Observations of the Indian Solar Market Experiences to be transferred?

Observations of the Indian Solar Market Experiences to be transferred? Berlin, 07 March 2012 Dr. Matthias Eichelbrönner 1

Content 1. E.Quadrat at a Glance 2. Indian Political Targets and Market Reactions 3. Specific Benefits: Roof-top Installations 4. Specific Benefits: Diesel-Parity 5. SOLAR GUIDELINES, a project for Indonesia? 2

E.Quadrat at a Glance Hands-on Experiences along the Value Chain (selected examples) WINDFARMS: 18 MW Windfarm Brandenburg, Germany 30 MW Windfarm Miszkowice, Polen 99 MW Windfarm La Muela, Spanien PHOTOVOLTAIC: 112 kw rooftop, Mannheim, Germany 700 kw rooftop, Bassin, Germany 40 MW substation, ground-mounted Finsterwalde, Germany BIOMASS POWER PLANTS: 15 MW Flörsheim, Germany 20 MW Mannheim; Germany 20 MW Königswusterhausen, Germany SMALL HYDROPOWER PLANTS: 600 kw Lunzenau, Germany 500 kw Jena Rasenmühle, Germany 500 kw Jena Paradies, Germany GEOTHERMAL ENERGY APPLICATIONS: Upper Rhine Valley, Germany Laufzorn, Germany 3

Political Goals for Solar Power in India (in brief) The Government launched the JNNSM Jawarharlal Nehru Solar Mission in 2009 Target: 20,000 MW of solar power by 2022; by 2013 1,000 MW grid-connected Market share grid-connected photovoltaic and CSP by 50:50 To promote programs for off grid applications, reaching 1,000 MW by 2017 and 2000 MW by 2022. To create favorable conditions for indigenous solar manufacturing capability and market leadership. To ramp up capacity of grid-connected solar power generation to 1,000 MW within three years by 2013; an additional 3,000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff. The target for 2022 of 20,000 MW or more, will be dependent on the learning of the first phase, which if successful, could lead to conditions of grid-competitive solar power. 5

Achievements January 2012 2010: MNRE opened Phase 1, Batch I: a tendering procedure for 150 MW was started, more then 300 applications received, totaling more than 1,800 MW; only one bid per company was permitted. Bidding processes Phase 1, Batch I: 2010 reverse bidding round Phase 1, Batch II: 2011 bidding round >> More than 50 % of price reduction can be recognized! PV installations end of January 2012: 481.48 MW (MNRE) Turn key specific investment cost are assumed to come in the range of INR 90/Wp ( 1,5/Wp) based on siginificant module price reductions. Indian module production capacity is increasing to more than 1000 MW per year. 6

Grid-Parity at the Doors in India! Source: KPMG Tarifs (upper band: 9,39 INR/kWh lower band: 7,49 INR/kWh) JNNSM Batch II 7

India s Solar Market Potential of 50 GW ahead MARKET DRIVEN Target JNNSM Source: The Rising Sun, KPMG, 2011; own estimations A recent study by KPMG estimates solar rooftop potential to be almost 19 GW, which summs up high-end and non-high-end residential buildings Off-grid applications are assumed to be in the same amount 8

Spot market PV module prices* fell below the 1 EUR/Wp mark for the first time in September 2011 61 Ct/Wp expected for 2012 Source: PVSEC, Hamburg, 2011 Source: eclareon/pvxchange spot market price data; www.pv-price-navigator.com (04/11/2011) Note: *Location Europe: Downstream margin, commission, logistics and packaging included (15 20 EUR ct/wp) 9

Market Effects Remarkable achievements on large scale photovoltaic installations Significant price digression Harsh competition amongst Indian project developers, margins are expected to be low Project finance on a non-recourse basis is not feasible at that point in time. Indian banks do not exposure themselves to take solar risks (information we gathered at meetings with different banks). Off-grid applications and roof-top applications (net-metering, REC, fuel-saver) are going to see more attention meanwhile. International market for solar panels brought down the price that solar installations become more and more competitive to conventional energy systems. Market incentives will decline over the next three years while solar will become competitiveness. 10

Ground-mounted Rooftop Building integrated PV-Market Segments in Germany <1% Source: Bundesnetzagentur, BSW-Solar Image : Schüco Image : Grammer Image: Sharp Private buildings: 1-10 kwp Social, commercial, agricultural buidlings: 10-100 kwp 9% 53% Large commercial buildings: > 100 kwp 22% Image : Solarwatt Image : Solarwatt Image : BP Market share in % of MW installed in 2010 15% Image : Geosol Image: Geosol 12

Schematic of PV Rooftop Installations Source: SMA Technology AG Who benefits from the installation? PV system inverter meter grid 13

Reduction in Transmission Losses High-Voltage Network Medium-High-Voltage Network Losses along the transmission network: High-voltage network Medium-high-voltage network Distribution network Total losses estimated to reach up to 25% Distribution Network Tail-End Photovoltaic Systems: Avoid network losses Increase network stability, esp. distribution level Each 1 kwh from photovoltaic avoids 1,25 kwh conventional (coal) power! 14

Multitalent Photovoltaic Service for: System owner/operator Distribution system/grid operator Reduction of transmission losses Source: FhG-IWES 15

Photovoltaic as a Fuel Saver parallel to Captive Power PV installation (with battery for UPS) Consumer Captive Power Diesel-Gen-Set (with battery for UPS) 17

Photovoltaic a Fuel Saver - Diesel Parity at the Doors Diesel Price India: INR 45 per liter equals 65 Ct/liter Diesel Price Jakarta: Rp 10100 per liter equals 84 Ct/liter Diesel parity for mid size captive power and off-grid installations is reached! PV Fuel Saver India Indonesia Electricity costs (efficiency 33%) without depreciation per liter 45 INR 10100 Rp Diesel price equals /l 0,662 0,840 Energy price /kwh 0,066 0,084 t/kwh 0,199 0,252 Specific PV System Investment /kwp 2000 2000 Specific PV Yield kwh/kwp 1800 1800 Initial price /kwh 1,111 1,111 Static amortisation years 5,60 4,41 18

How to Support Project Implementation? Project Development Project Implementation Plant Operation Land zoning, property access and clearances are in place Grid access capacity, substation, transmission line etc. are negotiated Clearances and administration approvals can be set in force PPA and relating agreements and contracts finally negotiated Bank requirements on equity, loan and securities are known and considered Finally all stakeholders can agree or have agreed to the project The owner and investor can make their final decision for execution >> To be worked out: guidelines to project implementation 20

Analysis Path to Project Implementation Project application Administration local Administration level State Administration level Federal level Utilities, grid companies different stakeholders Project stop no yes Detailed project engineering Project finance feasible Project stop no yes Project implementation 21

Expected Results Implementation of an Internet based guideline tool with public access for latest information, easy to modify, supportive and stimulative: Streamlined, time and cost efficient pathway from first step to implementation Improved preparation of public and commercial actors involved in solar system implementation and authorization processes Reduced workload for authorization bodies, grid operators and utilities as well finance institutes through higher quality of applications Overcome lack of communication between different stakeholders Enhanced legal-administrative frameworks and knowledge transfer between Indian States Increased attractiveness and transparency of the solar market for international companies Strengthened position in the global solar market 22

Example for an Adoptable Data-Base for Guidelines European Data-Base PV-Legal Coordinator: German Solar Industry Association (BSW) Project-Partners: 9 European Solar Associations plus 4 Subcontractors and the PV Industry Funded by the European Commission (75%) and Industry (25%) Duration from 1.7.2009 to 30.6.2012 23

Guidelines along Project Development Steps Site Development Promotion programes Site identification and securing, land property or lease agreement. Plant design, solar yield appraisal, business plan, clearances, approvals, PPA, PSA, codes, environmental assessment, legal structure (SPV), stakeholder involvement. Solar promotion programes, REC, CDM, tendering and bidding, application processes. Funding Fund raising equity and debt, recourse/non-recourse bank securities. Installation Operation & Maintenance EPC contract, installation, commissioning, acceptance test, claiming. Operation, benchmarking of yield, improvements, maintenance, refurbishment or demolition. 24

Guidelines for different Classes of Installations (on/off grid) Rooftop Installations: Small rooftop (1kW 5kW) Medium rooftop (5kW 100kW) Large rooftop (100kW 1 MW) Very large rooftop (>1MW) Ground-mounted Installations: Small ground-mounted (100kW 1MW) Large ground-mounted (1MW 5MW) Very Large ground mounted (>5MW) 25

Thank you for your attention..visit us on Dr. Matthias Eichelbrönner Managing Director & Co. Projekt- und Beratungs- KG Kolpingstraße 39 D- 68753 Waghäusel Germany Amtsgericht Mannheim HRB 700843 Tel +49/(0)6201/3929490 Fax: +49/(0)6201/3929491 www.equadrat-gmbh.eu 26