TECHNO-ECONOMICS OF SOLAR THERMAL POWER GENERATION IN INDIA CHANDAN SHARMA

Transcription

1 TECHNO-ECONOMICS OF SOLAR THERMAL POWER GENERATION IN INDIA CHANDAN SHARMA CENTRE FOR ENERGY STUDIES INDIAN INSTITUTE OF TECHNOLOGY DELHI HAUZ KHAS, NEW DELHI FEBRUARY 2016

2 Indian Institute of Technology Delhi (IITD), New Delhi, 2016

3 TECHNO-ECONOMICS OF SOLAR THERMAL POWER GENERATION IN INDIA by CHANDAN SHARMA Centre for Energy Studies Submitted in fulfillment of the requirements of the degree of Doctor of Philosophy to the INDIAN INSTITUTE OF TECHNOLOGY DELHI FEBRUARY 2016

4 Certificate This is to certify that the thesis entitled Techno-economics of Solar Thermal Power Generation in India being submitted by Mr. Chandan Sharma to Indian Institute of Technology Delhi in fulfillment of the requirements for the award of the degree of Doctor of Philosophy is a record of bonafide research work carried out by him under our guidance and supervision at Centre for Energy Studies, Indian Institute of Technology Delhi. The results obtained herein have not been submitted in part or in full to any other University or Institute for the award of any degree to the best of our knowledge. Dr. Tara Chandra Kandpal Dr. Subhash C. Mullick Professor Emeritus Professor Centre for Energy Studies Centre for Energy Studies Indian Institute of Technology Delhi Indian Institute of Technology Delhi Hauz Khas, New Delhi Hauz Khas, New Delhi i

5 Acknowledgements It gives me immense pleasure to express my gratitude to all those who supported me during the course of my study. First and foremost, I would like to express my deep gratitude to my research supervisors, Prof. Subhash C. Mullick and Prof. Tara C. Kandpal, for providing me thorough guidance, encouragement and invaluable suggestions throughout my research work in spite of their busy academic and professional schedules. I would like to extend my sincere thanks to the chairman and all members of my SRC (Student Research Committee) for providing their valuable suggestions during the various evaluation stages of my research work. I am also extremely grateful to the Head, Centre for Energy Studies for providing facilities and extending every possible support. I would like to express my sincere thanks to the Department of Technical Education, Government of Rajasthan and Principal, Government Engineering College Ajmer for allowing me to pursue my doctoral research work at Indian Institute of Technology Delhi under Quality Improvement Programme of All India Council for Technical Education, Government of India. Special thanks are due to Mr. Dhanne Singh, Mr. Rahul Rawat, Mr. Tarun Kumar Aseri and Mr. Ashish Kumar Sharma for extending all kind of support during my period of study. I wish to express my gratitude to my parents, my brothers and my sisters for providing their support and blessings that has helped me a lot in completing my research work. Special thanks are due to my wife Mrs. Pratima Sharma and two wonderful daughters, twelve year old Dhun and 6 years old Prisha for constantly motivating me. Their presence in my life inspires me to have positive thinking in times of distress and constantly striving for achieving new tough goals in life. ii (Chandan Sharma)

6 Abstract This study is an attempt towards achieving better understanding of some of the aspects that directly affect the techno-economics of solar thermal power generation. An attempt has been made to assess the potential of solar thermal power generation in India. Also the effect of several radiation data sources on the performance and levelized cost of electricity generation (LCOE) in India has been studied. In addition, effect of several design parameters on the levelized cost of electricity delivered has been analyzed. The extent of some of the potential incentives (viability gap funding, interest subsidy, investment tax credits, production tax credits and renewable energy certificates) required to achieve a desired value of LCOE for solar thermal plants have been estimated. A preliminary effort has also been made to study the effect of future reduction in the cost of solar thermal plants on the LCOE. Results obtained indicate a large potential (229 GW for a threshold DNI value of 2000 kwh/m 2 ) of solar thermal power generation in India. However, the annual DNI availability at niche locations in India is lower than that reported for solar thermal power plants in USA and Spain. There is substantial difference between different sources of solar radiation data for the country. Depending on the values of design DNI, solar multiple and hours of thermal storage, the estimated LCOE for parabolic trough based plants is in the range Rs /kWh-Rs /kWh. The provision of incentives can help reduce the LCOE. For example, LCOE of Rs. 9.75/kWh can be achieved for a plant at Barmer with a provision of (a) 6.3% of capital cost as viability gap funding or (b) an interest subsidy of 3% or (c) 32% investment tax credit or (d) production tax credits for 10 years at a rate of Rs. 0.81/kWh. There is moderate possibility of cost reduction in solar thermal power generation technology (estimated average learning rate of 10%) and consequently even with global installed capacity of 1000 GW, the estimated LCOE for India in 2050 is around Rs. 7.00/kWh. iii

7 Contents Certificate Acknowledgements Abstract Contents List of Figures List of Tables Nomenclature Page No. i ii iii iv viii x xiv Chapter 1 Introduction and Literature Review Relevance, justification and outline of the study Organization of the thesis Bibliographic review of literature on techno-economics of 11 solar thermal power generation 1.4 Concluding remarks 17 Chapter 2 Estimation of Potential of Solar Thermal Power Generation in India Introduction Review of CSP system requirements as reported in literature Direct normal irradiance Land requirement Water requirement Availability of transmission and other infrastructure Potential for auxiliary supply Methodology Identification of wastelands in the country Estimation of DNI and other climatic parameters for locations 25 with wastelands Identifying wastelands with acceptable annual value of DNI Accounting for the need to safeguard endangered species, 27 wellbeing of tribal population Accounting for potential of wind and PV power generation Results and discussion Availability of wasteland (for a particular threshold value of 30 DNI) Accounting for wasteland with large tribal population 30 iv

8 2.4.3 Accounting for wasteland with habitat of critically endangered 30 species Excluding wasteland under seismic zone Exclusion of land with higher slopes Accounting for the land suitable for wind and PV power 32 generation Ground water availability in potential locations Potential for solar thermal power generation Concluding remarks 38 Chapter 3 Review of Radiation Data Sources Used for Predicting the Performance 39 of Solar Thermal Power Plants in India 3.1 Introduction Solar radiation data sources Methodology Selection of locations Radiation data sources in Indian context Results and discussion Estimation of LCOE Parabolic trough plant Central tower receiver plant LFR plant Concluding remarks 65 Chapter 4 Effect of Design Parameters on the Levelized Cost of Electricity 66 Delivered by Solar Thermal Power Plants in India 4.1 Introduction Methodology Selection of potential locations to be considered for analysis Creation of the typical meteorological year files Simulation using System Advisor Model Estimation of LCOE Results and discussion Effect of increase of solar multiple on LCOE Effect of design DNI on LCOE Effect of hours of thermal storage on LCOE for PTC based plants Concluding remarks 85 v

9 Chapter 5 Effect of Incentives on the Levelized Cost of Electricity Delivered by 86 Solar Thermal Power Plants in India 5.1 Introduction Potential incentives for solar thermal power generation Effect of incentives on LCOE Effect of capital subsidy on LCOE Effect of interest subsidy on LCOE Effect of investment tax credits on LCOE Effect of production tax credits on LCOE Effect of renewable energy certificates on LCOE Estimation of the extent of incentive required for a desired value of 94 LCOE Methodology Results and discussion Viability gap funding Interest subsidy Investment tax credits Production tax credits Revenue from sale of renewable energy certificates Concluding remarks 115 Chapter 6 Cost Reduction Potential of Parabolic Trough Based CSP Plants and its 117 Implications for Levelized Cost of Electricity 6.1 Introduction Global status of solar thermal power Status of solar thermal power in India Requirements on components used in CSP systems Avenues for cost reduction of CSP technology Cost reduction through technological breakthrough / innovations Cost reduction through local manufacturing of CSP components Methodology Expected cumulative diffusion of CSP plants in the world Learning rates of different components of CSP plants Future capital cost of CSP plants in India Envisaged capacity of CSP plants in India Future levelized cost of electricity delivered by CSP plants in India Results and discussion Estimation of future capital cost of CSP plants in India 133 vi

10 6.7.2 Levelized cost of electricity in future due to likely reduction in 135 capital cost 6.8 Concluding remarks 137 Chapter 7 Conclusions and Recommendations for Further Work 139 Appendices Appendix A: Details of some operational solar thermal power plants in 143 Spain and USA Appendix B: Wasteland categories and corresponding area in different 144 States Appendix C: State wise number of potential locations for wind power 145 installations and range of annual average wind speed Appendix D: Framework for estimation of wastelands for solar thermal 146 power generation Appendix E: Projected demand for electric power and estimated solar 147 thermal power generation potential in five states Appendix F: Uncertainty in estimating renewable energy utilization 148 potential: A case of solar thermal power generation in India Appendix G: Expression for the levelized cost of electricity 163 Appendix H: Sample Calculations of LCOE for 50 MW central tower 164 receiver plant at Jaisalmer Appendix I: Sample Calculations of LCOE for 50 MW LFR plant at 165 Jaisalmer Appendix J: Assumptions for thermal storage media and related 166 parameters Appendix K: Estimation of breakeven capital cost (million Rs. /MW) of 167 CSP plant for its LCOE to become equal to that of an equivalent capacity Photovoltaic plant References 168 List of Publications 184 About the Author 185 vii

11 List of Figures Figure No. Title of Figure Page No. Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 A schematic representation of methodology adopted for estimation of potential of solar thermal power generation in India Allocation of wastelands between PV power and CSP for threshold DNI 1800 kwh/m 2 Allocation of wastelands between PV power and CSP for threshold DNI 2000 kwh/m 2 CSP potential in various states with annual threshold DNI of 1800 kwh/m 2 Figure 2.5 CSP potential in various states 37 Figure 3.1 Steps in appraising financial feasibility of a CSP project 40 Figure 3.2 A schematic representation of methodology adopted 46 Figure 3.3 Figure 3.4 Figure 3.5 Figure 3.6 Figure 3.7 Figure 3.8 Figure 3.9 Figure 4.1 Figure 4.2 Figure 4.3 A schematic representation of TMY 3 weather file creation and performance prediction Annual electricity output (GWh) of a 50 MW parabolic trough plant at various combinations of location and solar radiation data source LCOE (Rs./kWh) of a 50 MW parabolic trough plant at various combinations of location and solar radiation data source Annual electricity output (GWh) of a 50 MW central tower receiver plant at various combinations of location and solar radiation data source LCOE (Rs./kWh) of a 50 MW central tower receiver plant at various combinations of location and solar radiation data source Annual electricity output (GWh) of a 50 MW LFR plant at various combinations of location and solar radiation data source LCOE (Rs./kWh) of a 50 MW LFR plant for various combinations of location and solar radiation data source Methodology adopted for deciding values of solar multiple and design DNI Variation of LCOE with solar multiple for PTC based plant Variation of LCOE with solar multiple for LFR based plant viii

12 Figure 4.4 Variation of LCOE with design DNI for PTC based plant 81 Figure 4.5 Variation of LCOE with design DNI for LFR based plant 81 Figure 4.6 Figure 4.7 Figure 5.1 Figure 6.1 Figure 6.2 Variation of LCOE with hours of thermal energy storage for PTC based plant at Jaisalmer Variation of electricity output with hours of thermal energy storage for PTC plant at Jaisalmer A schematic diagram of the approach used for studying effects of incentives on LCOE delivered by solar thermal power plants Cumulative installed capacity of CSP plants across the globe Projected capital cost of CSP plants with and without storage Figure 6.3 Average LCOE projections for CSP plants 121 Figure 6.4 Figure 6.5 Figure E.1 Figure E.2 Figure E.3 Figure E.4 Figure E.5 Schematic of approach used for analyzing effects of cost reduction Cost breakup of a 50 MW CSP plant (a) without storage and (b) with 6 hours of storage Stake holders likely to be benefitted by potential estimation of renewable energy sources Available wasteland in (km 2 ) for different threshold values of annual DNI Distribution of wasteland (in km 2 ) between wind power and solar power for different DNI and wind speeds Distribution of wastelands (in km 2 ) between solar PV and thermal power (threshold DNI 1800kWh/m 2 /year) Distribution of wastelands (in km 2 ) between solar PV and thermal power (threshold DNI 2000kWh/m 2 /year) ix

13 List of Tables Table No. Title of Table Page No. Table 2.1 Threshold values of annual DNI suggested in literature 21 Table 2.2 Reported land requirement for different CSP technologies 22 Table 2.3 Water requirement for various CSP technologies 22 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 2.8 Wasteland categories considered suitable for solar thermal power generation Details of NASA SSE and NREL SEC Radiation data sources Wasteland and climatic conditions for the state of Rajasthan List of states in India having wasteland with DNI more than threshold value Wastelands inhabited by large tribal population in various states Table 2.9 Wastelands highly prone to earthquakes in various states 32 Table 2.10 Estimated wasteland area having wind speeds more than 4 m/sec in different states Table 2.11 Allocation of land for wind power, PV power and solar thermal power (DNI more than 1800 kwh/m 2 and wind speed more than 4 m/sec) Table 2.12 Allocation of land for wind power, PV power and solar thermal power (DNI more than 2000 kwh/m 2 and wind speed more than 4 m/sec) Table 2.13 Potential for solar thermal power generation in various states Table 3.1 Criteria for the classification of climatic zones and locations selected for analysis Table 3.2 Comparison of various radiation data sources 52 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Specifications of CSP plants based on three different technologies Financing conditions and other requirements as suggested by CERC for estimation of LCOE Sample calculations of LCOE for a parabolic trough power plant at Jaisalmer Annual electricity output (GWh) and LCOE (Rs./kWh) for combinations of location and solar radiation data source for a 50 MW parabolic trough power plant x

14 Table 3.7 Table 3.8 Table 3.9 Table 3.10 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 4.5 Table 4.6 Table 4.7 Table 4.8 Table 4.9 Annual electricity output (GWh) and LCOE (Rs./kWh) for combinations of location and solar radiation data source for a 50 MW central tower receiver plant Annual electricity output (GWh) and LCOE (Rs./ kwh) for combinations of location and solar radiation data source for a 50 MW LFR plant CUF (fraction) for combinations of location and solar radiation data source for a 50 MW power plant based on three CSP technologies Range of CUF for all the locations from different solar radiation data sources for the three CSP technologies Locations selected for the analysis and corresponding annual DNI Specifications of the solar thermal power plants considered in the study Effect of solar multiple on electricity output and LCOE for 50 MW PTC based plant Effect of solar multiple on electricity output and LCOE for 50 MW LFR based plant Number of hours in a year when DNI exceeds a stipulated value at different locations Effect of design DNI on electricity output and LCOE for 50 MW PTC based plant Effect of design DNI on electricity output and LCOE for 50 MW LFR based plant Effect of hours of thermal storage on LCOE for different values of solar multiple Variation of annual electricity output with hours of thermal storage and solar multiple Table 5.1 Effect of capital subsidy on LCOE 91 Table 5.2 Effect of interest subsidy on LCOE 92 Table 5.3 Effect of investment tax credits on LCOE 93 Table 5.4 Effect of production tax credits on LCOE 93 Table 5.5 Effect of the price of renewable energy certificates on LCOE Table 5.6 Input parameters used for estimation of LCOE 98 Table 5.7 Maximum acceptable LCOE for various combinations of WACE and solar RPO xi

15 Table 5.8 Table 5.9 Table 5.10 Table 5.11 Table 5.12 Table 5.13 Table 6.1 Viability gap funding required (as a fraction of capital cost) for various combinations of proposed WACE and solar RPO Interest subsidy for various combinations of WACE and solar RPO corresponding to different debt-equity ratios LCOE for zero percent interest rate on debt and for zero percent rate of return on equity for various debt-equity ratios Required rate of Investment tax credit for various combinations of WACE and solar RPO corresponding to different debt-equity ratios Rate of production tax credit for various combinations of proposed WACE and solar RPO corresponding to different debt-equity ratio Unit price of RECs for different ratios of debt and equity at different WACE Range of LCOE for different solar power technologies in India Table 6.2 Global status of CSP plants 120 Table 6.3 Status of solar thermal power in India 122 Table 6.4 Table 6.5 Different estimates of cost breakup of a 50 MW parabolic trough based CSP plant in India Comparison of capital cost and LCOE for various renewable energy supply based options in India Table 6.6 Requirements on the components of CSP plants 125 Table 6.7 Table 6.8 Table 6.9 Table 6.10 Brief description of technological improvements in CSP components and their implications Potential vendors identified in India for different CSP components Possibility of manufacturing of different CSP components in India with strengths, limitations and possible solutions Three scenarios for global cumulative diffusion of CSP plants Table 6.11 Learning rates for various systems of a CSP plant 131 Table 6.12 Benchmark capital cost as specified by CERC 132 Table 6.13 Table 6.14 Envisaged cumulative installed capacity of CSP plants in India Cost breakup and future capital cost for CSP plant without storage in the optimistic scenario xii

16 Table 6.15 Table 6.16 Table 6.17 Table 6.18 Table 6.19 Table A.1 Table B.1 Table C.1 Table D.1 Table E.1 Table F.1 Table F.2 Table F.3 Estimated future capital cost of CSP plant (without storage) for different scenarios Estimated future capital cost of CSP plant (with 6 hr storage) for different scenarios Effect of cost reduction on LCOE for CSP plant without storage in optimistic scenario Weighted average LCOE for CSP plants (without storage) for different scenarios Weighted average LCOE for CSP plants (with 6 hour storage) for different scenarios Details of some operational solar thermal plants in Spain and USA Wasteland categories and corresponding area in different states State wise number of potential locations for wind power installations and range of annual average wind speed Framework for estimation of wastelands for solar thermal power generation Projected demand for electric power and estimated solar thermal power generation potential in five states Brief summary of three studies carried out to estimate potential of solar thermal power generation in India Annual DNI values for five locations as specified by three solar radiation data sources Foot print of CSP technology assumed in the studies for potential estimation Table F.4 Footprint of different CSP technologies 159 Table F.5 Potential of solar thermal power generation in India for 159 different CSP technologies Table F.6 Effect of change of parameters on the availability of 161 wastelands Table H.1 Sample Calculations of LCOE for 50 MW central tower 164 receiver plant at Jaisalmer Table I.1 Sample Calculations of LCOE for 50 MW LFR plant at 165 Jaisalmer Table J.1 Assumptions for thermal storage media and related 166 parameters Table K.1 Cost and performance parameters for CSP and PV plants 167 Table K.2 Breakeven capital cost of CSP plants so that LCOE becomes equal to the present day LCOE of Photovoltaic plant xiii

17 Nomenclature Symbols C0 d fd fe fs fvgf Id n Pc Pste Re T ξ Capital cost Discount rate Fraction of debt Fraction of equity Fraction of capital cost as salvage value Fraction of capital cost provided as viability gap funding Interest rate on debt Useful life Price of conventional electricity Price of solar thermal electricity Rate of return on equity Loan repayment period Annual rate of escalation in O&M expenses Abbreviations CDM CERC CSP CTR CUF DNI DSG ECS EPC EPIA ESMAP ESTELA FIT Clean Development Mechanism Central Electricity Regulatory Commission Concentrated Solar Power Central Tower Receiver Capacity Utilization Factor Direct Normal Irradiance Direct Steam Generation Electrical Conversion System Engineering Procurement and Construction European Photovoltaic Industry Association Energy Sector Management Assistance Program European Solar Thermal Electricity Association Feed-in-Tariff xiv

18 GHI GIS HTF IEA IRENA ISCCS ITC JNNSM LCOE LFR MNRE NAEO NREL PTC PTC PV REC REN RPO SAM SAPG SCS SEC SEGS SWERA TCS TMY UCE Global Horizontal Irradiance Geographical Information System Heat Transfer Fluid International Energy Agency International Renewable Energy Agency Integrated Solar Combined Cycle System Investment Tax Credit Jawaharlal Nehru National Solar Mission Levelized Cost of Electricity Linear Fresnel Reflector Ministry of New and Renewable Energy Net Annual Electricity Output National Renewable Energy Laboratory Parabolic Trough Collector Production Tax Credit Photovoltaic Renewable Energy Certificate Renewable Energy Network Renewable Purchase Obligation System Advisor Model Solar Aided Power Generation Solar Collection System Solar Energy Centre Solar Energy Generating System Solar and Wind Energy Resource Assessment Thermal Conversion System Typical Meteorological Year Unit Cost of Electricity xv

19 UNEP VGF WACC WACE United Nations Environment Programme Viability Gap Funding Weighted Average Cost of Capital Weighted Average Cost of Electricity xvi