Having lived in India for 2 years, it is difficult for me
to be impartial when assessing the opportunities in the CSP
industry. I believe very firmly in the great capacity of
Indians to learn fast and reduce costs – they are
specialists in making things cheaper while maintaining
quality standards. I can´t think of anything that the CSP
industry is more in need of.
From an economic development perspective, India’s economy is
performing very well, averaging 8.5% growth this year. Its
growth rate could overtake China’s by 2013 – if not before –
according to
a recent article by The Economist.
While China’s growth has been largely state-directed,
India’s is driven in large part by its 45 million
entrepreneurs. Private firms have had to compete with the
world´s best – and many have discovered that they can.
Some of India’s largest companies have already taken an
interest in CSP and have been working aggressively to
understand the technology, to set partnerships with the
right companies and to drive down costs. Consequently, India
is emerging as a key market for CSP industry development,
holding immense potential that concentrating solar thermal
companies cannot afford to ignore.
Serious and dedicated local developers like Cargo Motors,
Coramandal, Enam Infrastructure, Electrotherm, Entegra,
Lanco Solar, SunBorne, Suryachakra, Welspun and Acme have
emerged in last two years. These are promising, financially
stable companies, that have long-term growth plans with land
banks at their disposal.
Similarly, large domestic construction companies are picking
up the pace in CSP. These include publically-traded EPC
companies include like BGR, Essar, Gammon, GMR, GVK, Jaypee,
Lanco, L&T, NTPC, which have robust balance sheets and large
order books.
New Solar Mission
Last year, the Ministry of New and Renewable Energy
announced its National Solar Mission, which aims to generate
20 GW of grid-connected solar power by 2022, of which 50%
will be CSP electricity.
The target for the first phase (up to March 2013), under the
Mission is to set up 1,100 MW of grid-connected solar power
plants.
The Indian power trader NVVN will procure solar power
from PV and thermal project developers under the Mission at
a tariff set by the Central Electricity Regulatory
Commission (CERC) for the first 3 years. NVVN will bundle 4
units of traditional power with each unit of solar power to
bring down the final cost. The tariff rates notified by the
CERC for 2010-11 are Rs 17.90 ($0.39 USD) a unit for PV and
Rs 15.40 ($0.34) for CSP.
The implementation process has started and during the first
phase, 500 MW of power will be developed. Around 55 requests
have been received for CSP, five of those for combined
thermal and PV projects.
Concentrated Solar Power the Indian Way
There is a buzz word that you often hear in India –
indigenization. Indians use this word to refer to
establishing local manufacturing facilities, and in doing
so, to achieve cost reductions. The mobile communications
sector provides a good example of this.
In mobile telecommunications technical know-how, supported
by local enterprise, paved the way for industry to become
the fourth largest network in the world within a short span
of 10 years. The sector has been doubling in size every
second year and now boasts a subscriber base of over 165
million. India's mobile phone tariff is currently the lowest
in the world, at less than 1 US cent per minute.
With very low capital costs enabled via the National Solar
Mission, there is no room for expensive components profiting
from a tight bottleneck of supply. The first phase will pull
the trigger for India's CSP industry to seize the
opportunity in manufacturing components. Indians are
expecting to commoditize the whole solar field – and to
export it in due course.
There are, of course, a number of financial and
environmental challenges to address if the Indians are going
to scale up this sector.
One major challenge is project financing. Equity and debt
funds first need to be organized if developers are to cash
in on the new opportunities. Selected projects run a fair
chance of ultimately finding funds; however, the rules for
raising debt (roughly 6 months, with penalties for delays on
financial closure) are stringent. Banks have yet to get
comfortable with some of the clauses in the model PPA, and
to study the yet-to-be released payment security mechanism.
As such, Indian financial institutions must first gain
experience and become familiar with the project appraisal
techniques. Meanwhile, debt seekers have little knowledge of
the yardsticks to be applied by the financial institutions
on the processing of financial sanctions.
The other challenge is the availability of water. While
India’s state governments have committed to providing the
required quantities of water, their commitment will be put
to the test during summer months. Uncertainty and adhoc
policies concerning water allocation threaten to compromise
the viability of solar thermal plants.
Alternatives such as dry cooling and hybrid wet/dry cooling
systems are to be considered in the long run in order to
mitigate the risk of limited or non-availability of water.
But at present, cost constraints render these options
temporarily unviable.
Although reservations based on past experiences are
understandable, India is a key market for industry
development and holds immense potential. India is a key
piece in the puzzle that will change the industry going
forward; it is absolutely instrumental to CSP industry
growth and development.
So for all you CSP folks – add the words Namastei and
Shukrya to your vocabulary. Now is the time to take
advantage of this opportunity and move swiftly to turn the
Indian dream into a global reality.
CSP Today is the leading business intelligence, news and
events company focused exclusively on the concentrated solar
thermal power industry. For more information on the
conference in India or other conferences around the world,
visit www.csptoday.com
For readers interested in learning more about the
opportunities for CSP in India, CSP Today has prepared an
India Country Profile Info. Pack download, including
in-depth papers & materials.