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Economics of setting up a MW scale solar power plant in India

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  • #31
    Originally posted by russ View Post
    You have to be a bean counter (money man - MBA )
    @ russ,

    Dear RUSS,

    I am neither scientist nor a economist nor in to MBA program as u assume.I am a mechanical engineer aged around 50.I don't know what is your expertise..I have expressed my views what i have studied via net..it is my hard earned money i need to invest cautiously..so i am here for some opinion and discussion.. If u have some solid information ( not like me all useless and bogus) please let me know why investment on solar is not sustainable with longer recovery periods..

    Comment


    • #32
      Originally posted by govindrao View Post
      @ russ,

      Dear RUSS,

      I am neither scientist nor a economist nor in to MBA program as u assume.I am a mechanical engineer aged around 50.I don't know what is your expertise..I have expressed my views what i have studied via net..it is my hard earned money i need to invest cautiously..so i am here for some opinion and discussion.. If u have some solid information ( not like me all useless and bogus) please let me know why investment on solar is not sustainable with longer recovery periods..
      Start your own thread. Bu tI will give a couple of clues.

      1. Without huge subsides solar cannot pay off.

      For each watt of RE you bring online you must match it with conventional generation, thus making solar unnecessary and just adds cost. Look at what has happened in CA. 20 years ago they only imported 10% of their energy and had low electric prices. 20 years after they quit building conventional generation and demand Renewable they now import 30% of their energy and have some of the highest electric rates in the lower 48. They expect electric rates to double this summer and rolling blackouts because neighboring states cannot meet the demand and will limit imports to CA. CA got got what they asked for; SCREWED.
      MSEE, PE

      Comment


      • #33
        Originally posted by bonaire View Post
        Of course you cannot replace coal plants with renewables, including solar + wind. Not only are they intermittent but you would need vast multi-GW plants to replace existing coal plants.

        What may work with the small load you currently have... (you say units per capita - I imagine this is something near kWh per household per year as I have no idea what a unit is there). Every house or apartment could have a solar array on top and some sort of better-technology battery storage to hold the charge for evening hours. Doing grid-scale solar only can power areas of the grid during the daytime and cannot serve at night. The remote villages have solar programs allowing for charging of lighting for tents. This solves a few problems. Women have work to do and don't have to continue to have babies. People can study at night and read. Solar work is in fact is helping India's population growth slow a little bit. There are videos on Youtube about such programs.

        The best way to keep from needing power is to not grow the lifestyle into a more western lifestyle. And if you do, you need nuclear power plants. No doubt about that. India could show strength in developing a solid nuclear energy power plant growth environment. We need that here in the USA as well - we need more nuclear plants especially in California. Cost to produce one kWh of power from nuclear is far less than through distributed solar energy. Solar would be "nice" as a supplement but will by no means be a world solution for decades until better batteries (higher density, low maintenance, cheaper) are developed.
        Unit in India is kwh...Nuclear power has shown its ugly faces in japan..cost alone is not the factor for everything...and most videos on you tube are fake.. India is better placed in renewable energy than Australia,..within Next five years grid connected solar power plants in India will exceed 10 GW..and India is the third largest power producing country in the world..yes we have a challenge about our population and our weak energy resources... hope God sun will bring light to Indian energy sector..

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        • #34
          You have no idea about nuclear energy. It is you ronly answer. Let's see how well soar works out for you at night and monsoon season.
          MSEE, PE

          Comment


          • #35
            Originally posted by govindrao View Post
            Unit in India is kwh...Nuclear power has shown its ugly faces in japan..cost alone is not the factor for everything...and most videos on you tube are fake.. India is better placed in renewable energy than Australia,..within Next five years grid connected solar power plants in India will exceed 10 GW..and India is the third largest power producing country in the world..yes we have a challenge about our population and our weak energy resources... hope God sun will bring light to Indian energy sector..
            1) Unit in India is kWh

            2) Improper design (auxiliary power wrongly located and poor seawall design/height) because no one could tell the boss he was nuts showed it's ugly face in Japan.

            3) Most of you tube is fake on any topic

            4) India's sun is good - except during the monsoon season(s)

            5) 10 gW of solar is little and is costing the government in India a fortune.

            6) The third largest power producing country? The Wiki has it 5th in 2010 but that is meaningless. There is a continual great shortage of power here. All serious manufacturing companies have their own captive generation.

            7) Most power is from coal and more coal power plants are coming on line every year.

            8) Trying to deal with the state power boards is a difficult experience - too many people want to become happy.

            9) Because of the government/union monopoly in the coal sector much of what is used is imported - cheaper and far more reliable
            [SIGPIC][/SIGPIC]

            Comment


            • #36
              Originally posted by russ View Post
              1)...
              2) ...
              3) ...
              4) ...
              5) ...
              6) ...
              7) ...
              8) Trying to deal with the state power boards is a difficult experience - too many people want to become happy.
              9) ...
              Sounds like a man who has worked there.
              SunnyBoy 3000 US, 18 BP Solar 175B panels.

              Comment


              • #37
                Originally posted by inetdog View Post
                Sounds like a man who has worked there.
                Over 15 years - so far - started the project in 1988 and had a couple of breaks along the way.
                [SIGPIC][/SIGPIC]

                Comment


                • #38
                  About solar in India. The generation peak of solar mid day is not the peak demand cycle in any grid environment. The only thing solar really does is smooth out the localized usage while not helping a national grid. In India, rich families have standby batteries because the grid is very problematic. It's going to get worse. As cities grow, as families demand more power in the coming years, base load plants will need to grow. Nuclear is the only way India can become sustainable no matter what the feelings are for solar. It's going to be quite an interesting time when population growth, middle class growth and energy growth all face the wall ahead when oil and gas prices rise and eventually become harder to produce. The world must face a need for population withdrawal (pun intended) along with heightened education and a need to glide path down from our economic want for more and more. Yes, we are a virus with shoes.

                  I say it all the time: "An economy that requires continuous growth to survive will eventually do neither."
                  PowerOne 3.6 x 2, 32 SolarWorld 255W mono

                  Comment


                  • #39
                    Hi,

                    After the EMI term of 5 yrs, you hardly see any big expenses, so even if you sell unit for INR 6, you will still be profitable...jus a quick thought, any ideas?



                    Originally posted by msr View Post
                    Hi CPS,
                    I am also thinking about setting up a 1MW solar plant in Andhra Pradesh. Based on my research so far, I have come to similar conclusions as you did. One major difference is break even point if RECs complete expire after June 2017.

                    You mentioned that majority of investment will be recovered by June 2017. Here are rough numbers I came up with. Assuming total investment is 8Cr and you take a loan of 5Cr, EMI would be around 10L per month.

                    Total Investment : 8 Cr
                    Loan : 5 Cr
                    EMI : 10 Lakhs per month = 1.2 Cr per year (based on 14% interest rate)
                    Maintenance costs: 1L per month = 12 L per year.

                    Total per year costs = 1.3 Cr

                    Fixed panel installation can generate around 15L units per year

                    Assuming REC floor price 9.3 and power price at 5. we can get Rs.14.3 per unit

                    So total income per year = 2.1 Cr

                    Profits per year = 0.8 Cr

                    Assuming 3 years for REC total profits = 2.4 Cr.

                    After June, 2017, If power price is 6 rupees per unit and REC drops to zero,
                    Annual income: 15L X 6 = 90 Lakhs
                    Annual expenses: 1.3 Cr.
                    Deficit = 40L

                    I don't see how this whole project is feasible based on these numbers. Are there special interest rates for solar? Or am I missing something here? Thanks for your help.

                    --msr

                    Comment


                    • #40
                      Where in India do you buy power for 6 Rs/kWh?
                      [SIGPIC][/SIGPIC]

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                      • #41
                        Originally posted by russ View Post
                        Where in India do you buy power for 6 Rs/kWh?
                        I believe it is more than Rs 6/kWh for commercial purpose.

                        Russ,
                        You said you don't think solar plant is very viable. I have not seen any reasons as to why. Given your vast experience in this field, your insights would be very helpful to us. Can you list your thoughts on why you don't think this is a good business?

                        Thanks

                        Comment


                        • #42
                          Originally posted by msr View Post
                          I believe it is more than Rs 6/kWh for commercial purpose.

                          Russ,
                          You said you don't think solar plant is very viable. I have not seen any reasons as to why. Given your vast experience in this field, your insights would be very helpful to us. Can you list your thoughts on why you don't think this is a good business?

                          Thanks
                          Work out real costs based on research - not guesses. Include staff as the panel will be cleaned daily in most locations, fencing and 24 hour security, connection costs to the grid including transformer & isolation, engineering costs - engineering company costs. The cost of the panels is only one facet.

                          Check into the difficulties getting the agreement from the state electricity board.

                          Check into how hard it will be for the government to cut the FIT presently offered (very easy as a clue). The government of India and state governments are giving away borrowed money on these schemes - one election and that can easily change - or even just when reality sets in.
                          [SIGPIC][/SIGPIC]

                          Comment


                          • #43
                            more details

                            Originally posted by CPS View Post
                            Hello,

                            I am planning to set up a grid connected crystalline solar module MW scale solar power project in India and wanted to share my experience with the group and also invite any input.

                            The cost per MW is ~ Indian Rupee (INR) 7 – 8 Crores (~ US $ 1.5 Million). A 1 MW plant in a suitable location will generate ~ 1.5 million – 1.7 million units of power a year.

                            I am planning to set up the project under the Renewable energy credit (REC) scheme. Under this scheme the government gives you a renewable energy credit - solar that is traded on the Indian Energy Exchange. The government has set a floor price of INR 9.30/unit and cap of INR 13.40/unit. This floor and cap is in place till March 2017. The buyers of the REC are power distribution companies (DISCOMS) and industrial users of power. These companies have renewable purchase obligations - solar (RPO - solar) that have been set by the various state governments. These RPOs increase every year.

                            In addition to this you get ~ INR 2.50/unit - INR 5.00/unit by selling the power.

                            The risk factor as I see them are -

                            1. Over capacity - Just because there is a floor and cap it doesn’t guarantee that you will get a customer for your REC. If the government doesn't enforce the RPO stringently with harsh penalties the buyers will not buy them.
                            2. What will the REC floor/cap be for the remaining 21 years of your plant. If the REC price drops rapidly in 2017 the economics are impacted.
                            3. The base power charge will be paid to you by (DISCOMS). Most of them are in very bad financial health. So there is default risk.

                            In regards to point 2 – A majority of your money will be recovered till 2017 so even if the REC drops to Rs. 0 the business case makes sense. Also the base power charge will probably go up 2017 so you gain some there.

                            In regards to point 3 – If you can find an end customer for the power then you will get a higher tariff and you also don’t need to deal with power companies. Another way to mitigate this risk is to set up the power plant in states where the DISCOMS are relatively in good health such as Gujarat, Andhra Pradesh, Maharashtra, etc.

                            I haven’t figured out if there is a way to mitigate the oversupply risk though so that’s one I'll have to live with.

                            I also evaluated the various state policies but it looks like the majority of the companies participating in the reverse bidding are doing so to take advantage of the 80% accelerated depreciation (AD) benefit. If you take the AD out of the picture it is not feasible to sell solar power at INR 6/unit or INR 7/unit. Since the AD is not of benefit to me I decided that the REC mechanism offers me the best return.

                            I'm also looking at KW scale rooftop projects. They are smaller in size but give good returns if you can scale up to decent volumes.

                            That's my experience so far!

                            CPS

                            Hi CSP ,
                            IM VENKI FROM ANDHRA PRADESH, I WANT TO ESTABLISH A 1 MW SOLAR PLANT,
                            CAN I GET DETAILS OF LATEST DISCOMS RATES, PLANT ESTIMATION COST,
                            THANKS IN ADVANCE

                            --VENKI

                            Comment


                            • #44
                              Originally posted by msr View Post
                              Thanks.

                              If it wasn't obvious, I am complete noob in this field. I don't need specific models and manufacturers but any pointers to do some research in available panels, inverters etc.. would be of great help to me.
                              http://bridgetoindia.com/ is a very good resource for solar in India in my opinion. They come out with reports several times a year that you can download from their website for free.

                              Another good resource is Photon International. They come out with a monthly report showing how various panels have performed. You can find the results from November, 2012 here - http://risskovteknik.dk/wp-content/u...st_2013-01.pdf

                              Comment


                              • #45
                                Solar RECs over supply

                                Looks like the month of May saw an oversupply of Solar RECs for the first time. Will be interesting to see what happens in the months to come when even more projects under the REC mechanism come online. As of May, 2013 ~ 100 MW of solar projects under the REC mechanism were up and running. The expectation was that ~ 200 MW of solar projects will get commissioned between June - December of this year. I think several of the projects will now adopt a wait and watch policy to see if the government starts enforcing the renewable purchase obligations.

                                http://economictimes.indiatimes.com/...w/20436046.cms

                                Edit: As of May, 2013 a total of 21,063 Solar RECs have been issued and 17,933 have been redeemed. That means 3,130 are outstanding. As of April 2013 only 860 were outstanding.

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