REGIONAL ANALYSIS I INDIA
Off grid opportunities In the off-grid space, solar power is already cost competitive with alternatives in certain applications. For example, telecom towers are an attractive market for solar PV installations. A large number of telecom towers are located in areas with limited or no grid connectivity and have to depend on diesel gen sets for meeting their power requirement.
Depending on the tower configuration and connected load, the price of diesel power can vary from around INR 15/ kWh to as high as INR 30/ kWh for low load towers in remote areas.
Today, India has about 360 000[7] telecom towers that are likely to grow to 700 000 towers by 2020, a large proportion of the new towers would be coming up in rural / semi-urban areas reflecting the much higher pace of new consumer addition in rural / semi-urban areas compared with urban areas going forward. This would result in diesel consumption increasing from about 2 Billion litres/annum (comprising about 3.5 percent of India’s annual diesel consumption) today to about 3.5 Billion litres/annum by 2020.
Solar PV installations are well suited to replace diesel consumption for the following reasons – solar power price is already competitive with the effective price of diesel based power for a large proportion of telecom towers and land availability for solar panel installations is generally not a constraint in rural / semi- urban areas.
While solar power would not be able to completely replace diesel consumption, we believe that it has the potential to replace about 30 percent of diesel consumption. This implies a diesel saving of 5.4 Billion litres between now and 2022.
This would also mean about 3,500 MW of solar panel installations that would create an industry (comprising of solar panels, inverters, battery banks and associated components) of USD 12.5 Billion in the same period.
Another off-grid application where solar power is well suited is the agricultural pumping segment. Presently, the power supply to agriculture segment is staggered and partially supplied during inconvenient night times when grid power is available.
Solar power, with its ability to provide day time power, can meet the agricultural power demand from the farmers without the need to be connected to the grid. Moreover, unlike industrial and residential loads, the water pumping loads can tolerate a certain level of intermittency in power output, which is a characteristic of solar PV power.
SWH Market Size Collector Area - Mn Sqm[9]
Hot water supply
The other segment of the energy market which can use solar energy is the solar water heating (SWH) segment. Solar water heating applications could be used in residential, commercial as well as industrial sectors. Internationally, SWH is a well developed technology and promises significant fuel savings and emissions reduction. China, European Union, Turkey, Japan and Israel are the leaders and cover about 90 percent of the global installed SWH capacity. While India is well endowed with solar insolation, the cumulative installed capacity in India in 2009-10 was only 3.53 million square meter.
As a comparison, China with relatively lower insolation has 125 million square meters of SWH collector capacity.
Residential SWH comprises ~80 percent of the total installed capacity. One of the biggest drivers of SWH offtake for residential applications is the favourable cost economics which works out to a payback period of 2.71 years. However, the barriers to this are the following: providers would customize the product High upfront cost of the SWH systems. This can be potentially addressed through a consumer financing solution.
Presently, the cost to consumer of alternates such as electric geysers do not fully reflect the true cost of these alternatives since electricity prices for the residential segment are mostly subsidised.
Hot water / steam are also vital inputs for a variety of industries including dairy, pulp and paper, textiles and leather among others. If solar installations were to replace fuel to an extent of 30 percent in industrial processes running below 250 deg C (where the solar solutions are relatively simpler) today, we believe that about 70 Mn Sqm solar collector area would be required. This would result in a saving of 4.8 Mn tons of oil per annum that is equivalent to USD 3.5 billion[8]. For solar power to find a place in industry, we believe that emergence of solution providers who provide performance assurances is necessary.
These solution to meet each industry’s specific need and provide assurances around hot water / steam requirements – duration of availability, temperature and pressure conditions, etc. We believe that solar equipment vendors would need to invest in technology as well as adapt to a more services driven model (similar to an Energy Services Company model) to be able to penetrate the industrial segment. However, we are confident that if and when such models evolve, the solution providers will find significant demand from the industrial segment. Table 3 summarises the potential for residential and commercial segments:
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 4.4
5.8 7.9 11.3 16.1 22.3 30.5 40.8 51.1 61.4 71.7 Incremental Market Size – USD Mn 219 230 363 635 915 1,212 1,664 2,143 2,207 2,273 2,342
1. Usage of solar power for telecom towers and capturing solar heat through collector area installation are already economically viable options. Hence, from an economic viability perspective, these applications do not have to wait till 2017-18 for a self-sufficient market to get created.
Table 3 48
www.solar-pv-management.com I Issue VIII 2011
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