per unit, the following are prerequisites :
1) The capital cost per MW shall fall to Rs.7 Cr.
The PV Cell cost itself is Rs.4.95 Cr / MW as seen from your Mail ( 80-90 cents / Wp). Is it possible to get land, the steel and other structurals, transformer, in-house electrical systems, installation, etc in the remaining Rs.1.05 Cr ?
2) 80% Accelerated Depreciation benefit is not available to other sources like Coal / Nuclear. Let this be known to all. Many do not know that this is an indirect subsidy available only for renewables. This brings down the investment by the promoters by about 25%. This was available for Wind for the past 10 years and now withdrawn and instead GBI has been introduced.
So, this cost reduction is by subsidy. It does not reflect the actual cost.
3) If we are able to get some external funding at 8%, as part of international support for " Green power", it is well and good. But if loans from Indian financial Institutions at lower interest rates is utilized, then it does not reflect the actual cost of Solar power.
With 8% interest, interest part works out to Rs.3.20 per unit with an assumed investment of Rs.7 Cr / MW.
4) Well, let us take lifespan for Crystalline as 25 years. What about the cost of crystalline ? Does it still works out to Rs.7 Cr / MW only or different ? Crystalline is costlier compared to Thin Film.
5) Opex @ Rs.0.4 per Unit seems to be reasonable.
Let us hope that all the above come true and we are able to get Solar power at Rs.6.50 per unit. Let it not be a disappointment like in Wind power.
With respect to the 3000 MW TN Solar Power, if the unit cost works out to Rs.6.50, then TN people will be paying about Rs.3 per unit extra compared to the present average production cost of Rs.3.50 per unit. Hence, we will be paying Rs.1580 crores per annum extra, when the 3000 MW solar plan is completed [( 3000 x 1000 x 0.2 x 365 x 24) x 3].
This number will go up by Rs. 526 Cr per year for every Rs.1.00 increase from the assumed solar power cost of Rs.6.50.
This is fine. People can be asked to pay for a "Green Initiative". (How Green this "Green" is, when we take into account of the pollution of Silicon manufacturing, proportionate increase in steel consumption per MW compared to other sources, the Lead Pollution by Roof top users, etc is a point for debate.)
But the main issue is that, by the time this 3000 MW of Solar power is installed in TN, about 3000 MW of the ongoing Coal / Nuclear power plants also will be commissioned. The then existing daytime shortage of 3000 MW would be comfortably met with these Coal / Nuclear plants itself.
Then where is the need for this 3000 MW Solar power plants which will produce only during day time ?
OK, can we dispense with the ongoing Coal / Nuclear plants ?
We need them anyway for night / peak hour load. This is NOT SO in Germany. Their peak load almost coincides with Solar power peak production time. Hence, there is some techno-economic justification for them.
It is unfortunate that people seem to miss this simple fact while pressing for Solar power.
Please note, no one is against Solar / Wind. Let the technology improve. Let it become atleast close to 25% grid parity level.
It is not any great technology that it takes time to develop / assimilate in India.
But still if we want to use it for the sake of knowledge, let us go for stand alone Wind / Solar units in remote areas. Also, we can encourage CSP with hybrid solar / gas turbine stations with Combined Cycle, since the investment in these power plants are idling in day time.
Still if we want to show that we are "Pure Green", let us encourage Solar PV / CSP in the already existing Wind Mill sites. This way we can effectively utilize the Wind Mill Land, Roads, Transformer, Electrical Systems, Grid, Manpower, etc. After all, Wind Mills operate only for 3 to 4 months in a year and that also at a maximum of 50 % capacity.
Hope some one sees these discussions as NOT as arguments FOR and AGAINST Nuclear power and conveys it to the powers that be for right modifications in the TN Solar Policy.
Very good post and analysis, Periasamy. Overall, I agree with your contention that we are some distance away (at least 30 years) before we can expect renewables to power a majority of our energy needs.
The cost of Rs 6.5 per kWh is what I expect in 2 years time. Panel cost can be expected to be about 60 cents/Wp, so that would be about 3 cr per MW. The BoS costs will probably decrease very little, so that would remain at about 4 cr per MW, that was my basis for calculation.
Yes, I am referring to crystalline modules...
Your point on AD accepted, it is an artificial incentive, not sustainable...
1) The projected price of Solar PV after 2 years is Rs.7 Cr / MW.
2) With the China Solar Cells "falling " price trend being arrested, even this Rs.7 Cr / MW may be difficult unless some technological break through happens.
3) The present price tag is Rs.8 to Rs.10 Cr/ MW.
In view of the above, we must educate and prevail upon the Govt / Industry not to pursue the TN Solar Policy in its present form.
As already explained, by the time these Solar PV plants start feeding to the grid, we would have commissioned 2000 MW of Coal / Nuclear as well. This will solve the day time power shortage and make the Solar power redundant.
Hence, as a long term solution based on the techno-economic factors, the Solar Policy shall be suitably amended to encourage :
a) CSP Hybrid with Gas Turbine / Cogen Power Plants / Or for those who need only Steam for Process requirements, like Textiles, certain Chemical industries, etc.
b) PV Solar Hybrid with Wind Mills.
c) CSP / PV / Wind Mills as Stand alone power source for remote areas where Grid connectivity is costly.
If we earnestly try, we can get the "Green" funds at low interest rates even for these hybrids.
If we go by public sentiment of "Why we should not use the freely available Sun Shine and Wind ?", TN will ulitimately end up in the same mess as we have ended up today by installing 7000 MW of Wind Mills and not investing early on to add a single MW of Coal / Nuclear power in the past 10 years !
People do not want to understand the fact that we can not use Sea water for agriculture just because it is freely and abundantly available. It can be used for Drinking purpose with lot of money spent for making it potable. It can also be used in coastal power stations for cooling purpose. We can not afford to use it for agriculture.
In the same way, Wind / Solar can only be used for specific applications with reasonable level of subsidies. If we attempt to use these sources for bulk grid applications, we will only be utilizing our scarce resources in the wrong way and cheat the public.
Countries like Germany can afford to make Don Quixote exercises with their abundant resources. Also, their grid load pattern suits reasonably well to use Solar power. It is not so in India.
It is the duty of educated lot like us to educate the public and the decision makers with right inputs. We must ensure that sentiments and prejudices do not play any role in techno-economic-social decisions.
@Periasamy - I agree with you on the way solar should be architected
Rather than look for just rooftop and grid connected, the modularity of solar (PV especially) should be utilised to arrive at optimal combinations with other power sources, and for areas where solar power makes most sense - for instance, decentralized power sources for villages with no grid
@Periasamy - Sir, your intensive calculations are really great and have given a real insight as to some beliefs such as "100% renewable powered" are completely idealistic (at least in a foreseeable future!).
I understand that I am still very inferior compared to your level, but still for the sake of getting my facts right at least, I would like to point out some of your notions which I consider to be a bit wronged.
Firstly, Germany doesn't have more resources than us. We have multiple times the land, multiple times the sunlight (we're WAY closer to the equator), lesser per capita energy requirement (Germany being one of the most developed countries of the world) and multiple time the resources compared to Germany. I understand the size in this matter only increases complications and hence is a disadvantageous factor, but it has its own pros too.
Secondly, we still import about 98% of our cells (and a major share of modules too) if I am not wrong. Leave wafer manufacturing (which has 0% existence here), even making a solar cell from wafer is not done on a large scale in India. In such a condition, how can we imagine prices to go down? It is like developing a huge artificial industry in the US based on Indian subcontinent mangoes and then complaining about high prices!
Third, computer chips require nine 9's of silicon purity while solar cells require six 9's (1000x lesser). So, if the computer chips industry can have a Moore's law, why can't we?
Fourth, even renewable energy can never be 100% pollution free, because no matter how non-polluting or direct the energy source is, we will still be needing infrastructure to harvest that. Even to harvest the most direct energy source, i.e, lightning, we'll have to build an infra for its harvesting. And even if we manage to harvest any energy 100% pollution free, we'll still be operating iPhones and iPad on that! So, the point in using renewable energy is not to go back to the stone age, but to build a better world polluting it as less as possible.
Fifth and most important, conventional energy sources have been in development for last 4 or 5 centuries (since Industrial revolution), so they have had their share of time for getting developed into efficient and reliable energy sources, while renewable energies have started giving them competition in just 4-5 decades! Conventional energies still need subsidies to become affordable, so what's so wrong if renewable energies are needing them too? I mean why the HELL are we so bent to make renewable energy 100% SUBSIDY free??! I mean subsidy is the money we pay the government to make things easier and affordable for us, right?
Yes, this is the question that I asked long ago. If production of Solar Cells result in so much emissions that is "saved" in 25 years, is it really "renewable energy source"? Of course, that way there are no zero-emission power plants. However, one can crudely estimate how much emission is created from the infrastructure establishment, and how much it saves later. This is required before labelling any process as green technology.
of course, it is a bad idea to invite risk at the cost of saving a few bucks, by importing from outside. For that matter, such dirty business tactics aren't exclusive to China. How about taking a look at our friendly America - they will dump GSM, 2G and 3G into India every few years *after* they themselves gone into 4G.. and we, like the familiar idiots end up importing all gadgets that comply with only old technology, thereby creating enormous e-waste. And that is not just for america. Huawei will dump routers and DSL modems that comply with only ip4, not ip6... and soon most of us have to buy "upgraded" routers and modems... all because we are the dumbest creatures who accept vintage obsolete technology. How about the "friendly" japanese dumping old automobile tech-nonono-nology into India, when the rest of the world is going towards hybrid, electric, hydrogen and other green technology vehicles?
India is being treated as the major dumping ground for almost every industrial sector. Thanks to Greenpeace, the French ship was stopped from unloading nuclear waste into India a few years ago. How many other times such dumping has happened without our knowledge? And the Russians are happy to sell us the 50 year old nuclear power plant technology only for some 25,000 crores, dirt cheeeeeap.... (some of our friends think so).
if we treat ourselves low, we can't blame foreign forces from taking advantage of us.
Come on India, Wake the hell up! Stop looking at phoren countries as something great! We are the greatest minds, if only we would use it!