Audio

The Solar Man’s ‘Gandhi Global Solar Yatra’

Dr Chetan Singh Solanki joins Girish Shivakumar to share his latest solar endeavour, the Gandhi Global Solar Yatra, commemorating 150th birth anniversary of Mahatma Gandhi.

Prof. Solanki has been a popular voice for solar advocacy. His initiatives have had an positive impact in India over the years. Now, he takes his vision of ‘Energy Swaraj’ to around the world. He has chosen to celebrate the 150th birth anniversary of Mahatma Gandhi by sharing his principles to the global audience. Listen to the interview and sign up to participate in the event on 2nd Oct 2019.

Mission Shunya: Towards a Zero Carbon Economy

Link to sign for Gandhi Global Solar Yatra: www.ggsy.in

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An Indian Utility Case Study

The role of policy in development has always been a topic of interest to me and it led me to pursue a masters degree. Now,  I have submitted my thesis titled ‘The Evolution of Electricity Retail Markets in a Low Carbon World: An Indian Utility Case Study’.

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The research for this topic involved reviewing case studies from other electricity markets especially considering the impact of solar rooftop adoption on electricity retail tariffs. The Indian utility considered for evaluation was Bangalore Electricity Supply Company (BESCOM). A detailed analysis of its past reports, Annual Revenue Requirement (ARR) filings, consumer and energy sales figures were analysed. It provided a solid reasoning to estimate the impact of existing rooftop solar PV policies and solar tariffs to the utilities.

A key part of the thesis turns out to be a new solar tariff proposed through this research. Under the Gross Metering regulations the solar tariffs are proposed to vary depending on the consumer. Although this could raise questions, it proves to be beneficial to the utility under Gross Metering who tend to increase tariffs under the pretext of revenue loss incurred. Also, considering the next phase of installing smart meters, flexible tariffs could be easily adopted and not to mention the declining solar system costs.

Since the report is under review I wouldn’t want to discuss the case in detail. However, I have presented key snapshots from the analysis in the slide deck below.

Comments/feedback/suggestions are welcome. Do drop a line if you need to know more about this research.

Information asymmetry in solar power markets

“The more you know, the more you know you don’t know”-Aristotle

Information asymmetry closely follows the quote albeit in a different way. It reflects upon the unknowns in any market over a transaction. The information asymmetry in electricity market is subtle but is turning to be prominent. The stakeholders in this sector include the electricity market regulators, the utilities, power generating companies, project installers and the end consumer. The information asymmetry at the national level between the government agencies and top power companies is well documented which allows me to look at the domestic scale.

Lets look at the market for residential solar projects in a country like India. A consumer with a requirement of a 1-2kWp rooftop unit for his house approaches a bank for financial assistance. It is unlikely that the consumer gets a loan, let alone walking away with funds straight away. Under current circumstances in a nascent market for solar rooftops in India, the banks are sceptical due to a lack of information.

  • No expertise in evaluating the solar rooftop project proposals
  • No reliable guarantee from the system installer on the project performance
  • Multiple components in the system with individual warranties ranging from 5 years to 25 years
  • If at all a Power Purchase Agreement (PPA) executed with a local utility is presented the chances of securing a loan increases but again depends on the reliability of the utility. Not every utility is reliable for the financial commitment.

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At the consumer’s end the information asymmetry stems from multiple sources.

  • First, there is no guarantee on securing a financial assistance from the bank.
  • Unless technically qualified or inquisitive, there will be lack of knowledge in understanding and comparing various solar solutions.
  • Lack of policy clarity. The issue with policy is not an isolated case in India. Residential rooftop projects across the globe have been subjected to this through Feed in Tariffs (FiT) and metering regulations. Its hard for residential consumers to invest in a technology without being sure of the payback.

Like in all cases of information asymmetry there will be someone who could leverage on the uncertainties and in this case it turns out to be the system installers. The system installers are solution providers who integrate the various components of solar Photo Voltaic (PV) system and offer it as a package to the consumer, like the residential consumer.

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  • They are better off because they know the technical nuances of solar PV.
  • Wouldn’t read good, but they are capable of identifying the gullible consumers under any policy and tariff contexts. Of course it is business.
  • It is good to see the prices of solar modules and other components drop significantly in the last few years but it has also opened up the market to the problem of lemons. In order to offer a net low price for the product, components with below par performance end up on the roofs of consumers inadvertently (or otherwise?).

It doesn’t justify to blame the system installers for leveraging this situation. Its a perfect market and companies like SolarCity have proved that it is possible to build business models under these circumstances. Taking the complete risk of project including capital cost and allowing consumers to benefit from solar power at a discount of retail tariffs is proving to be a success. System installers in India have taken cue and have started offering third party investment-energy sale model for residential scale solar PV rooftop projects. Utilities and regulators who often look up to system installers to evaluate the policy effectiveness have taken note of this initiative from Indian system installers and now offer PPA agreements with third party investors. Overall, information asymmetry is a natural phenomenon in any free market and its only a matter of time before all stakeholders are brought on level terms.

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