Getting wind and solar: Lessons for India

International Energy Agency (IEA) recently launched a report Getting Wind and Solar onto the grid: A manual for policy makers which is a compilation of the best practices from countries around the world in integrating wind and solar in the grid. IEA has approached the issue by making recommendations based on the Variable Renewable Energy (VRE) penetration in the grid. In addition to bursting the various myths and claims related to VRE integration, the report aims to serve as a handbook for phased adoption of wind and solar among the countries.

The four phase structure of IEA’s recommendation

IEA_2015

phases

An outline for successful integration in India

The overarching theme of recommendations for phase 2 countries like India is to get the grid infrastructure in order. Countries in this phase i.e. around 10% of wind and solar out of the total grid capacity need to upgrade its operational capabilities. To an extent India has got it right, it has moved away from building power evacuation for small solar projects to integrating them at a solar park level, although large capacity of wind power evacuation has been on a redundant evacuation system. At the distributed generation level a lot of state governments have restricted rooftop system installation based on the distribution transformer capacity which dint happen in many other developed countries.

Four point approach for India

phase2

In addition to establishing a grid code which is crucial for RE integration in a country like India, the report recommends a four point operational principle for system operators.

  • Visibility of a sufficient number of power plants to the system operator, including VRE.
  • Implementation and use of VRE production forecasts.
  • Scheduling of plants, management of interconnections with other balancing areas, and management of operating reserves according to load and VRE forecasts (in systems that have undergone market liberalisation this will likely require changes to market design).
  • Ability on the part of the system operator to control a sufficient number of plants close to and during real-time operations.

Overall, the report provides a good tool for assessing India’s preparedness in integrating RE. European front runners like Germany, Italy and Spain dint anticipate the effects of VRE integration and hence a manual like this is key to enable other countries to adopt practices in a phased manner. Setting the required grid infrastructure and practices in place is not capital intensive as the experience from other countries show that such cost is less than 10% of the generation capacity. Adding RE in the grid is a challenging issue and needs to be addressed, or as the report puts it In some ways it is analogous to riding a bicycle: the rider must make continuous adjustment to keep it in balance.”

For more info: IEA report, 2017

Five years on…

Setting things straight, I don’t write anything personal but this post is intended to be a little different. I have taken some time off to look back at where it all began for me as a professional.  The reason, it’s been over 5 years since my first project at a remote site in Rajasthan, which incidentally happened to be the first solar project to be commissioned under the National Solar Mission (NSM). Little did I anticipate that a 5MW project would kick off a programme, which if all goes as per plan could see nearly 100GW of solar projects by 2022. As a Graduate Engineer Trainee (GET) and 2 weeks into the job I was moved to a village in Rajasthan from the comforts of my hometown, Bengaluru. ‘Getting your hands dirty’ was one of the popular phrases used to encourage a fresh graduate and help settling in a rural setting. The real experience of a ‘renewable energy’ professional soon began.

Technology

A glance at the project plan tested my engineering background and understanding of semi-conductor physics and basics of photo-electric effect. A material without Silicon/Germanium could still exhibit PV behaviour, an eye opening introduction to thin films and the Cadmium-Telluride (CdTe) technology. Coincidentally this project also happened to be the first large scale deployment of this technology in India. The modules were assembled on a structure that had only posts rolled in India with the aluminium purlins imported, which was strange considering our large aluminium industries. Also, the available DC cables in India were not capable of withstanding a prolonged exposure to sunlight and hence high quality DC solar cables were also imported.

Construction

Time was a luxury for projects in 2011, although the projects were equally challenging. A 5MW project was to be commissioned in 8 months. The timelines of the early projects were long mainly due to over reliant on imported materials, although better planning ensured work at site was synchronised with the material delivery schedule.  Since this project was one of the first of its scale, it had to be built by a skilled workforce and hence we had international sub-contractors with significant European work experience land in India with meticulously planned action chart right up to the commissioning date only to find the site was not shovel ready. Add to that, there were delay in shipments more specifically delays in shipments getting cleared at customs with all the due formalities to get exemption benefits allotted for solar projects which everyone were dealing with for the first time. If 2016 saw Phalodi setting the record for the 50°C breach, 2011 saw Jodhpur region receiving the highest rainfall in decades, which disrupted installation works. Not to mention, work disruption by local villagers demanding right to work ‘on their land’ in spite of lacking the qualifications to do so, it was a common feature in 2011-12. So, even an 8 month timeline was short considering the vagaries at site.

And finally, with an increased workforce participation which involved local villagers who were then trained by international subcontractors the project got on track. Although transmission line and grid extension was not a significant challenge like today, it did get complicated and stretch the timelines, but in the end the project was commissioned right on time. Post commissioning one of the first learning was to familiarise with the procedure to clean the modules, using the right equipment, wasting the right amount of water and most importantly doing it early morning or late evening to ensure solar production is not disturbed. Incidentally the project has been one of the top performing plants commissioned in the first phase of NSM.

 

5 years on…

Looking back, 5MW construction was significantly challenging being the first project of its scale. Over the years, 5MW was claimed to be done in a month, a year later 5MW of module installation was done in a week and recently we had a developer who went on to execute blocks of 5MW spread over a project location in a day. It clearly signifies the growth, but what goes unmentioned is the development of supporting ecosystem around project development. One, developers and Engineering, Procurement and Construction (EPC) companies have gone from strength to strength over this time by doing more projects and managing resources. Second, the entire manufacturing supply chain is ready for projects of any scale throughout the year. Significant progress or rather forced adoption is seen in the sector especially in the manufacturing. International inverter, mounting structure, DC combiner box, solar cable, connectors and monitoring system suppliers have set up base in India or tied up with an Indian company. Back then, little did the manufacturing industry like aluminium and steel rollers anticipate opportunities. Early on, steel and aluminium rolling companies were sceptical about solar power plant as a means of business to them. A few of them accepted production orders on the condition that we take the cost of tooling development, today most of them supply exclusively for solar projects. Skilled workforce was a rarity or rather non-existent, today any village in the sun-belt region would claim to have people/local sub-contractors with solar installation experience.

It is always said that policies and regulations can build or destroy a sector; fortunately I have been on the positive side of things. I have seen a sector show promise, witness uncertainty and now rise back to a state of optimism. Moving from a time of relying on imports for major components to just relying on import of modules, sourcing international contractors to developing local contractors and allied services the sector has come a long way. Starting off as a professional in this sector, I was drawn by the thought of 100% renewable, although I now understand the technical challenges in that vision, I believe there are definitely interesting times ahead.

 [PS: The experience would have been incomplete without the support of my former colleagues; PC: Author and his ex-colleagues]

 

 

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.

One

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.

two

  • 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.

Images © Author