Gujarat setting up 8,000-crore solar power park at Charanaka

Charanaka, a village nestled in a remote corner of Patan district in north Gujarat is destined to become the state's hub of solar power generation. Solar panels will be laid on close to 3,000 acres of land in this village , where the state government is going to set up a ' Gujarat Solar Park . at an investment of Rs 8,000 crore. The apex state utility, Gujarat Urja Vikas Nigam Ltd (GUVNL), is currently in the process of entering into long term power purchase with agreements with 80 solar power project investors to commission almost 1,000 MW of generation capacity. This capacity will help procure 1,700 million units of environment friendly electricity per annum.

Many of these 80 developers will set up their generation facilities ranging from 1-45 MW units at Gujarat Solar Park. In first phase, developers will commission 500 MW of generation capacity at the park. The Centre's National Solar Mission aims to install 1,000 MW of grid solar power by 2013, and 20,000 MW by 2022. Interestingly , Gujarat is the lone state which is in the process of inking power purchase agreements to procure 965 MW of solar power from 80 project developers to attract investments of Rs 15,000 crore in the next couple of years.

The state government has already acquired 2,500 acre of land for the park. It is expected to have basic infrastructure in place by December, just ahead of the Vibrant Gujarat Global Summit, 2011 (a state-sponsored biannual event for attracting investments in Gujarat).

The project is part of the Solar Power Policy-2009 , which proposes to encourage generation of green power. Parts of North Gujarat, Kutch and Saurashtra regions have been identified to have optimum solar power plant load factor.Charanaka in North Gujarat will be the first site to be developed.

According to the state Power ministry, large parts of the state have solar insolation of 5.8-6 .0kWh per metre square per day. Insolation is a measure of solar radiation energy received on a given surface area in a given time.

The chosen site of Charanka has an insolation of 5.9kWh per metre square per day, said a state government official. Developers have already started work at the site as the government intends to showcase the site to the participants of the Vibrant summit, said a state government official.

Siemens to invest Rs 400 cr in renewable energy sector

Siemens Ltd will invest nearly Rs 400 crore in the development of wind turbines in the country in the next two years, company officials said here.

Siemens will design and manufacture the equipment and make the expanded Vadodara facility operational by 2013 in the next phase of development, said Dr Armin Bruck, Managing Director, and Mr A.K. Dixit, CEO, Energy Cluster, Siemens Ltd, on the sidelines of a function in which the Gujarat Chief Minister, Mr Narendra Modi, inaugurated the second phase of steam turbine and compressor manufacturing facility at Vadodara.

This is part of the Rs 1,600-crore of investments in India over the next three years, announced in February 2010 by Mr Peter Loescher, President and CEO of Siemens AC, to set up six hubs of base level products in India.

Manufacturing facility for steam turbines larger than 45 MW, which was one of the six hubs, has now been established at Vadodara, and the other five hubs are under way. These products will cater to the mid- and low-end market segment constituting around 70 per cent of the total market in India. The company envisages production of some 60 products at Vadodara.

Of the Rs 1,600 crore, Siemens plans to invest around Rs 1,200 crore in Gujarat alone. On the two phases in Vadodara, it has invested Rs 575 crore so far, including Rs 300 crore in energy and healthcare sectors.

The expansion will double the capacity of the Vadodara facility to manufacture steam turbines from the existing 45 MW up to 150 MW, which in the next phases will be augmented up to 250-300 MW.

The smaller turbines up to 15 MW are sourced from this factory by Siemens AG to cater to Asia, Africa and Europe.

Mr Dixit said around 30 per cent of the installed generating capacity in India is currently from Siemens licensees. In the industrial sector as well, over 500 Siemens industrial steam turbines from Vadodara facility have been installed in the country.

“Now, with the ability to manufacture steam turbines up to 150 MW locally as well as with the compressor manufacturing and testing facilities commencing at this site, we will widen our portfolio in the oil and gas sector.”

Siemens Ltd, in which Siemens AG holds a 55.18 per cent stake, comprises 19 legal entities with 21 manufacturing plants in India, with a business volume of Rs 12,000 crore in 2009, expected to double in the next two years.

Responding to Mr Modi's claim that Siemens is “shifting” wind turbine manufacturing facility from China to Vadodara, the officials clarified that Siemens's China business is three times larger than in India. “We are now adopting a balanced growth approach and only the latest technology development in renewable energy will now be done at the Vadodara facility.”

They said Siemens Ltd's current contribution to the behemoth's global business is less than three per cent, as against China's eight per cent. Siemens India currently has an order book of Rs 12,400 crore, including Rs 7,700 crore from the oil and gas sector. Oil and gas sector account for about 15 per cent of the company's business.

Besides, Mr Dixit said, Siemens is making Gujarat a major service centre for turbines and compressors as a continuous business proposition. The company is, at present, providing technology via BHEL to power plants of up to 800 MW, based on super-critical technology.

It is also working on providing turnkey-basis solutions to the gas-based power plants to be set up at Dahej and Kutch in Gujarat.

Cost of solar power projects set to fall

The Indian solar energy market is expected to witness a major boost within the next five years with per megawatt cost of solar power projects estimated to fall by nearly 50 per cent. Until now, the initial high capital expenditure incurred while implementing solar energy projects has been one of the main deterrents for investors. 

"Currently, solar photovoltaic projects cost around 15 to 18 crore per megawatt. The manner in which solar PV technology is improving, the cost of solar PV projects per megawatt should come down to 8 to 10 crore per megawatt within the next five to 10 years," Deepak Gadhia, Principal & Chief Mentor, Green Force Enviro Pvt. Ltd, told Projectmonitor. 

On the other hand, solar thermal projects cost around 20 crore per megawatt but it would come down to around 8 crore in next five to 10 years, Gadhia said. However, solar thermal was expected to produce double the amount of energy compared with solar PV, he added. Gehrlicher Solar AG, the German solar energy giant, recently established a joint venture with Greenforce Enviro Pvt. Ltd to offer EPC and other services for solar power plants that are being planned across India. The proposed joint venture aims to take full benefit of the Jawaharlal Nehru National Solar Mission. 

When questioned if the proposed joint venture would bring down EPC cost in the solar sector, Gadhia stated that the proposed joint venture would offer megawatt services and also involve "robots" in the installation process, which would help lower the cost of labour. 

"The cost of panels is only around 40 per cent of expenditure in any solar PV project, so if other costs are reduced then the project cost per megawatt will be reduced further," Gadhia said. 

At present, India does not have local players in the solar EPC business. The few ones that exist in this business are actually subcontractors for other international partners. The Gehrlicher Solar- Greenforce Enviro JV is expected to change the scenario in the solar EPC business.

Tata Power to Shun India's Solar Auction as Projects Maybe Unprofitable

ion on concerns that terms set by the government will make it difficult for projects to be built profitably.

“We haven’t bid for the National Solar Mission,” Banmali Agrawala, executive director of strategy and business development, said in an interview in Mumbai on the plan to generate 20,000 megawatts of power from the sun by 2022.

The decision by Tata Power, the generating unit of India’s biggest industrial group, not to take part in the first bids highlights concern that the plan is failing to draw companies with the skills and resources to jumpstart the program.

That could delay the development of India’s solar industry, which potential investors including the World Bank and atomic reactor maker Areva SA see as one of the world’s most promising. India gets about 300 sunny days a year in most of the country.

“These are bad signs,” said Ashish Sethia, lead analyst at Bloomberg New Energy Finance in New Delhi. “Many large players have either not bid very aggressively or stayed away from bidding.”

European governments including Spain, Germany and France are curbing solar subsidies that set off a boom of investment and spiraling state renewable-energy costs. India is seeking to avoid such problems in part by awarding capacity to developers offering the deepest discounts to the rate at which they’ll sell their electricity.

‘Piece of Cake?’

That could backfire should developers submit bids underestimating the cost and complexity of setting up solar plants, Agrawala said.

Some of the bids may be “a little aggressive,” Agrawala said. “We do hope that the people who are bidding those numbers understand what it means to set up a solar project. It’s not a piece of cake.”

The government set an initial selling price of 17.91 rupees (39 U.S. cents) a kilowatt-hour for solar photovoltaic projects and 15.31 rupees for solar thermal projects. Bids have been submitted offering discounts of as much as 4 rupees to those rates, he said.

“There is definitely a risk that a number of projects might either be delayed and some even be shunned completely at later dates” as developers find themselves unable to execute at quoted rates, New Energy Finance’s Sethia said.

State Alternatives

India’s wealth of sunny days provides 5,000 trillion kilowatt-hours per year of solar energy equivalent, according to the Ministry of New and Renewable Energy. In comparison, India’s projected total energy consumption this year is a fraction of that, 848 billion kilowatt-hours, a ministry report showed.

The country’s Solar Mission initiative seeks to draw investment to the sector by offering incentives including special tariffs and a power-bundling arrangement designed to assure projects of a buyer for their electricity. It has also set restrictions, including limits on solar equipment imports and a 5-megawatt limit on any one developer.

“To restrict the size to just 5 megawatts per business group we felt was too small,” Agrawala said. “Also, you’re not allowed to import equipment. As an owner, I’d like to discover what is the least possible price in the global markets.”

Tata Power determined it would have trouble raising loans from banks under the program because it wasn’t clear whether the designated power buyer, a unit of state-run utility NTPC Ltd., has the financial backing to ensure developers are paid for what they generate, Agrawala said.

Mumbai-based Tata Power is setting up a 25-megawatt solar plant in western Gujarat under a separate state program, Agrawala said. It expects to sign a power purchase agreement with Gujarat state this month and commission the plant by the end of 2011, he said.

“Serious players are still exploring other state-based mechanisms and the success of the sector will also be dependent on the success of those schemes,” Sethia said.

What's Next for Alternative Energy Technology?

The Future Is Closer Than You Think for Some Forms of Alternative Energy, Says The Boston Consulting Group

Advanced Biofuels, Concentrated Solar Power, and Solar Photovoltaic Power Are on Track to Change the Global Energy Landscape Far Earlier Than Many Assume.

For skeptics, alternative energy has long been more hype than genuine promise. Yet several alternative-energy technologies are approaching inflection points in their development, and the day when they could have a profound impact on the global energy landscapecould come far sooner than is commonly assumed, says a new report from The Boston Consulting Group (BCG). 

The report, released today and titled “What’s Next for Alternative Energy?,” examines the state of seven of the most significant alternative-energy technologies — advanced biofuels, electric vehicles (EVs), concentrated solar power (CSP), solar photovoltaic (PV), onshore wind, offshore wind, and clean coal through carbon capture and sequestration (CCS) — and assesses each one’s prospects in terms of three issues:

– Can it achieve cost competitiveness with conventional energy by 2020

and be economically viable without subsidies?

– Can it overcome barriers to rapid adoption once cost competitive?

– Can it reach penetration levels by 2025 that disrupt the status quo?

Among the report’s key findings:

– Advanced biofuels, CSP, and solar PV will see accelerating adoption

and growth and are on track to change the global energy mix far

earlier than is often assumed. Their costs are falling rapidly, and

they are on the path to becoming cost competitive within the next five

to ten years, if not sooner.

– Onshore wind power will see steady adoption and continued growth. It

is already cost competitive with conventional energy sources in some

instances, and its costs will continue to fall. Without breakthrough

declines in energy storage costs, however, the inherent challenges

posed by the intermittent nature of onshore wind and solar PV will

limit their ultimate penetration.

– EVs will also see steady adoption, becoming economically attractive

for lead segments by 2020. But broader adoption will require

significant declines in battery costs. Major infrastructure and other

hurdles will also have to be overcome.

– In contrast to onshore wind, offshore wind will struggle to move

beyond purely subsidy-driven growth. Offshore wind’s overall adoption

will be slow except in a few countries willing to continue heavy

subsidies.

– Clean coal through CCS will have very slow adoption and won’t be

viable for the next decade or two. The technology is vital for cutting

carbon emissions from coal-fired power plants. But it will develop

slowly for a number of reasons, including slow progress toward

demonstrating large-scale viability and moving down the cost curve.

“There is no question that conventional energy sources will constitute the bulk of the world’s energy for at least the next couple of decades,” said Balu Balagopal, a Houston-based senior partner at BCG and a coauthor of the report. “But a few of these green-energy technologies will make their presence felt very likely within the next few years. Their costs are falling quickly and significantly, pushing them closer to where they can compete on price — without subsidies — against fossil-fuel-based sources.”

As they become more cost-competitive, “their adoption will be constrained more by barriers such as the need for new supporting infrastructure. However, we believe these barriers will likely prove surmountable,” added Balagopal.

The report concludes with a discussion of the implications of these findings for oil and gas companies, utilities and power producers, emerging alternative-energy pure-play companies, industrial suppliers, and governments.

“Even in the relatively slow-moving energy industry, there are cautionary examples of how quickly fundamental assumptions can be overturned,” said Justin Rose, a Chicago-based principal and a coauthor of the report. “Shale gas in the United States and the adoption rate of flexible-fuel vehicles in Brazil come to mind. Companies need to be prepared for the opportunities as well as the risks.”

But the technologies are far from uniform in their near- to medium-term prospects, noted Petros Paranikas, a Chicago-based partner and a coauthor of the report. “It’s vital that companies, governments, investors, and other stakeholders in the energy ecosystem understand the differences among them, revisit assumptions, and redraw outdated plans and timetables. Making the wrong decisions in this space could prove costly.”

Source: Boston Consulting Group

Azure Power to invest Rs. 750 crore in Gujarat for Solar installation

 Azure Power, an independent power producer (IPP), plans to pump in around Rs 750 crore for solar power generation and equipment manufacturing in Gujarat over the next three years. The company is already in the process of setting up 15 Mw solar power plant in the state.

Azure Power has selected Modasa area in Sabarkantha district to develop 15 Mw solar photovoltaic (PV) power project involving an investment of around Rs 215 crore. Apart from this, the company is also planning a solar power equipment manufacturing unit in Gujarat, for which it intends to infuse approximately Rs 300 crore.The proposed manufacturing unit will manufacture PV modules, structures and cables. "Azure Power intends to pump in Rs 2,000 crore over the period of next three years across India, of which Rs1,500 crore would be for power generation and Rs500 crore for equipment manufacturing. Gujarat alone will have Rs 750 crore investment from the company," said Inderpreet Wadhwa, CEO, Azure Power.

The company is eyeing a combined production capacity of 50 Mw by 2012 and 100 Mw by 2015.In order to raise funds for its projects, the company is also planning a public issue and it may also divest further stake to private equity players. Azure Power has tied-up with SMA Solar Technology, SunEdison and SunTech for supply of PV inverters, monitoring technologies andd PV modules respectively.

solar power plant in Punjab, has inked a 25 year power purchase agreement with Gujarat government. Its 15 Mw power plant is expected to be commissioned by mid 2011. In addition to this, another solar power project in the state is also on company's radar.

Where is the money in solar?

 Indian policymakers have created a grand plan for solar power in the country, and the rubber is about to hit the road. In the first phase of the Jawaharlal Nehru National Solar Mission (NSM), about 650 MW will be distributed to the 40 most aggressive bidders from over 350 aspirants. Of this, 150 MW is solar photovoltaic (PV), which will go to the winning 30 participants from 300+ aspirants. Bids are due on November 16.

The Central Electricity Regulatory Commission (CERC) has set a price of Rs 17.91 per unit of PV power. In the NSM process, bidders have to indicate how much of a discount off this price would they be willing to accept for their projects. Those who are willing to take the biggest discounts will win.

The word on the street is that the bidding is going to be aggressive. With some bone-chilling numbers being bandied around informally in solar circles, the solar gold rush many had anticipated is fading fast like a desert mirage. Many cross-sectoral hopefuls, with little prior exposure to anything remotely connected to energy generation, had jumped onto the solar bandwagon, convinced that solar offered disproportionately high and stable 30-year returns. Now that they are faced with the reality of tariff bidding, most are wondering, where is the money in solar?

Let’s take a quick look at what drives PV economics. Since solar is considerably more expensive than conventional power, it requires a subsidy to drive demand and capacity. Once a subsidy mechanism is established (as it is with the NSM), allocations are awarded to developers, who in turn contract with manufacturers and EPC contractors to build the solar power plants. Once built, these plants need to be operated and maintained for 25-30 years. The economics of solar projects is driven by some select parameters: how good is solar radiation, how much does the power plant cost, what is the efficiency of the power plant, what is the cost of the financing and, of course, what is the tariff that supports all of these costs and leaves enough for a decent return?

Now let’s turn our attention to the varying objectives of the companies in the fray. Some companies very clearly want to be one of the five largest solar players in India over the long haul and have the financial capital to get there. Others are looking to build a decent-sized business that they could...