SolarQuarter Magazine July 2017

Special Focus - Solar PV Utility Scale and Solar Parks

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Volume 06. l Issue 7

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July 2017

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India’s Most Read Solar Energy Magazine

Index

To book your space in the upcoming issue, please contact: Smriti Singh / Aishwarya Baile M: +91 7718877513 / 7718877514  E: bd.firstviewgroup.com

News At Glance

News ....................................................................... 4 � International News .......................................................... 6 � Indian

Industry Insights � PV

Module Warranties: Separating Fact from Fiction.................................................................................... 8 � Solar Park Bhadla III India: Lowest bid of Rs 2.44 per KWh by AC ME -Is it a Finance Game only Or, a big game of technology & commercial viability as well?......... 10 � GREENING THE GRID: Pathways to Integrate 175 Gigawatts of Renewable Energy into India’s Electric Grid...................................................................... 18 � Understanding India’s Currency Hedging Facility.............................................................. 21 � Capital Market Instruments For Solar Energy Financing................................................ 26 � India Solar Tariffs - Irrational or Misunderstood?.............................................................. 28 � Risk Management In PV Financial Modelling..... 29 � Will the solar exuberance sustain?.......................... 31

Industry Perspective

Of GST On Solar Sector................................ 20 � A road map has been laid out to set up at least 50 solar parks, each capacity of 500 MW. How do you think the solar parks in India are shaping up?”........................................ 22, 23 Key Driving factors for falling bids in india.............. 24 � Impact

� Sector

Coupling Will Help Achieve Higher Contribution From Solar Energy.............................. 13 � STRING CO MBINER BOX - THE WEAKEST LINK IN PV POWER PLANT......................................... 13 � Jakson making big strides in Rooftop Solar EPC Solutions....................................................... 30

Analysis � Solar

PV technologies and their market shares ................................................................. 15

Global Insights

Product Feature

Outlook: U.S. Q1 2017 Sees 2GW Solar Capacity Additions............................................. 32

� Real-Time

Site Monitoring with NRG Systems’ Solar Resource Assessment System........................ 25 � Meco .................................................................................. 27

Publishing: Vijay Kumar

Editor: Varun Gulati

Circulation: Chandan Gupta

� Mr.

Amresh Mahajan AVP – Technology, ACME Solar............................................ 12

� Mr.

Tech Insights

� Market

Exclusive Interviews

C. Chaudhary Head – Solar, OstroEnergy Pvt. Ltd.......................... 12

� Mr.

Venugopalan CM Head - Energy Division, Bosch Ltd................................................ 14

� Mr.

Anurag Garg Vice President, Solar and Energy Storage Busines, Schneider Electric India..................... 14

� Goutam

Samanta Head- PV Technology, Orange Renewable............................. 16

� Mr.

DV Manjunath Managing Director, Emmvee Group.................................... 19

Editorial: Sanjana Kamble Nikita Salkar, Neha Barangali

Business Development: Vipul Gulati, Smriti Singh Aishwarya Baile, Vikas Khadtale

Printing/Processing Vaibhav Enterprises

Office: FirstView Media Ventures Pvt. Ltd., S09 - C1, 2nd Floor, Haware Centurion Complex, Nerul (E), Navi Mumbai, Maharashtra, India. 400 706.

T: +91 22 2771 7143/50 E: info@firstviewgroup.com

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Indian News Arctech Solar hits 2GW installed capacity milestone in India Recently, Arctech Solar, one of the world’s leading manufacturers and solution providers of solar tracking and racking systems, officially announced that its Indian Subsidiary’s installed cumulative capacity has reached 2GW. This includes 1.4GW fixed structures and 650MW solar trackers. In 2013, Arctech Solar began to set foot on this land with an Indian dream, and rooted itself deeply in Indian market as its home market in global business development. Within just a few years, the team has established remarkably. Since 2015, Arctech Solar has consecutively dominated No. 1 in India’s PV market share. According to the Global PV Tracker Landscape 2017 report published by GTM Research, Arctech Solar has far exceeded other manufacturers with the absolute superiority of No.1 Asia-Pacific market share in 2016.

ILIOS Commissions 3MWp for Sagitaur Ventures in 23 Days ILIOS an EPC company from Hyderabad, has recently commissioned a 3MWp plant with single axis trackers in Karnataka in a record pace of 23 days. REC modules & ABB inverters were used. ILIOS has installed over 25 MWs of trackers in its overall 60 MWs EPC experience and has been in the forefront to make single axis tracker a viable option even in projects where the PPA is not very lucrative.

Speaking on this ILIOS CEO Naveen Vunnam says “ We thank Sagitaur in trusting us. In times when India is achieving 10GW a year, with average project size above 100MWs each, it has become a challenge to ensure the same quality of supply and services to all scales of projects be it small or big. ILIOS has been ensuring that there is the same reliability, quality and confidence in services rendered to all scales of projects. Many times component suppliers are flooded by orders and eventually compromise in quality and delivery timelines for the smaller scale projects. To ensure there is no lapse in quality to lower scale projects is ILIOS’s prime responsibility.”

TMEIC Powers Up 350 Units of SOLAR WARE Inverters for SB Energy Holdings Limited Bangalore-based TMEIC Industrial Systems India Pvt. Ltd. has successfully supplied 350 units of 1MW SOLAR WARE inverters to SB Energy Holdings Limited which is a subsidiary of SoftBank Group.

This plant, which is located at Ghani Sakunala Solar Park, Kurnool District, Andhra Pradesh, is world’s 7th largest project. The operation has been started since March 29, 2017, and this is first operational plant delivered under Jawaharlal Nehru National Mission Program.

SOLAR WARE inverter is a highly engineered utility-scale PV inverter with the most advanced multi-level switching technology, delivering high energy efficiency (98.7%), and a lower equipment footprint, thus leading to an unparalleled yield on customer investment. Its reliability, efficiency and productivity is suitable for mega-solar power plant deployment.

TMEIC has been recognized with many awards for its extensive high-quality product portfolio and services. TMEIC has manufacturing base in Bangalore, Karnataka, and shipped more than 2GW in India by the end of March 2017.

TMEIC will continue to provide benefits to customers through realizing highperformance, high-quality and reliable products and services for which demand is expected to rise globally.

TANGEDCO 1500 MW Tender - Atha Group wins 200 MW of Solar power bid Atha Group (NVR) is pleased to announce that they have won the bid to supply 200MW of solar power to TANGEDCO. Group Companies – Narbheram Vishram and NVR Energy Pvt. Ltd under Atha Group will setup 100MW plant each.

Tamil Nadu Generation and Distribution Corporation (TANGEDCO) had recently invited tenders to supply solar power of 1500 MW. Among several other companies, the winning bid was awarded to Narbheram Vishram and NVR Energy Pvt. Ltd, two Group companies under Kolkata-based Atha Group by quoting Rs. 3.47 per unit.

The quoted rate of Rs 3.47 per unit is one of the lowest for supplying solar power in the state of Tamil Nadu. As per the officials of TANGEDCO,many established players and NLC participated in this tender and the quoted rates are unprecedented for the entire power sector. The rates which were quoted varied from Rs 4 per unit to Rs 3.47 per unit.

Hartek Power paves way for reliable electricity to 70,000 people, executes substation in testing Mashobra terrain Demonstrating its expertise in executing projects in difficult mountainous terrains, Hartek Power, one of India’s fastest growing Engineering, Procurement and Construction (EPC) companies, has commissioned a prestigious 66/22-KV

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substation project in Mashobra village of Shimla, which will provide reliable electricity supply to a population of 70,000 in Mashobra and adjoining areas.

Surmounts major challenge of cutting down hill to make way for construction The 66/22-KV substation, constructed at a cost of Rs 12.2-crore and based on the much more reliable Loop In, Loop Out system, involves short-distance feeders and improvements in system which will go a long way in reducing T&D losses Constructed at a cost of Rs 12.2 crore, the 20-MVA capacity substation based on the advanced and much more reliable Loop In, Loop Out (LILO) system will supply power to domestic and industrial consumers in Kiar Koti, Tarapur, Durgapur, AllIndia Radio Station, Baldian, Shari and parts of Shimla, Theog and Sunni tehsils.

EMMVEE COMMISSIONED 1MW ROOF-TOP SOLAR POWER PLANT AT IT’S SOLAR WATER HEATER MANUFACTURING FACILITY IN DABASPET, KARNATAKA Emmvee solar heating system state of the art manufacturing facilities at Dabaspet, Karnataka, India, has a production area of 25,000 square metres.

These extremely ecological masterpieces that feature sophisticated processes, environment friendly materials, and an exceptional energy concept ensure sustainable production.

EMMVEE COMING UP WITH 3 PV POWER PLANTS IN KARNATAKA WITH 40MW POWER GENERATION Emmvee is also a successful bidder for developing 3 power projects of total capacity of 40MW in Karnataka. These projects are being developed at the cost of around 280 crores.

EMMVEE’s JOINT VENTURE WITH REDDY’S LAB, HYDERABAD We have formed a joint venture with Reddy’s Lab located at Hyderabad for the supply of solar power for their facilities. For this Emmvee & Reddy’s Lab have formed a new company which will operate and maintain the solar power plant and supply electricity exclusively to their facilities. The capacity of solar power plant is 15 MW

Iran sees number of solar parks under construction or coming online increase Another 20 MW solar plant was connected to the grid in the Iranian southeastern province of Kerman, where at the same time construction started on a 100 MW PV facility.

Iran’s Energy Minister Hamid Chitchian has officially inaugurated the 20 MW Mokran Solar Power Complex in the southeastern province of Kerman. According to a press release from the Iranian Renewable Energy and Energy Efficiency Organization (SATBA), the facility is currently the country’s largest operational ground-mounted PV plant.

Panda-Shaped Solar Power Farm Providing Clean Energy To China China Merchants New Energy Group is one of the largest clean energy companies in China. It is deep into a solar power project that will eventually cover more than 1,500 acres with solar panels. The first phase of construction was completed on June 30 — a 248 acre solar farm that looks like a giant panda from the air. When complete, several panda-shaped areas will populate the Chinese countryside.

The first phase is a 50 megawatt solar installation that will produce 3.2 billion kilowatt-hours of solar energy over the next 25 years, according to the company.

Generating that much electricity from sunshine will mean one million tons of coal won’t be burned, reducing carbon emissions by 2.74 million tons. Construction on a second panda-shaped solar farm is scheduled to begin later this year.

Solar is now the most popular form of new electricity generation worldwide Solar has become the world’s favourite new type of electricity generation, according to global data showing that more solar photovoltaic (PV) capacity is being installed than any other generation technology.

Worldwide, some 73 gigawatts of net new solar PV capacity was installed in 2016. Wind energy came in second place (55GW), with coal relegated to third (52GW), followed by gas (37GW) and hydro (28GW).

Together, PV and wind represent 5.5% of current energy generation (as at the end of 2016), but crucially they constituted almost half of all net new generation capacity installed worldwide during last year.

It is probable that construction of new coal power stations will decline, possibly quite rapidly, because PV and wind are now cost-competitive almost everywhere.

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India Contact: Arjun Prasad Sah Mobile: +91- 88267 48995 E-mail: arjun@linuo.com

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International News Elcom International awarded Solar Cable Connector Company of the Year 2017 by leading solar magazine, Solar Quarter, for its outstanding achievement in product quality and performance Elcom International; Mumbai - 22.06.2017: Elcom International is pleased to announce the award, titled “Solar Connector Company of the Year” bestowed upon by leading Solar magazine, Solar Quarter, owned by FirstView Group.

The award comes in the light of company’s contribution to solar industry by developing and successfully serving solar customers with 1500V PV cable connector, TUV certified.

ELCOM is the only Indian Manufacturer who has upgraded its solar connector with TUV certificate for 1500 VDC - as per the latest version of IEC 62852:2014 standard. Elcom has received a TUV certificate for the upgraded version of its PV cable connector, ESC-4, which can now operate at 1500 V DC.

USAID and ADB Sign MoU to Develop Solar Parks in India The U.S. Agency for International Development (USAID) and the Asian Development Bank (ADB) have signed a Memorandum of Understanding to facilitate $848 million (Rs. 5,681 crore) in funding to develop solar parks across India. Through the agreement, USAID will align the technical resources of two of its programs to support ADB’s investments in the development of solar parks and renewable energy transmission infrastructure in states at the forefront of India’s efforts to promote clean energy. The collaboration will initially focus on Rajasthan. The cooperation will design and develop public-private partnership models as well as study options for managing grid reliability. In particular, USAID technical activities will help place investments of $348 million (Rs. 2,331 crore) by ADB for transmission infrastructure for renewable energy deployment in western Rajasthan.

IDFC acquires 190 MW of Indian PV projects from First Solar The infrastructure fund of IDFC Alternatives has signed an agreement to purchase 190 MW worth of solar PV assets from First Solar Power India, an affiliate of First Solar Group. The projects are located om the states of Andhra Pradesh and Telangana.

A subsidiary of IDFC Alternatives – a multi-fund asset manager from India – has today signed a purchase agreement to acquire 190 MW of installed solar assets from U.S. solar developer and thin film specialist First Solar.

Vector Green Energy Private Limited, which belongs to IDFC Alternatives’ India Infrastructure Fund II, will take ownership of seven solar farms across the Indian states of Andhra Pradesh and Telangana, in a deal thought to be worth $300 million.

India needs to boost rooftop solar energy Recent newspaper articles have highlighted the rooftop photovoltaic (RTPV) sector’s sluggish growth in India. The articles claim that based on the present outlook, the 40 GW target for 2021-22 will not be achieved.

Earlier, the ESC-4 Photovoltaic connectors were approved as per EN 50521:2008+A1 standard for 1000 VDC rating which has now been upgraded to the voltage rating of 1500 VDC. Also the PV connector is revised and approved as per the latest version of IEC 62852:2014 standard.

Indian solar park off-taker rules change India’s Ministry of New and Renewable Energy (MNRE) has released a document clarifying the rules for state government offtake of solar park capacity. The country is currently in the process of extending its solar park capacity from 20GW to 40GW. In its previous regulation, it was stated that state governments must buy at least 20% of the power produced from any solar park via the distribution company (Discom). However, the rules have been clarified to say that if the state government has agreed to buy more than 20% of the power from one or more solar parks in the state, then it is permitted to purchase a lower portion of power from subsequent parks, as long as at least 20% of the aggregate power generation of all the solar parks in the state has been purchased.

IREDA to strengthen solar parks with World Bank funding The Indian Renewable Energy Development Agency (IREDA) has planned for World Bank financing of USD 100 million for the development of internal infrastructure of solar parks under the aegis of the Ministry of New and Renewable Energy, said a government release on Thursday. The World Bank loan is proposed to flow to the interested solar power park developers (SPPDs) through IREDA, said Power Minister Piyush Goyal.

In addition, the World Bank is providing low-cost financing to rooftop solar developers under a USD 625 million Programme for Results (P for R) to be routed through the State Bank of India.

UP turns focus to solar power, to generate 10,700 MW by 2022 The Uttar Pradesh government has proposed to source 8 per cent of its electricity requirements through renewable energy by 2022.

According to the Draft UP Solar Power Policy-2017, the state government has also proposed to meet the target of generating 10,700 MW solar power. This includes 4,300 MW from rooftop solar projects, by financial year 2022.

Under the proposed policy, the government will set up solar parks with a minimum capacity of 100 MW. The State, through the Uttar Pradesh Power Corporation Limited (UPPCL) or the distribution licensee, will offer to purchase 100 per cent of the power generated from a solar park.

It will also be mandatory to have at least 50 per cent of the power generated from the parks to be sold to a UPPCL Distribution Licensee. These benefits will be extended to private solar park developers. A Central Financial Assistance (CFA) of 25 lakh for detailed project report for each solar park and 25 lakh per MW or 30 percent of project cost will be made available for the solar park.

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Greenpeace India’s report shows that RTPV uptake in major cities such as Delhi, Mumbai, Bengaluru, Hyderabad and Chennai has been abysmal. While the largescale ground mounted solar parks have gathered critical mass in India with tariffs as low as Rs 2.44/kWh, RTPV is lagging behind significantly, comprising only about 1.46 GW of today’s 12.5 GW installed solar capacity.

India’s SECI cancels 950 MW of solar tenders, seeks re-tender at lower rate The Solar Energy Corporation of India has scrapped large amounts of solar+storage tenders at both the Pavagada and Kadapa solar parks as it seeks to renegotiate with states for lower tariffs.

One of India’s leading lights for solar deployment suffered a setback last week as it was forced to drop 950 MW of planned solar tenders due to tumbling prices.

The Solar Energy Corporation of India (SECI) has cancelled proposed tenders in the states of Andhra Pradesh and Karnataka after a sharp drop in the price of solar in India to just INR 2.44/kWh – at the Bhadla Solar Park in Rajasthan – turned the heads of would-be bidders.

Buy abroad diktat doesn’t worry India’s solar sector India has to make suitable policy changes by December this year to remove measures it had undertaken to protect its fledgling solar manufacturing sector from foreign competition, according to a recent notice issued by the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO). DSB adjudicates on trade disputes between national governments.

“The United States and India have agreed that the reasonable period of time for India to implement the recommendations and ruling of the DSB in the dispute ‘India -- Certain Measures Relating to Solar Cells and Solar Modules (WT/DS456)’ shall be 14 months from the October 14, 2016, date of adoption of the DSB recommendations and rulings. Accordingly, the reasonable period of time expires on December 14, 2017,” DSB said in a communication on June 16.

Locus Energy Expands Virtual Irradiance Coverage Across Asia Provides Fleet Operators, Asset Managers, and Performance Engineers with Critical Solar Irradiance Data, Without On-Site Sensors Locus Energy has recently expanded its Virtual Irradiance coverage across much of Asia, providing fleet operators, asset managers, and performance engineers with the data they need to benchmark, model, and diagnose solar PV site issues.

With this release, Locus offers highresolution irradiance data across India, Pakistan, Iran, the United Arab Emirates, Malaysia, Singapore, Sri Lanka, Oman, Azerbaijan, Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan, Afghanistan, Nepal, Bhutan, Bangladesh, Myanmar, Thailand, and parts of Saudi Arabia, Iraq, Yemen, Eastern China, Kazakhstan, Mongolia, Laos, Cambodia, Indonesia, Georgia, and Somalia.

The irradiance data from Locus Energy’s Virtual Irradiance system does not require on-site irradiance sensors, yet provides a similar level of accuracy in 2 assessing the amount of sunlight energy that a site has received. Locus’ sixthgeneration irradiance product has been available in the U.S. since 2014.

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Industry Insights PV Module Warranties: Separating Fact from Fiction Beware the Trojan Horse Manufacturers also provide warranties covering the performance of a module. In case a PV module under-delivers on its power output promise, manufacturers should offer a combination of physical and financial remedies, although hidden clauses may minimise the amount of compensation paid out.

Negotiating photovoltaic (PV) module warranties can seem like a complicated task with blurred lines separating fact and fiction. Making the wrong choices could see a project saddled with hidden clauses, often unnecessary coverage, and false promises.

The warranty usually reflects a manufacturer’s confidence in its product, and it needn’t be a leap of faith if asset owners, lenders, developers, and EPC (engineering, procurement and construction) firms focus on three critical factors.

Unicorns Don’t Exist PV module manufacturers tethering on the edge of financial bankruptcy are by no means a rarity.

What impact does this have on warranties? Every manufacturer must maintain a cash warranty reserve to cover warranty claims, but this can be a challenge when the bulk of its financial resources are devoted to servicing debts.

As a result, manufacturers often resort to buying Original Equipment Manufacturer (OEM) insurance to cover warranty obligations. Often touted as a benefit, the reality is that insurancebacked warranties could add to the cost of the modules, while the inclusion of a third layer – and fine print designed to limit payouts – can slow down the claims process.

Bloomberg New Energy Finance noted that First Solar was the only “quoted pure-play module company in the ‘safety zone’” in its PV Module Bankability 2016 report. Critically, these insurancebacked warranties do not always offer Third Party Rights, which allow affected asset owners to receive payments in case of the OEM’s bankruptcy.

And, as recent developments have shown, the risk of bankruptcy in the PV business is real.

Watch for the Sirens Some PV warranties include clauses that may be unnecessary, even redundant, making them look like something that they are not.

Let’s start with workmanship warranties: this governs any defect that is the result of failings in the manufacturing process. These warranties span anywhere between 5 and 25 years, with coverage including repair, replacement or refund at either a depreciated value or at the market price.

It is also important to point out that some defects can negatively impact performance from the moment that the modules are installed; while others may take a year or two to manifest. The reality is that ten years is more than adequate for workmanship defects to come to light and one may argue that longer coverage is redundant to the performance warranty.

Looking at more mature industries – gas turbine manufacturers typically offer no more than a twoyear workmanship warranty – a longer warranty usually compensates for the lack of a robust, long-term performance track record.

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Many module manufacturers will include an option to repair or replace a low-performing module. Significantly, many manufacturers reserve the right to supply used or refurbished modules as replacements. The best policies, however, will offer new modules, free-of-charge, to supplement any shortfall in capacity if a repair is not possible.

operation. Once again, a degradation that exceeds this limit per year from the third year of operation will attract a penalty, requiring the manufacturer to compensate the asset owner for the shortfall between the actual power output of the affected module and the power output threshold. The payout will be based on the market price of the module at the time of the claim or the original sales price of the panels.

The bottom line is that a warranty is only as good as the remedies it offers. Decision-makers can ensure that they secure the best terms available simply by doing their homework and ensuring that, at the very least, someone picks up the phone when they call the helpline to make a claim.

Author: Timo Moeller is First Solar’s Global Director for Customer Support, Product Field Performance and Commitments.

Things get a little complex when asset owners seek monetary compensation because the OEMs that offer financial reparation – and many do not – have different ways of calculating their liability.

The commonly accepted approach is for manufacturers to pay the asset owner the value of the shortfall between the actual power output of the affected module and a predetermined power output threshold. This threshold is based on the market price of the module at the time of the claim or the original sales price of the panels - as module prices have steadily fallen, it’s easy to see which option would be of greater value.

Central to this calculation is the Power Warranty Start Value and the Warranted Degradation, which represent the manufacturer’s commitment to the amount of power a module will produce.

A robust warranty will account for a Power Start Value of 98% in the first year – in other words, the manufacturer guarantees that the module will deliver at least 98% of its nameplate power output in the first 12 months of its operation.

Modules delivering less than 98% are subject to remediation in line with the warranty terms.

Beyond the first year, the module’s performance warranty is benchmarked to the Warranted Power Output level. A module with a no more than 0.5% annual drop in power – which is what the industry’s leading OEMs offer – guarantees that the power output of a module will not reduce by more than 0.5 percent per year, from the second year of its

Mr. timo moeller Director

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Industry Insights Solar Park Bhadla III India: Lowest bid of Rs 2.44 per KWh by ACME -Is it a Finance Game only Or, a big game of technology & commercial viability as well?

On 12-may-2017, 500 MW capacity in Bhadla PhaseIII Solar Park of Rajasthan in India was auctioned.

Outcome of auction - winning bid of Rs. 2.44 per unit and 2.45 per unit LCOE by ACME Solar Holdings for 200 MW and Japan’s SBG Cleantech for 300 MW respectively Here we will try to showcase that how the outcome of auction is not only a finance game but a big game of technology and commercial viability as well.

Before that we will get a glimpse of what is LCOE and how LCOE is calculated What is LCOE ÂÂThe LCOE is the total cost of installing and operating a project expressed in “Rupees per kilowatt-hour”or “Rupees per unit” of electricity generated by the system over its life. It accounts for: ● Installation costs ● Financing costs ● Taxes ● Operation and maintenance costs ● Salvage value ● Incentives ● Revenue requirements (for utility financing options only) ● Quantity of electricity the system generates over its life

How LCOE is calculateD ÂÂLCOE or “Levelised Cost of Electricity” is a ratio puts all costs both fixed and variable in the numerator, and divides it by energy yield (Unit or kilowatthour) 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 value to the present value Now we shall highlight that how the outcome of auction is not only a finance game but a big game of technology and commercial viability as well.

Why the LCOE drop from Rs 4.63 per unit in November 2015 to Rs. 2.44 per unit in May 12, 2017 can be interpreted as a game of finance? ÂÂWe have seen that innovations to reduce capital costs or increase energy yield are the key to bringing solar to coal fired without subsidies. ÂÂAlso note the important role played by the “Weighted average cost of capital (WACC)”, market beta, discount rate and term (N). ÂÂWe 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 we came to know from Financial Model that 25% decrease in “cost of capital” reduces the LCOE by more than 5 %. ÂÂWe 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.

Why the prevalent emphasis is that the LCOE drop from Rs 4.63 per kilowatt-hour to Rs 2.44 per kilowatt-hour is not only a Game of Finance also a Big Game of Technology & Commercial Viability? ÂÂChinese factor due to which solar PV module, which account for more than 50% of the entire project CAPEX, costs have fallen faster as the “delta decease” is essentially financed by bleeding module makers from China. This Chinese factor has been originated by the temporary overcapacity in China resulting from delayed projects in several key markets. ÂÂAs 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. ÂÂMoreover, based on the experience curve, it is needless to say that each time the total production quantity has doubled; the prices for solar modules on the world market have fallen by 20 %.

ÂÂSolar Power Levelised cost of Electricity (LCOE) of INR 2.44 per unit indicate that Solar power has become cheaper than conventional coal fired power plant in spite of the fact that “gridconnected solar PV (photovoltaic) plants use transmission lines only 20% of the time compared to 70% by traditional plants, which makes it 3.5 times(=70%/20%) costlier to wheel solar power”. ÂÂRecently formed Solar Energy Corporation of India (SECI), while sitting on the current installed capacity of 10 GW, targeting to reach 100GW by 2022. Solar panels are mostly imported. So in an optimistic way, the silver lining is that solar panels indigenized manufacturing boom is imminent and on the anvil. ÂÂWith the increasing participation of the solar power, the operation of conventional coal fired plants will have to be ramped down or up to maintain balance between energy supply and energy demand. This would result in lower plant load factor for conventional coal fired power stations, which are expected to drop to 50% levels from current 60%. This in turn would push up the fixed cost component in the average cost of power and push them out of favor with state utilities.

“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.”

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

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In Conversation “We, at ACME are fully aware about our responsibilities and have set up a state of the art Solar lab to study the module behaviour in Indian conditions” What are the recent technology trends seen in Solar module market?

Mr. Amresh Mahajan AVP – Technology, ACME Solar

How important is the selection of right modules for the solar projects?

A solar panel is like heart of a Solar Power plant.

Weaker the heart, lesser the life span and problems throughout the time a person lives.

Same goes for a Power plant with a weak module.

To select a right module, it is required to have a bill of material which can withstand harsh Indian environmental conditions, stable manufacturing process, robust mechanical strength, lower thermal coefficient and lesser measurement uncertainty.

These days Tier 1 or Non Tier 1 has become a buzzword but in my view, a fairly ordinary module can be manufactured by a so called Tier 1 manufacturer and vice versa. We focus more on the design aspect and the process control part rather than getting influenced by the name of the manufacturers.

It’s the technological advancement which has taken the module wattage from 180w to 300w for a 60 cell module in 6 ~ 8 years. Whether it’s small changes like graduation to 5 Bus bar from 2 bus bars or 156.25mm cells or bigger changes like PERC cells, N type Mono cells, bifacial cells, Glass to Glass modules, each and every change has resulted in increased in efficiency of solar cells/modules.

Infact it’s the technology which has brought down the costs to a level where it can be compared with the other conventional energy resources. Lot of work is happening in Nano technology, smart modules, cells with no bus bars and lab scale efficiencies levels have scaled the heights which are very encouraging from future standpoint. But still lot needs to be done from reliability standpoint.

The existing standards are very basic and qualification criteria’s do not warranty the intended life span especially for Indian conditions. With prices going down lot of inferior Bill of material have also seen the daylight in the name of optimization and test protocols are not smart enough to detect them. Lot of work need to be done in this field particularly.

How Should Developers Select Their Module Partners?

I recommend a 3 step formula. (a) Don’t get bogged down by big names (b) Insist on Bill of material that suit your requirements (c) Be vigilant during the manufacturing process.

Solar technology is evolving with time. Is there anything that you are looking forward to happen in the next few years?

How do you think the Industry would shape up in near future?

For sure it’s not going to stop here, there are lot of innovations which will evolve over a period of time and probably will take the efficiencies to a level, we hesitate to talk about now. However, in years to come, I see greater revolution in Solar is waiting to come from outside and not inside. As Solar is a complementary source of energy and not alternate source of energy, the development of storage media is going to play a big role in future. Once batteries are ready to take over the mantle of solar plants in night with minimal effect to environment, the conventional sources of power generation will find very difficult to survive.

Anything else you would like to add for our readers I think by this time, everyone knows that solar power is there to stay and is going to solve lot on energy problems in India and across the world. The big names in Indian also need to share responsibility and start investing in facilities that makes it more reliable, acceptable and compatible to our environmental conditions. We, at ACME are fully aware about our responsibilities and have set up a state of the art Solar lab to study the module behaviour in Indian conditions and will be happy to contribute in whatever way we can to develop a product that fits Indian conditions perfectly. Infact ACME is the first developer to take a lead in this aspect and since we will own our farms for the lifetime, we want the technology to be highly reliable in addition to being highly efficient.

“Last one year was primarily invested in execution of a strong pipeline of over 400MW” Which states do you believe will see maximum solar energy investments this year?

Mr. C. Chaudhary Head – Solar,

OstroEnergy Pvt. Ltd.

Ostro Energy has very strong financial backing, and counts Actis Capital (AUM : $7bn) as a key investor.

Ostro prides itself in being one of the quickest to reach over 1.1GW portfolio, within 3 years, with a good blend across wind & solar. Our vision is to make green energy accessible to all.

Last one year was primarily invested in execution of a strong pipeline of over 400MW. Additionally, we set the new benchmark in wind PPA, winning 250MW at a record tariff.

As a developer, what key challenges do you face today?

The key challenges as FX Risk, payment security from state government, timely and clean land acquisitions, evacuation system and tedious permits and approvals.

Another key gap in India is lack of high quality international EPC contractors. Having installed solar across different continents, I strongly feel that quality of EPC contractors in India needs to improve significantly.

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Rajasthan, U.P. & M.P.

As the assets become older, will aggressive bidding today become a pain point for the industry a few years down the line?

Some of the key technologies you will see in next couple of years will be robotic dry cleaning, manless security

This will be true for companies who are not technology driven.

technologies and extensive

Initially solar was driven by Capex optimisation and land availability, but with many global investors such as Actis Capital, entering India now the focus is on LCOE and new technologies.

use of virtual robots (for

The same is evident from the improvement in technology for solar panel, inverters and structures.

As we move from 5MW – 10MW plants to plant sizes of 100MW – 1000MW, automation will to take centre stage.

Some of the key technologies you will see in next couple of years will be robotic dry cleaning, manless security technologies and extensive use of virtual robots (for data analysis to improve plant performance).

Solar energy has already achieved grid parity and will constitute the major chunk of all new power plants addition in India and the world.

I strongly believe that Indian solar space will grow to 500 GW by 2030 and will be a key employment generator over next two decades.

data analysis to improve plant performance).

What are the milestones you wish to achieve by the end of this fiscal?

In solar business, we will commission 110 MW and 350 MW capacity in wind. We are also planning to develop several MW capacity of solar pipeline by end of the fiscal year.

Anything else you would like to add for our readers.

The industry should start focusing on technology and operational efficiency and ensure that Indian customers enjoy the most competitive green energy tariff around the world. I am very optimistic that by 2040 everything shall be run by Solar.

Solar Quarter • July 2017 12

Tech Insights Sector Coupling Will Help Achieve Higher Contribution From Solar Energy The coupling of the power sector with heating, cooling and transport offers significant opportunities for: integrating higher shares of VRE generation while also expanding the use of solar energy in other end-use sectors and increasing efficiency of energy use. Sector coupling can be achieved in a number of ways, including:

Electrification of Heating and Cooling in Buildings and Industry Thermal grids (district heating and cooling) and individual building systems (e.g., heat pumps) can serve as new markets for renewable electricity while also operating as demand buffers for variable generation. This can be accomplished by shifting thermal demand somewhat to better coincide with the ebb and flow of variable output, and by equipping district systems to store thermal energy for later use.

Electrification of Transport Electricity is already used for many trains, trams and other forms of transport. Electric passenger vehicles also are growing in number, with more than one million plug-in electric vehicles estimated to be on the world’s roads as of 2015. Electrification of transport enables the use of renewable electricity in vehicles through on-board batteries or hydrogen fuel cells. It also allows for the opportunity to balance VRE generation by timing battery charging and hydrogen production to coincide with surplus renewable electricity generation. A third potential advantage is to utilise such vehicles as two-way

storage devices that can return electricity to the grid during peak demand periods or serve other electricity needs of the owner, depending on the circumstances.

Use of Smart Energy Networks Timely and relevant information about supply and demand, and the flexibility thereof, will be an increasingly critical component of the production and distribution systems that couple renewable electricity with thermal applications and transport.

“Smart” electrical and thermal energy networks will convey real-time information to both energy producers and consumers to optimise and synchronise supply and demand through a combination of supply-side flexibility and demandside management and response. One component of this is to translate information on system imbalances into price signals so that the new transport and thermal demand can efficiently respond to changing conditions on the supply side by time-shifting demand, and even return stored energy to the grid when needed. The potential synergy is substantial as the expanded use of renewables for transport and thermal applications, in turn, can balance grid

power and perhaps over other ancillary services for grid stability and security. Understanding how these services might be provided, and their economics, will be crucial to better assess the transition costs, or the savings, that can result from significantly higher shares of renewable energy. The coupling of the power sector with the heating, cooling and transport sectors is likely to become the key to realising the full potential of renewable energy in the overall energy system.

The concept has already been put into practice in California, Denmark, Germany and China now is encouraging coupling to reduce curtailment of wind and solar power.

STRING COMBINER BOX - THE WEAKEST LINK IN PV POWER PLANT What differentiates a high performing Solar PV Power plant from the rest is the choice of components used. PV modules, Inverters, Transformers, DC cables are generally considered as the most critical systems. Very few EPCs give significance to String Combiner Boxes (SCB), which then becomes the weakest link in a PV power plant.

Combiner boxes are gateways that routes the energy harvested by PV panel to the Inverter. On a high level it comprises of DC Fuses, DC Disconnector Switch, connector terminals housed in an IP65 enclosure. These boxes typically carry 250A at 800VDC and hence should provide the least resistance! Since several Strings inside the SCB are connected to busbars, there will be multiple mechanical joints. A poor termination will cause heating of these joints which not only impacts the power generation but also can increase the temperature inside the SCB and if neglected can cause fire and permanently damage the system.

Since the SCBs are placed out in the open and because of the high current flowing, there is a temperature cycling effect which could result in loosening of the joints after few months. Hence as part of O&M activity, it is very important to open the SCBs and apply torque periodically as per manufacturer’s instruction.

Another way to keep tab on the SCBs is to measure the string current. Many SCBs are equipped with monitoring feature which measures the current flowing through each string, Voltage of the bus and also the temperature inside the SCB.

Combiner boxes are gateways that routes the energy harvested by PV panel to the Inverter. On a high level it comprises of DC Fuses, DC Disconnector Switch, connector terminals housed in an IP65 enclosure.

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Comparing the current of various string and analyzing data for any abnormalities will tell you if the SCB needs maintenance. Proper choice of SCBs can significantly improve the generation of Solar PV plants in the long run. If you are observing generation drop don’t just focus on Inverters or PV degradation, checkout the condition of your String Combiner Box. Somashekar T H CTO – Avi Solar Energy Pvt Ltd

Solar Quarter • July 2017 13

In Conversation “Bosch offers optimally customized solutions to meet the customers energy requirements which is the need of the hour today”

Mr. Venugopalan CM Head - Energy Division, Bosch Ltd

What are the current and potential challenges fronting on solar EPC sector in India these days?

When you look at EPC, understanding the right requirements of the customer is one challenge.

On one hand, you have the rooftop plants and on the other hand, you have large, ground mounted, utility scale plants. Then, there is something in between which is the specific requirement of the capital consumers. The important thing is to really understand the customer requirement and then come out with the right engineered solution- and in order to cater to these requirements, Bosch offers optimally customized solutions to meet the customers energy requirements which is the need of the hour today. Another challenge is to obtain efficient funding. So according to me, these 2 are the challenges fronting on solar EPC sector in India.

Do you expect to see the aggressive bidding again by the developers or have the tariffs bottomed out for the present?

If you look at the basic material cost and if you look

at the conversion charges from material to the panel, there is a limit of how much lower it can go. So, yes you could still see a little bit of tariff reduction but it will definitely stabilize over a period of time. There is a limit beyond which it cannot happen.

Rooftop has been a growing segment. Do you see more business from the off-grid market in India over the next 5 years?

Rooftop-yes; whether it is off-grid, I would differ and say that growth would be more on grid connected rooftop solar plants. When you say off grid, then it is also a little storage connected to that. This could be a system for a very small capacity and hence not very economical. I definitely see a future where people will extensively be using rooftops to generate power for self-use and also to evacuate to the grid through a net metering concept. That’s going to be the big change we can anticipate in the near future.

In the previous related question I talked about understanding the engineering challenges. See, building a project for an airport is a different ball game altogether. One has to understand the entire aspects of the aviation industry, airports and the challenges in the airport’s premises to build up a project. So that is an engineering challenge.

What is most important is right engineered project and extreme focus on safety, quality and ease of maintenance. These are the main aspects an EPC should focus on and address in the coming years.

consistently focusing on highly quality oriented engineered projects specifically meeting the customer requirements and giving them a very unique optimum solution.

Our projects are the benchmark projects like the project we built up for Cochin airport making it the first airport in the world that is completely grid free and working on solar. This calls for a clear focus on quality, safety and the project management processes.

This is where we are focused and we will continue to play a major role in this case for enterprise customers.

With sustainability being Bosch’s long term strategy, we are completely ready, rather looking forward to play a major role in India’s journey in renewable energy efficiency, reduced emissions and so on and so forth.

We are the biggest player in automotive space and we came out with the best of the emission systems which brings down the emission to the lowest. We are coming out with that mind-set. We are an engineering company so our projects are highly engineered and we have further expanded our portfolio to energy efficiency projects.

Looking at these aspects, Bosch will play a major role in the enterprise segment. Although we are headquartered in south India, North India is a focus area for us.

Anything you would like to share with the readers?

We are working very closely with the customers in clusters like Faridabad and Ludhiana where there are a lot of commercial industries. Bosch is providing them customised rooftop solar PV solutions.

We started our business in 2014 as Bosch Energy and Building Solutions and from there we have been

Our aim is to be the energy partner to our clients and provide them with a complete solution.

“Our products have been operating successfully for past several years in harsh & stringent climatic conditions that prevail in India”

Mr. Anurag Garg Vice President, Solar and Energy Storage Busines, Schneider Electric India

Let’s begin with a glimpse of your company’s presence and offerings in India?

At Schneider Electric, our expertise are in solar power conversion and energy management. We have complete solution for photovoltaic integration and connection including power conversion (inverters, transformers and switchgear), electrical distribution, monitoring, supervision and technical support. We work as partners with our customers leveraging our project management capabilities with a comprehensive portfolio of Electrical Balance of Systems for solar energy, backed by a global service network.

We have powered more than 2 Giga watts (GW) of solar capacity in India through our diverse product range of inverters, transformers and other medium -voltage equipment commissioned across solar

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projects in India under the Jawaharlal Nehru National Solar Mission (JNNSM) & other schemes. India’s cumulative solar capacity has crossed 12,000 MW, 20% of which is flowing through Schneider Electric’s equipment.

Currently, Schneider Electric is supplying Solar equipment and products from four plants, namely at Bangalore, Baroda, Kolkata & Hyderabad, where we manufacture solar equipment such as Solar Inverters, Ring Main Units upto 33kV, Inverter Trafo, Power Trafo, Medium Voltage HT Panels upto 33kV, and Charge controllers.

Being a leading manufacturer in the global PV inverter industry what makes your product offering different from others?

At Schneider Electric, customer centricity is at the core of all its activities. Our efforts are focused towards constant innovation with an aim to offer our customers best-in-class solutions, to achieve Lowest Cost of Energy over lifecycle of the Plant (LCOE). We invest 5% of our revenues annually in R&D initiatives.

With digitization and Internet Of Things spearheading every industry today, we are well entrenched with the trends. Our latest offering, Conext SmartGen, a 1500-volt utility scale power conversion system, provides greater efficiency in power generation with lower short-term and long-term costs, and far longer service life. It is the first power conversion platform

for renewable energies that fully leverages the power of cloud connectivity and analytics.

Conext SmartGen™ records and stores its own operations and service history, has self-diagnostic capabilities and can send proactive service warnings and reports to the cloud. With Connectivity integrating the whole Energy Value Chain, we can truly make energy safe, reliable, efficient and sustainable.

Our products have been operating successfully for past several years in harsh & stringent climatic conditions that prevail in India, especially in areas where Solar Plants are located. Manufactured locally in India at our state of art global manufacturing facility, the products are based on proven and tested global technology and references.

A brief on your growth in the past year and some milestones you wish to achieve this year.

Over the past one year our presence in the solar sector has grown over 50 percent. Last year, we supplied equipment for more than 500 MW of solar capacity, as against 1.5 GW in last four years. For 2017, our target is to supply and commission equipment for more than 500 MW solar projects.

We are present across locations with our projects in the states of Punjab, Rajasthan, Uttar Pradesh, Madhya Pradesh, Chattisgarh, Gujarat, Maharashtra, Odisha, Bihar, Telangana, Andhra Pradesh, Karnataka and TamilNadu

Solar Quarter • July 2017 14

Analysis

Table 4.4 Solar PV technologies and their market shares TECHNOLOGY GROUP

MARKET SHARE 2015

Made from silicon manufactured in such a way that it forms a continuous single crystal without grain boundaries. More efficient and more expensive than most other types of cells.

Mono- crystalline Wafer-based Crystalline Silicon (c-Si)

Thin-film based

Emerging PV technologies

DESCRIPTION

93% Poly- or multi- crystalline

Made from silicon manufactured in such a way that it consists of numerous small crystals, forming grains.

The most common type of cells used, with a 69% share of c-Si technology. Less expensive but also less efficient than those made from monocrystalline silicon.

Amorphous Silicon (a-Si)

5%

Non-crystalline form of silicon deposited in thin films onto a variety of substrates (plastic, metal, glass).

Contains no toxic heavy metals, but has low efficiency. Production discontinued in recent years such that market share is negligible.

Copper indium gallium (di)selenide (CIGS)

2.5%

Manufactured by placing a thin layer of copper, gallium, indium and selenide on plastic or glass backing and electrodes on both front and back. Thin enough to be flexible, but performance is below that of polysilicon-based panels.

Cadmium telluride (CdTe)

4%

The only thin film material to rival crystalline silicon thus far in cost per watt. But cadmium is toxic and supplies of tellurium are limited. Used in some of the world’s largest PV power stations.

Concentrating solar PV (CPV)

The most mature emerging technology. CPV systems (optical sun-tracking concentrator’s lens) focus direct sunlight on highly efficient solar cells (multi-junction cells). The high efficiency of these solar cells reduces the needed PV array area, which partially offsets the additional cost of the concentrating system.

Organic PV and (OPV) ƒ dye- sensitised solar cells (DSSC)

Based on use of low-cost materials and manufacturing processes that consume low energy and are easy to scale up. Includes technologies based on active, organic layers that are suitable for liquid processing; hybrid DSSC, which retains inorganic elements; and fully organic PVs such as perovskite solar cells (see Box 2).

Advanced inorganic thin-film

Includes advanced thin-film concepts, such as multicrystalline silicon thin films and the spheral CIS approach obtained from the high-temperature deposition process (> 6◇◇ºC).

Novel PV concepts

Depend on nanotechnology and quantum effects to provide high-efficiency solar cells that either tailor the active layer to better match to the solar spectrum, or modify the solar spectrum to improve energy capture.

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Solar Quarter • July 2017 15

In Conversation “The choice of solar module selection is very difficult task as there are more than 800 module manufacturing companies available in the global market”

Goutam Samanta Head- PV Technology, Orange Renewable

The most important parameters to be considered are as follows:

How Should Developers Select Their Module Partners?

� Light Induced Degradation (LID)

Developers or EPC players normally do the due-diligence in the market & shortlist few module suppliers. Thereafter, tie up with module manufacturers during pre-bidding stage. Usually, a MOU is signed between a developer & module manufacturer with expected module price at least three months earlier of COD. Developers select the module type either thin film or c-si based modules based on the corresponding factors: model No (Poly/Mono, 60/72 cells, 1000/1500 VDC etc) & also the location. The engineering team analyses the generation data based on PVSYST results.

� Temperature co-efficient of power, current & voltage � Potential Induced degradation (PID) � Few critical parameters as per IEC 61215 standard � Location of Plant � Solar insolation at site

How important is the selection of right modules for the solar projects?

Solar Module is the most important component of a solar power project. Module is defined as PV power generator as it directly converts sunlight to electricity. The rest of the system is to ensure that the DC electricity is converted to AC and is evacuated optimally (minimizing the transmission losses) to the grid. Solar Module accounts for nearly 60% of the total solar project costs and the power is to be delivered power for 25 years and more. Therefore, the choice of solar module selection is very difficult task as there are more than 800 module manufacturing companies available in the global market.

Given the above fundamental and economic aspects, it is very important to scrutinize the technical parameters of module data sheet before purchasing solar module.

� PVSYST analysis with all major inputs of selected module � Generation data There are few more parameters need to be scrutinized � Positive Power Tolerance � Power Output (bins) for both for 60 & 72 cells family � Module Efficiency � System voltage � NOCT � Low light response � Weight � Product warranty � Performance warranty � Busbars (BB) � Class of JB � BOM

� Production Quality Control AZISINDIA2017_Solar Quarter_124,46x203,2_national.qxp_AZISINDIA2017_Solar Quarter_124,46x203,2

PART OF THE INTERSOLAR GLOBAL EXHIBITION SERIES

India's Largest Exhibition and Conference for the Solar Industry Bombay Exhibition Centre, Hall 1, Mumbai Rub shoulders with over 12,000+ key players – thousands of opportunities every day What comes next with technology and markets – keep your finger on the pulse See, be seen, share – boost awareness, stay top-of-mind, shape B2B developments

with special exhibitions

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Plan

What are the recent technology trends seen in Solar module market?

Poly or Multi-crystalline silicon modules are dominating in the present global market with market share of 90%.

Out of which ploy’s share is almost 75% & balance 25% is mono. But the market share of monocrystalline module is increasing in slow space. Mono-crystalline modules could not have more market share due to challenge in crystal growth by C-Z technology compared to casting technology for conventional poly.

Mono modules are earlier costing 10% more than poly. However, high efficiency monocrystalline modules with PERC technology will capture 35-40% market share by end of 2018.

Also to be noted that thin film technology modules are good with Cadmium telluride (CdTe) & Copper indium gallium selenide (CIGS) and may see a greater demand from the industry going forward.

Solar technology is evolving with time. Is there anything that you are looking forward to happen in the next few years? How do you think the Industry would shape up in near future? � Presently, Solar PV industry is dominated by single glass, EVA encapsulated & back-polymer based module technology using ALBSF screen printed poly solar cell � Mono PERC cell is taking a good lead in near future. The present p type Mono cell efficiency is more than 20.5% compared to 18.5% poly cell. Lot of Tier1 modules players are working with n-type mono cells efficiencies more than 21.5%. � Present 1000 VDC modules will be upgraded to 1500 VDC shortly with suitable inverters to reduce the DC cost � Glass-Glass modules will be a good choice beyond 2018 with 30 years warranty which ensures very low degradation � Glass-Glass bi-facial modules with tracking system will make a huge impact on LCOE beyond 2020 � Few higher efficiencies evolving technologies for c-si cell/module: such as Inter Digitated Back Contact, Metal Wrap Through (MWT), Smart Wire, Hetero-junction Technology (HJT) & HJT Bi-Facial Smart Wire Technology.

Anything else you would like to add for our readers 3rd Inspection & testing: It is very important for developers & EPC players to check quality of the module to meet the challenging prices in India, should not affect adversely on module quality.

Therefore, the following three tests or inspections are essential at the manufacturers facility as per mutually agreed Quality Control Plan (refer to Module Procurement Agreement): 1. In-Line Factory Inspection: 3rd Party inspectors usually inspect in module manufacturing shop floor (24 X 7) for � BOM verification � Process & Quality testing as per control plan � Test & Measuring Equipment calibration & Gold/ Secondary reference criteria � Flash test & EL inspection of randomly selected modules as per agreed protocol 2. Pre-Shipment or Pre-dispatch Inspection for 5 or 10 MW lot size. Sample modules quantity (no of modules) to be picked up from the warehouse or shop floor storage area for verification of the following tests as per agreed AQL standard � Visual Inspection

� Flash Testing

� EL Inspection

� Dimension checking etc.

3. 3rd Party laboratory testing for 5 or 10 MW lot size. Sample modules quantity (no of modules) to be selected & arranged to dispatch 3rd Party laboratory for further verification of the following tests as per agreed AQL standard � Flash Testing

� EL Inspection

� LID

� Few more tests as per IEC 61215 standard as per module purchase agreement.

Solar Quarter • July 2017 16

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Solar Quarter • July 2017 17

Industry Insights GREENING THE GRID: Pathways to Integrate 175 Gigawatts of Renewable Energy into India’s Electric Grid About the Study The use of renewable energy (RE) sources, primarily wind and solar generation, is poised to grow significantly within the Indian power system. The Government of India has established a target of 175 gigawatts (GW) of installed RE capacity by 2022, including 60 GW of wind and 100 GW of solar, up from 29 GW wind and 9 GW solar at the beginning of 2017. Thanks to advanced weather and power system modeling made for this project, the study team is able to explore operational impacts of meeting India’s RE targets and identify actions that may be favorable for integration. Our primary tool is a detailed production cost model, which simulates optimal scheduling and dispatch of available generation in a future year (2022) by minimizing total production costs subject to physical, operational, and market constraints. We use this model to identify how the India power system is balanced every 15 minutes, the same dispatch interval used by power system operators. The results can be used to inform policy and regulatory decisions that support system flexibility and RE investment.

KEY FINDINGS How India’s Power System Could Operate with 100 GW Solar and 60 GW Wind Power system balancing with 100 GW of solar and 60 GW of wind is achievable at 15-minute operational timescales with minimal RE curtailment. This RE capacity generates 370 terawatt hours (TWh) annually, a 22% share of total electricity consumption in India, reaching a nationwide instantaneous peak of 54%.

Annual RE curtailment (assuming sufficient in-state transmission) is 1.4%, consistent with experiences in other countries with this level of RE penetration.

Fuel requirements for coal and gas fall 20% and 32%, respectively, and CO2 emissions fall 21% (280 million tonnes) in 100S-60W compared to a No New RE scenario. As a result, plant load factors for coal drop from 63% to 50% with nearly 20 GW that is never economical to start.

Changes to operational practice can reduce the cost of operating the power system and reduce RE curtailment, but are not essential for 160 GW RE integration. Scheduling and dispatch that is optimized at the regional, rather than state level can support more efficient operations of thermal plants and reduce annual operating costs by 2.8%, or INR 6300 crore1 (approximately USD 980 million).2 In

could be relaxed. Such a scenario reduces RE curtailment to 0.13% and production costs by 4.7%.

In comparison, scheduling and dispatch optimized at the regional level and with transmission constraints delivers over half of these savings. Nationally coordinated dispatch combined with an additional 25% interregional transmission capacity delivers 84% of the savings compared to the idealized copper plate.

addition to improving access to least-cost generation, coordination between states helps reduce the number of coal plants at part load, providing greater operational range to the remaining committed coal plants to lower generation output when RE generation is high. National coordination provides even further cost savings (3.5% savings) and reduced RE curtailment (to 0.9%).

Reducing minimum generation levels of large thermal plants is the biggest driver to reducing RE curtailment. Changing minimum generation levels of all coal plants, from 70% today to 55% of rated capacity (consistent with the CERC regulations) reduces RE curtailment from 3.5% to 1.4% and annual operating cost by 0.9%, or INR 2000 crore. Reducing minimum generation levels further, to 40%, reduces RE curtailment to 0.76%, with negligible decreases to annual operating costs.3 If only centrally owned plants achieve 55% minimum generation levels but state-controlled plants maintain minimum generation levels of 70%, RE curtailment is 2.4%.

The peak systemwide 1-hour up-ramp increases 27% compared to a system with no new renewables, to almost 32 GW up from 25 GW. This ramp rate can be met if all generating stations exploit their inherent ramping capability. Aggregated nationally, for 56 hours of the year, system-wide up-ramps exceed 25 GW/hour, greater than any ramp requirement in the No New RE scenario, and peak at almost 32 GW/hour.

The current generation fleet is shown to successfully respond to these ramp events within our operating assumptions. We found no significant change in either production cost or RE curtailment when coal generation ramp rates were made less flexible in the simulations, although this study assumes a similar load shape for 2022 as prevailing today.

A significant change in load shape could affect the net load ramp rate.

Five-minute scheduling and dispatch has been demonstrated elsewhere to better handle ramping, if required at a later stage.

A copper plate sensitivity delivers 4.7% savings and 0.13% RE curtailment. Our “copper plate” represents a transmission system with no constraints and operations with no barriers to scheduling. Though not a physically plausible scenario, this scenario provides insights into the maximum achievable savings if all transmission and market constraints

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Batteries insignificantly impact emissions and total cost of generation. Batteries do reduce curtailment (from 1.4% to 1.1%); however, the value of this curtailment is offset by the batteries’ efficiency losses during operation. In the 100S-60W scenario, 2.5 GW of batteries (75% efficient) reduce RE curtailment by 1.2 TWh annually but lose 2.0 TWh annually due to inefficiencies. Also, there is insignificant impact on the total cost of generation because the overall generation mix changes little. Batteries could be economically desirable for RE integration for grid services that are outside the scope of the study (e.g., frequency regulation, capacity value, local transmission congestion).

Retiring 46 GW of coal (20% of installed coal capacity) does not adversely affect system flexibility, assuming adequate instate transmission. Retiring coal plants that operate less than 15% of their capacity annually (205 generation units, totaling 46 GW in capacity) has almost no effect on system operations.

Summary: Power system balancing with 100 GW of solar and 60 GW of wind is achievable with minimal integration challenges, bringing benefits of reduced fuel consumption and emissions. Meeting existing regulatory targets for coal flexibility, enlarging geographic and electrical balancing areas, expanding transmission in strategic locations, and planning for future flexibility can enable efficient and reliable operation of the power system now and in the future.

KEY FINDINGS: Different Pathways to Meeting RE Targets; Looking Beyond 2022 A wind-dominated system achieves higher RE penetration rates and requires less thermal fleet flexibility. Compared to the official RE targets, a scenario with more wind (100 GW wind, 60 GW solar), helps achieve a higher annual RE penetration rate (26% compared to 22%, due to wind’s higher capacity factors), reduces CO2 emissions an additional 6.1%, and has less RE curtailment, 1.0% compared to 1.4%.

Because of its relatively less variable net load profile, the higher wind scenario creates fewer conditions requiring thermal plant flexibility.

A 250 GW RE system could achieve India’s Nationally Determined Contribution targets, but 16% annual RE curtailment in the Southern region would likely signal the need for modified strategies. To identify a more viable pathway toward 250 GW, additional studies can evaluate the trade-off among increasing system flexibility versus locating more of the RE capacity in other regions.

Potential Planning and Policy Actions that Can Support RE Integration 1. Coordinate RE generation and transmission at the state level to ensure sufficient in-state transmission.

2. Create regulatory or policy guidelines to support institutionalization of cost-optimized capacity expansion planning. Create and maintain a nationwide model that helps optimize generation and transmission buildouts, which can then be used to inform investment decisions and RE policies.

3. Evaluate options for enhanced coordination of scheduling and dispatch between states and regions.

Credits: National Renewable Energy Laboratory

Solar Quarter • July 2017 18

In Conversation Emmvee thrive towards qualitative and quantitative optimization in providing customers with Sustainable Wide Ranging Solar Power Solutions facilities for next 25 years. The capacity of solar power plant is 15 MW.

Mr. DV Manjunath Managing Director, Emmvee Group

Let’s begin with a glimpse of your company’s presence and offerings in India?

EMMVEE is the market leader in solar industry with global presence since 1992. Since then we are setting new trends with its comprehensive system solutions. Emmvee, manufacturer of photovoltaic modules and solar water heating systems with 2 specialized manufacturing facilities and employs over 650 people. Emmvee at present has 0.5 GW per year solar module manufacturing capacity and has plans to expand as per the market development and needs in future.

What are your growth plans for the Indian market?

Based on market demand and needs, Emmvee want to expand the manufacturing production facility considering both backward & forward integration.

What have been the latest trends in demand for your products & services in India? Where do you see the next demand growth coming from?

As India is growing rapidly in adopting solar energy.

There are number of power projects coming up in India. Large corporates are investing in solar power production and most of our modules goes to these big projects, besides this there are many residential projects coming up in the country.

We produce modules that are more appropriate for such applications.

Tell us a bit about the recent technology advancements in your sector?

It has been a significant improvement in solar cell efficiency, today solar cells used in large projects has hit 19.5%. Many new cell technologies have also made inroads. For example HIT, BIFACIAL, PERC, organic cells are raising good interest as future technologies.

Anything else you would like to add for our readers.

Emmvee thrive towards qualitative and quantitative optimization in providing customers with Sustainable Wide Ranging Solar Power Solutions. We believe in quality and our infrastructure, specialist staff and engineers, and state-of-the-art process make sure we achieve optimum production quality and well satisfied customer .We are committed to offer highly reliable product and solar power solution.

We are also very active in EPC space of large solar photovoltaic based power projects. The company has a great deal of experience in developing and commission many power projects in Europe. The company owns and operates 4 power plants in Germany. In India too, the company has successfully completed power projects aggregating to a total capacity of 100MW as on date, which also includes roof top projects.

What have been some of the recent developments at your organisation? � We have installed the world’s most advanced cell stringer machine and multi-stack laminator, beside other sophisticated machine in our facility. � Emmvee commissioned 1MW Roof–top solar power plant at its solar water heater manufacturing facility in Dabaspet, Karnataka, India, has a production area of 25,000 Sq. mtrs. � Emmvee is also a successful bidder for developing 3 power projects of total capacity of 40 MW in Karnataka. These projects are being developed at the cost of around 280crores. � Emmvee’s Joint Venture with Dr. Reddy’s Lab, Hyderabad for the supply of solar power for their

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Solar Quarter • July 2017 19

Industry Perspective Impact Of GST On Solar Sector The GST structure on solar industry lacks clarity which is delaying the project execution and has slowed the market drastically since its introduction on July 1st.

We find that Government has not considered any difficulties and confusion prevailing in some other all segments of Solar Industries. Let us highlight below the problems we face in small off grid power plants and Retail Marketing, after that we will highlight the problems we are facing in Module Manufacturing.

b) Solar Power Generating System - Off grid Solar Inverter which includes

a) Solar Power Generating System

1) Solar Street Lamp @ 5%

Purely DC Power supply based on Solar Energy which includes

3) Solar Battery @ 28%

1) Solar Modules @ 5% 2) Solar Battery @ 28% 3) Inverter @ 12i 4) Cables @ 28%

c) Solar Street Light System 2)Street Light LED Type @ 12%

1) Solar Panels GST@5%

4)Cables @ 28%

2) Solar Battery GST @ 28%

In all the above 3 cases, as a manufacturer of Solar Modules, we are charging final GST of 5% and have a big amount which is due for refund. It is not easy to get refund from Govt Officials.

3) Solar Charge Controller GST @ 18% 4) Cables for Connection GST @ 28%.

We are getting from customer GST @ 5% and paying at the rate of 18% and 28%, how to get refund from department, till what time will our capital be blocked, Are there any talks for making components of the System also at GST @5%. These are some of the burning questions that need to be addressed.

Similarly,

Soumyen Mukherjee President

As given in Chapter heading 84 or 85, all components/ spares of Solar Power Generating System should be at 5% GST, We need some kind of paper work so that components required to supply the above system are available at 5% Per GST as per Chapter Heading.

Similarly, same problem lies with Module Manufacturers. As per Govt Solar Module is to be sold at 5% GST under heading 84 or 85, but raw materials

The move to start a new regime is always very appreciable. Imposition of GST is expected to be a good move for our country.

The nation was running by a parallel economy which didn’t contribute directly to the growth of the country. With the compulsory imposition of GST it is expected that parallel economy will come under the same umbrella of the country.

The Solar industry may face Sova Solar Ltd. some initial hindrances, like other industry, but in long run it will definitely enjoy the benefits of GST. With the help of instilling more liquid funds into the economy the purchasing capacity of mass will be increased.

GST will not be a cost to registered retailers therefore there will be no hidden taxes and and the cost of doing business will be lower.Benefit to people to that, as prices will come down which in turn will help companies as consumption will increase. Once this flow will become smooth, like other industry Solar Industry will also enjoy the benefits.

In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services.GST will be levied only at the final destination of consumption based on VAT principle and not at various points (from manufacturing to retail outlets). This will help in removing economic distortions and bring about development of a common national market, which ultimately help the total economy and Solar Industry is not out of the economy .Moreover, GST will also help to build a transparent and corruption free tax administration.

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for the same attract very high GST, namely 1) Silicon Sealant GST @ 28% 2) Solar Glass GST @ 28% 3) Aluminum Frame GST @ 18% 4) Ribbon GST @ 18% 5) EVA, Backsheet @ 18%.

6) Junction Box @ 18% As you can see, we as a module manufacturer is also paying higher amount of GST while procuring raw materials while getting only 5% from the customer.

Mr. Abhinav Mahajan Director IB Solar

The above scenario is very troublesome for the future of the Indian Solar Module Manufacturing Industry and this matter needs to be taken with the Government.

Further we should take up with Govt to use Made in India Solar Modules,so that local manufacturers are able to sell panels in India , as such Make In India scheme is turning out to be failure with over 90% share of the installed capacity is of Foreign Solar Modules.

“The new GST rate of 5 per cent will have a marginal impact on manufacturing and maintenance of solar equipment and projects. “There is expected to be a 4-5 per cent rise in project cost after the GST. That would not mean a significant impact in the per unit cost. The new rate will also impact tariff by around 15-20 paise. I think the viability of solar in the Indian context will remain. If it were a lower GST rate, then that would have been an added incentive but at an overall level I do not think it will make a difference in the long run. Those who have recently bid aggressively assuming that prices of modules or panels will have a lower rate will face slight problem for the transitionary period but I think over time the price economics will adapt to the new regime”

Mr. Manish Gupta Director Insolation Energy Pvt.

“Reduction of complexities goes a long way in reducing costs. That being the driving force in PV industry to make in independent of grants and subsidies, GST will go a long way in addressing this need, when the dust settles. As things become simpler it will bring down the layers/channels between suppliers and customers, which in turn again results in lowering of costs and speeding up execution. This will be key to mass adoption of rooftop solar in residential/commercial segment.

DSM is developing materials targeted at bringing down levelized costs of energy resulting in interesting priceperformance ratio in PV modules for rooftop segment and is positive about impact of GST on solar industry in India.”

Vivek Chaturvedi, Regional Director – Solar, DSM India, Middle East and Africa

Solar Quarter • July 2017 20

Industry Insights Understanding India’s Currency Hedging Facility Foreign debt can increase the amount of capital available for renewable energy and provide a cheaper source of capital. A currency hedge – a strategy to reduce risks in the foreign exchange market – is often needed to protect against the risk of currency devaluation. When there is a mismatch between financing currency (foreign) and revenue currency (domestic) in a renewable energy project. The high cost or lack of hedging facilities for some currencies poses a barrier to mobilising foreign capital for investment in renewable energy.

This “FX Hedging Facility” aims to reduce the cost of currency hedging by targeting a particular tranche of currency risk, thereby allowing risks to be allocated to suitable parties and eliminating the credit risk premium (The Lab, 2016a).

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To address this challenge, the Indian government has been experimenting with different concepts, such as a currency hedge fund or a currency risk guarantee. The government is also working closely with the India Innovation Lab for Green Finance to develop a currency hedging facility to cover the di erence in exchange values between the Indian Rupee and hard currencies (e.g., USD or euros) over the long term.

The Lab is a public-private initiative that aims to seek out and help implement novel solutions for unlocking and scaling up investments in green infrastructure in India.

In October 2016, the Lab members endorsed the design of a customisable currency hedging product, which involves a foreign exchange (FX) hedging facility backed by a risk guarantee. This “FX Hedging Facility” aims to reduce the cost of currency hedging by targeting a particular tranche of currency risk, thereby allowing risks to be allocated to suitable parties and eliminating the credit risk premium (The Lab, 2016a). With strong support and endorsement from the Lab’s members, including the Ministry of Finance and Ministry of New and Renewable Energy, the facility is moving forward on pilot projects with key financing stakeholders (The Lab, 2016b).

Solar Quarter • July 2017 21

Industry Perspective A road map has been laid out to set up at least 50 solar parks, each capacity of 500 MW. How do you think the solar parks in India are shaping up?”

Govt. of India has come out with audacious target to double India’s solar generation capacity, from 20 GW to 40 GW, by setting up solar projects of installed capacity of 500 MW or more. This will require focused effort from all GoI agencies and transparency along with swift response to succeed.

These projects are called Ultra Mega Solar Projects.

UMPP projects were essentially intended to bring economy of scale for land, evaluation infrastructure and the balance of system. India has already experience with Ultra Mega thermal projects (UMPPs). However, we believe that concept of Solar Park is different in one fundamental aspect and that is

Power plays a key part for growth in economics of a country.

The power sector of India is one of the largest growing sectors in the world, due to the high power demand of electricity. As India is power deficit, there is a huge gap between the power generation and power demand. To shorten this gap, we are moving from conventional sources to non-conventional sources of energy.

India’s perspectives are to improve power generation, with keeping the environmental safe for our future generation.

India’s geographical conditions are most suitable to harness solar energy in the world. We are blessed

This is an appreciable initiative taken by Government of India. Main development model used for Solar power plants have been turnkey by developer from arranging land to connectivity and construction of the plant. Main challenges before the developer for timely completion are land acquisitions, ROW and Central/State Grid Connectivity. Moreover Grid configuration conflict in suggested schemes by central/SECI while implementation into state grids adds on to delay or stagnancy of the project.

Solar park developer provides land and connectivity so that cluster development of plants are achieved.

Most of the solar parks are in JV with state government which reduces lead time for land acquisitions.

Currently 34 solar parks are completed / sanctioned in 21 states with a total capacity of 20 GW. The tariff has

Pursuant to the aggressive policy-end measures taken by the government towards development of solar parks, substantial on-ground progress has taken place with several states having rolled out/rolling out specific incentives promoting development of solar parks by providing for measures like deemed conversion of land, single window clearances, road connectivity, exemption from payment of electricity duty, provision of power evacuation facilities and several other ancillary facilities.

However, to assess how the solar parks in India are shaping up, it is not just relevant to understand the policies brought in place, number of in-principle approvals granted/funding provided by the state/ central government etc., but also to evaluate if the purpose of bringing in such policies for development of solar parks is being accomplished or not.

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it will enable smaller developers to participate in the opportunity. In past, what we saw in thermal UMPPs is rise of few large companies who captured the plants & resources offered. Going forward, what we foresee in case of solar parks is that this framework will make benefits of economies of scale available to even smaller developers.

power supply ecosystem shifting from few large developer with capital as core competency to a multiplayer ecosystem based on digital capabilities.

This creates opportunity for nimble & small players to enter the market & create value. This will require developer to be focused on building capabilities in areas like i) digital project management ii) On demand analytics & insights based operations iii) connected ecosystem with customers, vendors & employees. It may be start of a mega trend with

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official views of Accenture.

with 300 plus of sunny days. Technological changes are making the solar power, financially viable by reducing the high cost. Government is planning to set 100 GW of solar by 2020 and out of which, 20 GW is for solar parks. Solar parks or solar power generation at one location brings the costing and operational cost at its minimal. Solar parks are generally made on the waste-land or non-agricultural land. To reduce the India’s deficit gap of power, the effective way is to have more of these solar parks. Government of India has taken a big step to reduce the present deficit by planning to have 50 solar parks with 500MW capacity. The major challenge related to the solar park is the Transmission and Distribution (T&D) as they are located at remote areas and far away from

the places of demand.

driven to new lows in these solar parks considering that the major risks are taken care of. However the development of a project within a Solar Park turns out to be a little costlier affair compared to non-park projects. Through the help of Government and Nodal agencies the cost could be brought down.

substation permissions and construction.

Financial support for solar parks as business entities are yet to be matured.

Investments are getting attracted for the development of solar parks and the country is likely to witness increased interest in this sector. One of the major concerns will be acquiring contagious parcel of land for larger capacities (1 MW could need around 4 to 5 acres of land). This will lead to partnerships with state agencies / PSU for park development.

Enhancement in the tariffs fractionally or marginally for the solarpark projects would attract more developers.

India is set to achieve its target of 25 GW of solar park capacity in the near future.

The lead time for development of a solar park could be more than a year considering the transmission and

On this note, it must be considered that as on date, the cost(s) to be incurred by a developer for setting up a project in solar parks, like development charges, lease rentals, O&M charges etc. are relatively higher in comparison to the projects being developed outside of solar parks.

In our experience, what has also been a major challenge for investors, is the status of the facilities which solar parks boast of being made available to the developer. As an example, in several instances where bids were floated by the government for development of large capacities as a part of a solar park, development of evacuation infrastructure, road connectivity, levelization of land etc. were still not carried out by the implementing agencies. Such issues have often made it difficult for the developers to do a realistic analysis of their exposure, while bidding for such projects. Further, we note that the documents

Mr. Roshan Joshi Principal Accenture

The present bid tariffs based on reverse auction is in the range of Rs.2.44-3.30/kWh which signifies the major improvement in cost competitiveness in the solar power. The success of this non-conventional power sector largely depends on the efforts and mindset of the Government.

Mr. Sunny George General Manager-BD Asun Solar Power Private Limited

Mr. Brijesh Gupta CEO, Renewable Energy Business, Atha Group

which are expected to be signed by the successful bidders with the relevant governmental authorities, such as PPAs, implementation and support agreement, land use permission agreement, coordination agreement etc. do not address such risks adequately, leaving the Mr. Rahul Arora bidders exposed to Partner any liability which may arise due to failure to HSA Advocates commission the project within the agreed timelines because of any such factors beyond their control.

Solar Quarter • July 2017 22

Industry Perspective

The federal government of India has approved an investment of Rs 8,100 crore for setting up at least 50 solar parks and ultra-mega solar power projects.

The federal government of India has approved an investment of Rs 8,100 crore for setting up at least 50 solar parks and ultra-mega solar power projects, an investment that would help double the solar power production target to 40,000 MW. The concept of Solar Park in India which begun with Charanka in Gujarat has now expanded to include large operational parks like Bhadla in Rajasthan, Kurnool Ultra Mega Solar Park in Andhra Pradesh fueling the growth in installed capacity of Solar in the country.

While developers of Solar Parks take care to ensure minimum hassles for their customers who want to

Even developers of large solar parks do not invest in a high quality solar weather station to conduct ground measurement of solar radiation data and other weather parameters.

a great extent.

Vaisala studies estimate that even 4 months of ground measurement could reduce uncertainty due to resource availability by almost 40% and 1 year ground measurement could reduce it by 56%. Vaisala

solar park. This will go a long way in helping their

site adapted with ground measurement data, provides the most accurate GHI and DNI values for a given site and helps reduce uncertainty to All developers of solar parks should install and diligently maintain one or many high-quality weather stations depending on the size of the clients to reduce uncertainty and get a highly accurate estimate of the energy that could be generated from their projects.

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+91 80235 68018 Solar Quarter • July 2017 23

Industry Perspective Key Driving factors for falling bids in india We have seen a sharp downward trend in India’s solar auctions recently. While largely this has been driven by falling prices of modules, which account for roughly 50-55% of the project cost, falling BoM costs and design optimisation have also allowed bidders to reduce tariffs.

We witnessed a continuous fall in module prices over the last few years and more particularly in the last 2 years as more and more Chinese modules came into India. Based on this trend, it seems that some of the recent bids expected this downward trend to continue and expected module prices would reach US ¢20-22 / Wp. However, the falling trend of prices was recently arrested and prices went back to US ¢32-34/ Wp. This trend reversal was driven by an aggressive race to complete commissioning of large PV capacities in China by June 31st as the lucrative FiTs of last year were expected to reduce from July. Chinese manufactures

therefore focused their attention to the local Chinese market for the last 2 months as China witnessed a record 24 GW of installations in 6 months of 2017. It is expected that this year China will install 35-40 GW of solar PV in all. If we compare the annual demand of 30-35 GW of PV installations within China with the installed module manufacturing capacity of 65- 70 GW, it means that there is excess capacity installed in China. With US and EU imposing antidumping duties for Chinese modules, India is the next largest market for Chinese module. An overcapacity in China coupled with good FiTs within China means that Chinese module suppliers can sell modules at very competitive rates in India – even going down to short run marginal costs.

Whether this trend of falling module prices will again start in future is debatable. Particularly as India begins an antidumping investigation into import of cells and

modules from China, Taiwan and Malaysia, it will cause anxiety in the minds of developers that have already quoted aggressive bids but not entered into arrangements to procure the modules. In case evidence is found and any anti-dumping duty is imposed on Chinese modules coming into India, it will mean that the power tariffs that we have seen may not fall further and could stabilise.

India recorded its lowest-ever solar tariff of Rs 2.44/unit of electricity. That is a 73% fall since 2010, and compares favorably with India’s cheapest power source– coal, electricity from which now ranges between Rs 3/unit and Rs 5/unit.

regulatory approval, engineering, procurement and construction (EPC), and land acquisition to grid connection.

Major factors which are driving identification of such tariff in reverse auctions are following

4. Global capital flows into India are playing a key role as well, endorsing, supporting and encouraging the positive policy moves of the Indian government

1.

Drop in cost of modules, the prices for which fell 29% in India in the first quarter of 2017 over the previous year.

2. The cost of debt is a major input into the cost of solar generation, which are available at betterrates due to implementation of payment security mechanism and infrastructure risk mitigation with solar parks 3.

Given the operating costs are near zero once built. The rapid upscaling of investment has also encouraged learning by doing, driving the costs of implementing solar down along the entire value chain from finance,

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Mr. Gurpreet Chugh Consulting Director/ Principal ICF

5. These tenders have 12-18 months’ time limits for delivery These new low prices are truly phenomenal, prices don’t need to go lower, at these levels solar is the low-cost solution for India’s growing electricity needs. A major long-term win for Indian electricity consumers, is also that these solar tariffs are fixed in nominal terms for the 25-year contract duration.

Mr. Ashok Kumar Nehra CEO Enfrosun Power Private Limited

Solar Quarter • July 2017 24

Product Feature Real-Time Site Monitoring with NRG Systems’ Solar Resource Assessment System Collecting accurate data from a utilityscale solar PV plant site is a critical part of all stages of project development.

In addition to helping developers estimate a potential facility’s annual energy production (AEP), secure favorable financing, and see a swift return on investment, this information is key to ensuring that an operating plant is reaching its full energyproducing potential.

IPACKACCESS BENEFITS � Deliver real-time, 1 Hz meteorological data into your wind farm’s SCADA system via Modbus TCP � Deliver statistical data (average, standard deviation, min, max, and max 3-sec gust) at user-selected intervals (1, 2, 5, 10, 15, 30, and 60 minutes) so it can be directly forwarded to forecasting providers or other stakeholders* � Access the data on pre-defined registers using industrystandard Modbus TCP protocol* � Ensure the security of your data by limiting access via userdefined IP addresses � Quickly install the unit in the field, no coding required*

power module for data loggers that enables plant operators to integrate real-time meteorological data into their SCADA (Supervisory Control and Data Acquisition) systems via Modbus TCP. iPackACCESS serves up real-time 1 Hz sample as well as statistical data at user-selected intervals. Data are delivered to pre-defined Modbus registers. With no coding required, iPackACCESS offers ease-of-use and data security by limiting access to defined IP addresses.

For more information about NRG Systems and the company’s products for solar resource assessment, solar monitoring, wind resource assessment, wind plant optimization, and a range of atmospheric remote sensing applications, visit nrgsystems.com or contact Arvinder Singh, Senior Territory Sales Manager, Asia Pacific, as@nrgsystems.com.

Today, on-site solar resource assessment is the most widely used method for data collection. When coupled with satellitederived irradiance data, on-site measurements ensure the lowest resourcerelated risk and an increase in p90. While many factors must be considered when conducting resource assessment, none have the potential to impact the quality and accuracy of your data as much as the measurement equipment you choose.

For more than 35 years, NRG Systems has been creating superior turnkey measurement tools for the renewable energy industry. Designed and manufactured in Vermont, USA, NRG’s products are renowned for their accuracy, efficiency, and ease-of-use.

The company’s Solar Resource Assessment (SRA) System is a prime example of its integrated approach to resource assessment.

Designed for both preand post-construction data collection needs, NRG’s SRA System comes in four different sensor configurations – each built around a pair of pyranometers that provide redundant measurements of Global Horizontal Irradiance (GHI) – and can be customized to meet each customer’s unique project requirements.

All potential SRA System configurations integrate seamlessly with NRG’s SymphoniePRO® Data Logger – a lowpower, industrialgrade data logging system. Data collected

by SymphoniePRO are transferred by NRG’s line of Symphonie iPackGPS communication and power modules, including Symphonie iPackACCESS. iPackACCESS is communications

a and

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Solar Quarter • July 2017 25

Industry Insights Capital Market Instruments For Solar Energy Financing The rapid decline in technology costs has increased investor appetite for renewable energy investment projects. This in turn is making more capital available in many parts of the world. Green bonds and yield companies (yieldcos) are two innovative mechanisms gaining prominence. Their rise is underpinned by strong government commitments to establish an attractive market environment for renewables and by private sector interest in funding renewable energy projects. Such instruments open up opportunities to new classes of capital providers in the renewable energy sector while providing the necessary liquidity in the market and helping to reduce the cost of capital.

GREEN BONDS Green bonds are used increasingly as vehicles for institutional investors to invest in renewable energy assets in capital markets. They can offer a means for borrowers to raise large-scale, longterm financing from non-bank sources and at relatively low cost. The potential for the continued growth of green bonds needs to be further analysed because their success thus far relies on the high credit-rating of the issuing entity. In 2015, nearly half the USD 41.8 billion green bond-labelled proceeds went to renewable energy projects, making renewables the biggest sector in the green bond universe (IRENA, 2016f). In 2016, more than USD 62 billion of green bonds was issued in the first 10 months alone, making this a record year (see Figure 3.4). Interest in green bonds is growing rapidly, particularly in emerging markets led by India and China. More recently, Mexico and Brazil also issued inaugural green bonds in December, 2016.

YIELDCOS The yieldco structure emerged in 2014 as an option for energy utilities and other renewable energy asset owners to spin off operative assets from their balance sheets to develop, finance and implement new projects. In a typical yieldco structure, an entity transfers its operative renewable energy assets into a new company it fully owns. This new entity is listed thereafter, and new equity is raised through a share issue, while the parent company typically remains as a significant minority owner in the yieldco. As yieldcos grow through the purchase of stable, operational assets from parent companies, they can enable institutional investors to invest equity directly

in corporations and thus own operational renewable energy assets (IRENA, 2016f). The sharp decline of most US yieldco share prices in 2015 by an average of 40% raised concerns among many investors.

Prices fell because the yieldcos could not raise public offerings at high rates and were unable to acquire new assets that could deliver steady cash flows for dividend growth. As a result, no equity was raised for a period of time. However, there were signs by late 2016 that the US yieldco market was starting to recover ground, despite steep price reductions in various stock markets and the financial difficulties of some parent companies in 2015. A number of yieldcos announced plans to issue new shares in 2016, although the scale was much smaller than before. In contrast to the period before 2015, the initial public offerings in 2016 were considered to reflect more realistic valuations. Yieldcos again have begun to acquire operating US wind power assets, with some yieldcos showing growth potential to acquire projects on the open market.

An Overview of Green bond markets in India and China INDIA’S green bond market is expanding quickly, with more than USD 1.1 billion issued during 2015, and a total of USD 800 million in the first eight months of

2016. Following the inaugural green bond issuance

by Yes Bank in February 2015, the Export-Import Bank of India and the Industrial Development Bank of India also raised funding via green bonds.

Since then, the Indian market has seen the first corporate green bond issued by a wind power project developer; the first certified Indian green bond to be listed on the London Stock Exchange; and the first green bond issued by India’s largest power utility.

This rapid growth is due largely to the Indian government’s strong commitment to supporting green financing mechanisms. In January 2016, the Securities and Exchange Board of India released its o¨cial green bond requirements, establishing guidelines for reviewing, reporting and tracking the progress of green bond issuance.

CHINA is the world’s single largest green bond market. Chinese issuers led issuances in 2016, contributing to about one-third of total volume in the first nine months of the year (China Economics Net, 2016). The Chinese government offers tax exemptions or subsidies for green bond insurance to reduce financing costs and is currently creating national standards and regulations.

In December 2015, the Green Finance Committee of the China Society of Finance and Banking published the Green Bond Endorsed Project Catalogue, which sets criteria for various projects and businesses to qualify as green. In September 2016, the People’s Bank of China (the country’s central bank) released green financing guidelines that highlight the national government’s support for green bonds (China State Council, 2016).

This prompted the Bank of China, one of the country’s largest state-owned commercial banks, to announce plans in September 2016 for the first green “covered bond” to be issued by a Chinese public entity. The bond will conform to both the People’s Bank of China’s Green Bond Guidelines and the international Green Bond Principles. This structure can improve the rating of the issuance, giving international investors easier access to the rapidly growing Chinese green bond market.

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Solar Quarter • July 2017 26

Product Feature MECO “SOLAR MODULE ANALYZER (Photovoltaic I-V Curve Tester) Model 9009” The MECO Solar Module Analyzer Model – 9009 is a portable analyzer used for testing, maintenance and finding efficiency of various parameters of solar panel and cell. Analyzer can be used to design Solar System to generate specific power. It can identify Solar Power System requirement, best angle of Solar Panel installation and Broken / Worn-Out cells.

size as well as optimum power output position of

Other features:

panels and helps to identify defective cells or panels

Solar Module Analyzer 9009 can scan solar cells/ panels upto 60V and 12A maximum. The portability of this device means that it is also useful in quality assurance at various stages on the production line and can be taken from one site to another. When used in the installation of solar panels, solar panel analyzer assists in determining the proper inverter

and voltage (Vnow, Vopen, Vmax). Solar cell/ panel

Max. Solar Panel Power (Pmax) search by AutoScan : 60V, 12A, Best Resolution of 1mV1mA, Memory Size 100 Records, Large LCD backlight, Communicate with PC via USB Cable, Manual AC Adaptor & Rechargeable Lithium Battery, I-V Curve with Cursor to Display each Data Point

that have worn out over time.

The solar panel analyzer also provides the user with current and voltage (I-V) test curves, maximum solar power (Pmax) as well as current (Ishort, Imax) efficiency (%) is also easily determined using the unit.

Solar Module Analyzer is supplied with user friendly software for Data Storing and Analysis. Users can store data (.CSV/.TAB) that can be read in MS Excel and print Waveform / Graph via printer.

For details please visit: website: www.mecoinst.com

MECO “SOLAR POWER METER Model 936” ● Physics and optical laboratories ● Meteorology ● Agriculture

● Windows performance – calculation and verification of the heating or heat reduction caused by direct sunlight.

MECO Solar Power Meter is a portable meter used for measuring Solar Power or Solar Irradiance.

It uses High sensitivity Silicon Photodiode to measure solar power. Solar Meter can also detect Solar Tilt Angle with Orientation.

This instrument is designed to measure solar power in the range from 400 to 1100 nanometers. It Measures the solar power and transmission up to 2000 W/m2.

Solar Power Meter has Max / Min / Avg and data hold functions to indentify locations with maximum or minimum power.

The good spectral range, orientation and angular detection of meter allow users to conduct the most precise quantitative measurements of Solar Power Radiation.

Features : ● Solar power measurement Orientation and Tilt angle

with

● Easy measurement for rate of daylight penetration ● Auto change for measuring range ● Auto power off with disable function ● Instantaneous values

display

Ave/Min/Max

● 20 points memory ● Socket of tripod mounting ● Magnetic mount ● Backlit LCD and 4 digits triple display

Applications : ● Solar radiation measurements ● Solar power research for location of the solar panels or solar water heater

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Solar Quarter • July 2017 27

Industry Insights India Solar Tariffs - Irrational or Misunderstood? economics of traditional, more risk prone sources of energy generation. In this light the natural floor for solar tariffs in India cannot be discerned by starting at the top and chipping away at a thermal derived returns (with its corresponding tariff) benchmark. On the contrary it can only be appreciated by working ones way from ground up. This means identifying an appropriate market determined returns reference benchmark for what solar’s underlying cash flows really represent, and then asking oneself how much additional return one requires beyond that benchmark for the trouble of simply waking up everyday and waiting for the sun to shine. An honest answer to this fundamental question will point to required returns and corresponding tariff, and if one is not happy with those numbers, one can be sure that there are many others who will be.

I recently came across an article highlighting subdued M&A activity in the Indian solar space as it appears buyers are now reluctant to acquire older projects with high tariffs due to perceived curtailment and/or tariff revision risk! I guess this means the latest solar tariffs may not be so irrational after all.

A high tariff is only as good as the offtaker - and keep in mind that attractive legacy tariffs are principally the domain of state Discoms as central offtake came into the picture only recently. On the flip side, while tariffs may now be eye poppingly low for central offtakers like NTPC or SECI, they come with the comfort that the resulting top line is being implicitly underwritten

by GOI. It is in this backdrop that I don’t completely “get” the concerns that solar projects are unviable at recently discovered low tariff levels.

IRR’s may appear low in absolute terms, but they are not in negative territory First, while resulting Internal Rate of Return to Equity (IRR- and I don’t agree with this single narrow measure as being the last word in investment decision making) gives the appearance of being low in absolute terms, it is still solidly positive – so it is not as if absolute returns have drifted even close to negative territory. Second, once a decision to invest has been made, energy sector project viability in general remains threatened by a host of factors such as cost overruns, constraints on availability of input, sudden increases in price of input and curtailment of offtake. All of these risks have tended to afflict traditional sources of energy generation in India, more so the recent additions to capacity contracted with various state Discoms for offtake. Solar on the other hand is either inherently immune to these risks or is implicitly covered on the curtailment front by central offtake.

An IRR only investment making process can lead to value destruction if not balanced with an independent assessment of project risk and resulting required capital cost.

This brings me back to my earlier point on IRR. Using an ad hoc target IRR derived from some perceived sponsor cost of capital, or even worse, a single ad hoc target IRR for different project types as a one size fits all approach to hurdle rates is fraught with danger. A sound investment decision is one where IRR exceeds a project’s independently calculated Cost of Equity (CoE) for only then will it turn out value accretive, otherwise we are talking value destruction.

It’s important not to confuse the investor/sponsor cost of capital with the project CoE here. It’s even more important to ascertain the project’s standalone CoE reflecting all risks in the first place.

India today has thousands of MW of stranded thermal capacity. In many instances investment

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decisions appear to have been made on the basis of financial models that simply churned out IRR’s that exceeded perceived sponsor cost of capital. A correct approach which calculated a distinct CoE for each project reflecting 360 degree risks for the same, would have most likely revealed a CoE in excess of financial model derived IRR, sending a clear signal to sidestep the opportunity. In other words project risks were greatly underestimated and not adequately captured in the hurdle rate when assessing projected cash flows. Instead, an erroneously lower hurdle rate encouraged unnecessary risk taking.

With thermal, risks were underestimated; with solar, an overestimation of risks appears to be taking place.

With solar, it appears the prevailing belief that tariffs are too low flows from the opposite direction, ie an overestimation of risk.

Among other features, solar projects benefit from insignificant cost overrun risk in light of ever falling module prices, zero input cost, zero input cost volatility, minimal O&M risk and generation contracted out with an implicit GOI guarantee – so where is the risk? Adding minimal barriers to entry into the mix merely helps to explain the rapid pace of drop in tariffs towards a natural floor but not the level of the natural floor itself.

Mr. Gagan Sidhu Renewable Energy Finance/ Investment Banking Professional GMR Group

ADVT

Returns expectations for solar need to be de-linked from thermal and approached from a totally different perspective.

This brings us to the most topical question of all - where exactly does this natural floor lie? To truly understand solar is to appreciate its simplicity and to discard all the baggage accumulated over years of analyzing the

Solar Quarter • June 2017 28

Industry Insights Risk Management In PV Financial Modelling Risk Identification In PV financial modelling, improper inputs (costs, yield, e.g.) will inevitably result in incorrect calculations of revenue, cost, cash flow etc, thus give inaccurate assessment of the investment-worthiness of a PV project. Financial model inputs are strongly influenced by technical assumptions related to the PV levelised cost of electricity (lCoE).

In the recently released Solar Bankability project, the authors have compiled a list of 20 most common LCOE technical assumption risks by carrying out gap analyses on the technical assumptions used in samples of present-day PV financial models and plant yield estimation reports. They also extended their analysis and compiled technical failures from databases of

hundreds of MWp of PV plants in operation. Focus was placed on technical risks during planning and during operation and maintenance, and those risks which are relevant to the calculation of the PV lCoE. The failures are tabulated in a technical Risk Matrix.

The risk of each failure was assessed based on which PV project phase and on which PV plant component the failure could originate from.

The conclusion from this exercise is that there is a strong correlation between incorrect lCoE technical assumptions and PV plant technical failures. in fact, the technical failures listed in the risk Matrix are likely caused by the mistakes related to technical assumptions used in the PV lCoE calculation faulty planning, installation and operation and maintenance practice.

Figure 3: Lifecycle costs (CAPEX and OPEX) of surveyed PV financial models showing a significant portion of CAPEX in PV lifecycle costs

Technical Risks Due to Poor Assumptions in PV Financial Models To compile technical risks which could impact PV financial models, we surveyed samples of presentday PV financial models, EPC and O&M contracts, and plant yield estimation reports. These samples are from large-scale and commercial PV plants in France, Uk, Germany, italy and the Netherlands developed between 2011 and 2016. The survey highlights that in general there is neither a unified method nor a commonly accepted practice for translating the technical risks into PV financial models. The CaPEX appears to contribute a significantly large portion (roughly75-90%) to the PV lifecycle costs compared to the OPEX. Moreover, EPC and O&M costs are dominant in the CaPEX and oPEX (70-90% and 3070%, respectively).

Gap analyses were performed systematically according to the phases in PV project lifecycle and whether the root causes are likely to occur before, that is at year-0, or during the PV operation. The results show that technical gaps generally exist across all PV project phases. They occur in all elements of the PV lCoE, namely CaPEX, oPEX and energy yield estimation. There are two types of technical risks: those with economic impact on the energy yield of the PV plant, and those with economic impact due to plant downtime and cost of fixing during operation. The root causes of both types of risks could be introduced either during project development (procurement, planning and construction, i.e. EPC) or during PV operation (o&M). The list of important gaps identified in the analyses are presented in Table 1.

Table 1: Most common mistakes in the present day technical inputs for PV financial models Risk

Phase/field

Identified critical technical gaps

Procurement/ product selection and testing

1. Insufficient EPC technical specifications to ensure that selected components are suitable for use in the specific PV plant environment of application.

2. Inadequate component testing to check for product manufacturing deviations.

3. Absence of adequate independent product delivery acceptance test and criteria.

4.

The effect of long-term trends in the solar resource is not fully accounted for.

5.

Exceedance probabilities (e.g. P90) are often calculated for risk assessment assuming a normal distribution for all elements contributing to the overall uncertainty.

Planning/ lifetime energy yield estimation 6.

7.

Year-0 Transportation Installation/ construction

PRE-BID ASSISTANCE

Incorrect degradation rate and behaviour over time assumed in the yield estimation.

Incorrect availability assumption to calculate the initial yield for project investment financial model (vs O&M plant availability guarantee).

CONSTRUCTION SUPERVISION

8. Absence of standardised transportation and handling protocol.

9.

Inadequate quality procedures in component un-packaging and handling during construction by workers.

COMMISSIONING ASSISTANCE

10. Missing intermediate construction monitoring.

11. Inadequate protocol or equipment for plant acceptance visual inspection.

THIRD PARTY REVIEW

12. Missing short-term performance (e.g. PR) check at provisional acceptance test, including proper correction for temperature and other losses.

Installation/ provisional and final acceptance 13. Missing final performance check and guaranteed performance.

14. Incorrect or missing specification for collecting data for PR or availability evaluations: incorrect measurement sensor specification, incorrect irradiance threshold to define time window of PV operation for PR/availability calculation.

PLANT AUDIT

15. Selected monitoring system is not capable of advanced fault detection and identification.

16. Inadequate or absence of devices for visual inspection to catch invisible defects/faults.

Risks during operation

Operation

17. Missing guaranteed key performance indicators (PR, availability or energy yield).

18. Incorrect or missing specification for collecting data for PR or availability evaluations: incorrect measurement sensor specification, incorrect irradiance threshold to define time window of PV operation for PR/availability calculation.

Maintenance

19. Missing or inadequate maintenance of the monitoring system.

20.

Module cleaning missing or frequency too low.

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Solar Quarter • July 2017 29

Tech Insights Jakson making big strides in Rooftop Solar EPC Solutions Jakson showcased its innovative engineering capabilities by successfully integrating solar panels on the rooftop of train coaches run by Indian Railways.

The project was awarded to Jakson by Indian Railways Organization for Alternate Fuels.

As India increases its efforts to switch over to renewable energy, there has been significant investments in solar to meet the nation’s energy requirements. The National Solar Mission has set an ambitious target of 100 GW solar capacity by year 2022 with special emphasis on developing rooftop solar PV projects. The government plans to add 40 GW of rooftop solar capacity in the country by the year 2022 and the rest 60 GW coming from land based projects.

Rooftop Solar power plants are increasingly gaining popularity today across a wide range of industrial, commercial and residential sectors due to relatively lower cost of investments and lesser complexities involved in setting up a plant. Several favourable government initiatives like subsidies and net metering policies are also giving rise to a demand for rooftop solar projects in India. A nation-wide rooftop solar installation impetus is a sustainable strategy in the long run for the nation to meet its ambitious targets.

Rooftop Solar power plants are increasingly gaining popularity today across a wide range of industrial, commercial and residential sectors due to relatively lower cost of investments and lesser complexities involved in setting up a plant.

Jakson Group, one of India’s leading energy and engineering solutions company is amongst the few select companies in India with an integrated solar portfolio. The company owns and operates Independent Solar Power Plants, has engineering teams for execution of both land-based and rooftop solar power projects, and also manufactures and sells a wide range of solar modules and products.

In a report by Solar Energy Corporation of India, Jakson was ranked as the second largest rooftop

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solar installer in the country. It is a market leader in the segment with a rooftop solar projects portfolio of approximately 40 MW. In the past few years, Jakson has executed several rooftop solar power projects across some of the most prestigious buildings in the country. These include solar rooftop plants at the President’s Estate in Delhi, Varanasi Airport, Raipur Airport, Delhi Metro Rail Corporation, Yamuna Sports Complex in Delhi amongst others. In this article, we present two of its most innovative solar rooftop case studies for our readers.

Case Studies Powering the Coaches of Indian Railways with rooftop solar Jakson showcased its innovative engineering capabilities by successfully integrating solar panels on the rooftop of train coaches run by Indian Railways. The project was awarded to Jakson by Indian Railways Organization for Alternate Fuels. It was a complex project with unique design and engineering requirements – integrating solar panels on the roof of coaches that run up-to speeds of 100 km per hour.

Using an innovative engineering approach, Jakson was able to fit solar panels on the rooftop of the train coaches using specially designed U-channels.

The generated power will be used to power lights and fans inside the coaches for use by the passengers. This solar PV project will help Indian Railways offset Co2 emissions and also achieve significant savings in diesel costs.

The railways recently pressed into service once such DEMU train that will operate from Sarai Rohilla in Delhi to Farukh Nagar in Haryana.

for the 2010 Commonwealth Games. YSC wanted to harvest the power of solar. However, the metal roofing of the complex posed a challenge for installing solar panels. This was overcome by Jakson using innovative engineering capabilities. The plant consists of 1600 modules of 250 Wp capacity which generates approximately 5.84 lakh units per year. Bidirectional meters are installed for sale of power to the grid in case of surplus.

Jakson successfully commissioned a 400KW Solar Rooftop power plant on a metal roof without piercing the surface by using innovative Klip Lock mounting system

Innovative Klip Lock Solar Mounting Structure at Yamuna Sports Complex, Delhi Jakson successfully commissioned a 400KW Solar Rooftop power plant on a metal roof without piercing the surface by using innovative Klip Lock mounting system. The plant was installed at the Yamuna Sports Complex (YSC) in New Delhi, India. YSC is an international sports complex which is owned by the Delhi Development Authority (DDA). It was a venue

Solar Quarter • July 2017 30

Industry Insights Will the solar exuberance sustain?

CRISIL Research believes bidding aggression will continue for a while, despite pressure on returns The solar sector is super-charged right now, going by the aggressive tariff bids seen of late. However, there is a big question mark on whether, or how long, the euphoria will sustain.

Third, the Solar Energy Corporation of India has ensured that payment delay/ default risk to the solar developer is minimum by setting up a corpus fund to cover 3 months of payment in the event of delay.

Fourth,competition for Indian independent power producers has intensified with large global companies looking to expand their portfolios in India even as recent entrants also seek a piece of the pie.

Generation spurts with DC overloading without commensurate rise in capital cost

Source: CRISIL Research

Fall in bid prices not in sync with decline in module prices

Note: We have considered only central level bids in the given period.

Source: PV Insights; CRISIL Research

Tariffs hit a new low in May, with the winning bid for 500 MW capacity at the Bhadla Solar Park in Rajasthan quoting at Rs 2.44/unit – a price that makes it cheaper than even thermal power. This was way below the Rs 3.15/unit bid seen just the previous month,for a 250 MW capacity at Kadapa Solar Park in Andhra Pradesh.

Fifth, the risk is lower in solar parks, which offer ready infrastructure and utilities, including ~2,000 hectares of land with clear titles and evacuation infrastructure i.e. 400/220/132/33 kv grid substation with associated 220 kv lines.

Sixth, CRISIL believes developers are factoring DC side overloading, which essentially means photovoltaic arrays of rated capacity higher than that of inverters could be connected (which in turn reduces cost/ MW as seen in chart below) to generate more number of units from inverters.This view gains credence from the fact that in the Bhadla bids, for instance, there is no upper limit on the capacity utilisation factor that a solar plant should achieve.

Seventh, in order to improve project economics, the players could negotiate for buyer’s credit linked to import of modules – which account for 55-60% of the total capital cost – from Chinese companies. This would lead to savings as there would be no principal repayment for three years, and developers could refinance the loan at the end of that.

Eighth, large developers had raised funds last year from private equity funds and other institutions anticipating significant auctioning activity in 2017.

CRISIL believes the sharp decline indicates the players are aggressively trying to build their solar portfolios at the cost of project returns.

However, tendering activity in the past 6 months has been muted, mounting pressure on them to deploy funds and garner a larger piece of the pie.

All the same, CRISIL Research believes such low bid tariffs are unsustainable unless players are able to significantly reduce interest costs (below 9%) and module prices witness a sharp drop.

Global module prices have declined barely 1-2 cents/ Watt in the past few quarters and are expected to remain at these levels in the next few.

CRISIL Research believes the aggression in bidding is expected to continue over the next 12-18 months as players look to scale up their portfolios amid stiff competition and limited alternative investment options in the power sector. However, for growth to sustain,an improvement in the financial health of distribution companies, stricter enforcement of renewable purchase obligations and availability of low-cost finance would be critical.

Mr. Rahul Prithiani Director CRISIL Research

CRISIL believes the sharp decline indicates the players are aggressively trying to build their solar portfolios at the cost of project returns.

A bevy of factors has resulted in declining tariffs.

First, solar module prices have declined sharply – with ~40% reduction since the beginning of 2016 – to around 33 cents/ Watt today.

Second, the high annual global horizontal irradiance (GHI) in states like Rajasthan, Andhra Pradesh and Maharashtra ensures healthy power generation. Bhadla (Rajasthan), for instance,has a GHI of ~6 kwh/m2/day and over 300 sunny days in a year.

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Solar Quarter • July 2017 31

Global Insights Market Outlook: U.S. Q1 2017 Sees 2GW Solar Capacity Additions When accounting for all projects (both distributed and centralized), solar continues to drive a growing portion of new electric generating capacity additions.

For reference, a $0.78/W price on modules would match 2012 levels for imported Chinese modules and put average system costs at 2015 levels. In turn, while GTM Research expects 36 states to be at grid parity for rooftop solar at the end of 2017 under current conditions, 11 would fall out of grid parity if Suniva’s proposal were approved in H2 2017 and took effect next year.

In Q1 2017, the U.S. solar market installed 2,044 megawatts direct current (MWdc), following an unprecedented year of more than 15 GWdc installed in 2016. As was the case in 2016, Q1 2017 saw more than half of capacity additions come from the utility PV segment, which added more than 1 GWdc for the sixth consecutive quarter.

When accounting for all projects (both distributed and centralized), solar continues to drive a growing portion of new electric generating capacity additions.

Last year, solar ranked as the No. 1 source of new capacity additions, largely due to the double-digitgigawatt wave of utility PV installations that came on-line amidst prior uncertainty over the extension of the 30% federal Investment Tax Credit. Building off that momentum, solar accounted for 30% of all new electric generating capacity installed in the U.S. in Q1 2017, ranking as the second-largest driver of capacity additions across all fuel types.

In 2017, distributed solar is on track for a slowdown in growth across both, residential and non- residential PV. In the residential PV segment, national residential solar companies continue to slow operations and pursue profitable sales channels at the expense of growth. Equally important, segment-wide customer acquisition challenges are constraining growth in major state markets, with California expected to fall year-over-year for the first time this decade.

Meanwhile, factors including revisions to community solar programs rules, virtual net energy metering, and solarfriendly rate structures spurred a flurry of project development for non- residential PV in the second half of 2016.

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Meanwhile, factors including revisions to community solar programs rules, virtual net energy metering, and solar-friendly rate structures spurred a flurry of project development for non- residential PV in the second half of 2016. As we move further into 2017, a waning pipeline of projects still being grandfathered in under these programs, rates and incentives is expected to support incremental growth in 2017 for the non-residential PV segment.

Finally, the majority of utility solar installations slated for 2017 remain driven by projects that pushed out their completion dates from 2016 as a result of the federal ITC extension. Utility solar is on the cusp of another boom in procurement, with the majority of utility solicitations focused on maximizing the number of projects that can come on-line with a 30% federal ITC in 2019 or later by leveraging commenceconstruction rules.

But heading into 2018, uncertainty looms over the long-term outlook for U.S. solar, due to a new trade dispute initiated by the domestic module and cell manufacturer Suniva. On May 23, 2017, the International Trade Commission announced that it would consider Suniva’s, petition under Section 201 of the Trade Act of 1974. This petition could result in “remedies to safeguard against foreign-manufactured crystalline silicon photovoltaic products”, including import tariffs, volume limitations, or other measures.

The ITC will make a determination of injury by Sept.

22, 2017, and if it finds injury (or threat of injury), it will recommend remedies by Nov. 13, 2017. President Trump could then accept, modify or choose not to implement ITC’s recommended relief measures.

In its petition, Suniva is requesting relief against imports from all geographic sources. Suniva’s requests include, but are not limited to, a minimum price on crystalline silicon PV modules(initially $0.78/W) and a tariff on cells (initially $0.40/W).

These requirements would step down annually for three additional years.

The tariff on imported cells would step down to $0.37/W, $0.34/W and then $0.33/W, while the minimum module price would step down to $0.72/W, $0.69/W and then $0.68/W.

Meanwhile, more than two-thirds of the current utility PV pipeline stems from projects that utilities procured outside an RPS mandate, based on its costcompetitiveness with natural-gas alternatives. On top of that, more than 60% of the current pipeline comes from projects that signed PPAs in 2016 onward. Those 11 GWdc that support the near-term outlook are also at risk of project cancellation if module prices end up higher than developers’ assumptions when they initially originated contracts with utilities.

With the above in mind, it remains to be seen how the International Trade Commission will ultimately rule on the Section 201 filing – an additional layer of uncertainty lies in how President Trump will respond to the ITC’s recommendations. But if Suniva’s proposed minimum import price on modules and tariff on imported cells are approved, PV installations would significantly drop across all three market segments (further outlined in a forthcoming research note from GTM Research).

The majority of utility solar installations slated for 2017 remain driven by projects that pushed out their completion dates from 2016 as a result of the federal ITC extensio

Solar Quarter • July 2017 32

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Solar Quarter • June 2017 35