A status check on Dollar dominated bidsfor solar projects in India

Original Post: BRIDGE TO INDIA 

India has been discussing dollar dominated bids for solar projects in the country for some time now. The rationale is to attract low cost international capital and reduce hedging costs by pooling currency risk with the ultimate objective of reducing the cost of solar power. An initial allocation for 1 GW of projects is believed to be in planning stages and guidelines on bidding process are expected within the next couple of months.

• The government hopes to lower the cost of solar power by around 10%
• BRIDGE TO INDIA analysis shows that cost reduction may be slightly less at about 5% but these projects may attract new capital to the sector
• It is worth going through the added complexity of Dollar dominated bids only if the government is confident of using this mechanism for much larger capacity, say 10 GW or more

Under this structure, National Thermal Power Corporation (NTPC) hopes to buy solar power at a fixed tariff of about USD 5.6 cents/kWh (INR 3.6/kWh) using auction process and sell to distribution companies (DISCOMs) at around INR 5/kWh, about 10% lower than current cost. This leaves INR 1.40/kWh to cover hedging risk.

BRIDGE TO INDIA analysis shows that this is a sensible move as there is already very strong demand from international investors for Indian solar projects. But the actual tariffs realized under Dollar denominated bids will likely be less than 10% because procuring currency hedging for 25 years is not possible and it is not clear who will maintain this hedging corpus and bear the residual risk. This unhedged risk, which increases with time, is very difficult to quantify and will result in higher hedging cost.

It is important to highlight that the Dollar tariffs will remove exchange rate risk for developers and investors, but they will still bear all other India project development risk including offtake, dispatch, policy and other operational risks. Hence, developers expecting 10-11% return on projects in the USA, for example, will still expect a return premium for Indian projects to compensate for extra risks. And will the international lenders who anyway do not take any currency risk see these projects differently? The government should finesse the structure after thorough consultation with developers and lenders, distribution companies and NTPC, which is expected to be the project procurement agency. It might take another 6-8 months before all the kinks are ironed out and India actually moves forward with the first round of dollar dominated bids.

It is worth going through the added complexity of Dollar dominated bids only if the government feels confident of using this mechanism for much larger capacity, say 10 GW or more. The clear objective should be to attract large international developers for larger projects and reduce project procurement time and costs in addition to hedging costs.

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Worse news for Australia as India taps solar, Beijing bans coal

Original Post:  By Sophie Vorrath 

As Australia’s federal government commits to a future digging up, burning and most of all exporting the nation’s vast coal resource, two of the countries upon which this shaky economic plan is most dependent – India and China – look to be closing the door on the heavy polluting fossil fuel.

In Delhi last week, the Indian government committed to a plan to provide low-cost loans and grants to set up some of the world’s largest solar PV parks across the country, each of them comprising as much as 20 gigawatts of capacity, about 10 times what India has built to date.

The parks will host large plants ranging between 500 megawatts to 1,000MW that will be connected to the grid. State utilities will be expected to purchase at least 20 per cent of the power generated at the parks, leaving project owners free to export the remainder of electricity to consumers elsewhere in the country.

“We’re preparing a scheme for solar parks and it will be out after cabinet approval in about one month,” said Tarun Kapoor, joint-secretary at the Ministry of New and Renewable Energy, speaking at the EQ solar Summit on Friday.

India’s plans are to use scale to drive down solar costs and produce power from at least four of these so-called ultra-mega projects at a maximum of 5,500 rupees a megawatt-hour – that is about 32 per cent below the global average for solar, according to data compiled by Bloomberg, and well below the average for coal-fired power generation. The land used for the projects will also be subsidised by the government to keep project costs low.

Separately, India also plans to auction 1,500MW of PV capacity in its biggest tender yet, the final guidelines of which will be issued this month. The first 750MW are expected to be awarded in bidding by the end of September, according to the state-run power trader overseeing the process, NTPC Vidyut Vyapar Nigam Ltd.

As Tim Buckley wrote on RenewEconomy in May, in the context of waning coal consumption in China, India has become increasingly critical to the stability or continued growth of the seaborne coal market.

Add to this India’s five-year solar lighting goal – a pledge from the newly elected Indian PM, Narendra Modi, that every home in the power-starved nation would be able to run at least one light bulb by 2019, powered by solar – and you have what looks like a much diminished future coal equation for Australia.

China, meanwhile, is moving ahead on plans to address its pollution problem by phasing out coal, with the Beijing Municipal Environmental Protection Bureau announcing on Monday that the districts of Dongcheng, Xicheng, Chaoyang, Haidian, Fengtai and Shijingshan would stop using coal and its related products, and close coal-fired power plants and other coal facilities, by 2020.

According to official Chinese government statistics, coal use accounted for 25.4 per cent of the capital’s energy consumption in 2012 – a figure that is expected to shrink to less than 10 per cent by 2017.

As we have noted before on RenewEconomy, China’s plans to slash its already declining coal use poses a major – but certainly not unheralded – problem for Australia’s coal industry.

According to data from Newcastle’s Port Waratah Coal Services, China has accounted for just over 25 per cent of coal through the Port of Newcastle, the world’s biggest coal export hub in 2014.

On top of this, the price for thermal coal has plunged more than 10 per cent in the last two months – due largely to major importing nations like India making it clear that renewable energy is offering a competitive energy alternative.

Currently, thermal coal is sold for less than $70 on the spot market, well below the mark for Australian producers to make money, let alone the cost of production and the level to get the finance for the massive new projects Prime Minister Tony Abbott is hoping to encourage – or those projects already in the pipeline, like the multi-billion dollar development of what would be one of the world’s biggest coalmines, in Queensland’s Galilee Basin, largely earmarked for export to India.

But, as Buckley noted, problems for Indian coal electricity generators, compounded by a range of other challenges, “mitigate against the chances that India policy makers will favour large-scale centralised coal fired power generation in the future.”

As for China, Greg McKenna says it well on Business Insider today: “there is some hope that a base is being formed and that this news is already baked into the cake but as China moves away from coal use and invests in clean energy it seems any chance of a boom as China grows may prove ephemeral.”

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Maharashtra backs solar power 

Original Post:  Shruti Ganapatye | 

• Mumbai

 

Representational image

The Maharashtra government is bringing a policy giving concessions to housing societies and new housing projects for installing solar energy panels. The incentives will include relaxing some taxes and giving more FSI for new buildings. The move has been made to encourage the use of solar energy in the state.

“We have prepared a draft of the policy to boost the use of solar energy in the state. The policy is meant for housing societies, residential complexes and institutions. Our emphasis is that the people should use rooftop solar panels and solar cookers, water heaters, purifiers, lamps and pumps,” an official from the energy department said. The proposal is expected to come before the Cabinet this month for approval, the official added.

The government is going to give the status of ‘green building’ to institutes that follow the policy norms, he said. “Other incentives could be in the form of tax relaxation and more FSI. But we need a nod from the urban development department for that. We want departments related to housing to support the policy and give incentives as per their convenience,” the official said.

The policy proposed by the state on the use of solar energy for domestic purposes is the first of its kind. “The solar energy required for household purposes is little, and therefore we are bringing this separate policy. The energy will be generated with rooftop solar panels. As per the surveys, the state has potential to generate a good amount of solar energy,” he added.

The state government has announced that 7,500 mw of solar power would be generated till 2019. It has invited a public-private-partnership model for the new solar power generation stations. There are innovative experiments taking place in the state to generate power by putting floating solar panels on the sides of dams.

NTPC invites bid for 

100 mw solar plant in UP

Original Post: Debjoy Sengupta, ET Bureau

• 

(In UP, the state government…)

KOLKATA: NTPC has invited global bids for its 100 mw (10x10 mw) solar capacity project in Uttar Pradesh under the National Solar Mission, a project that equipment supplier has been eyeing since March.

In UP, the state government has joined hands with NTPC to develop a 375 mw solar power park in Jalon district at an estimated cost of Rs 3,000 crore. The state government plans to hand over about 750 hectares to NTPC on a nominal rent for developing the solar park in a phased manner.

The project is part of the state-run company's plans to set up 10,000 mw of renewable energy projects by 2020. The government has appointed NTPC to act as the nodal agency for implementing 15,000 mw of solar projects under the National Solar Mission Phase II Batch II in three tranches - 3000 mw in 2014-17, 5000 mw in 2015-18 and 7000 mw in 2016-19.

In Andhra Pradesh, NTPC is developing the world's largest solar power project at single location - the project in Anantapur district is targeting 1000 mw capacity. This project is proposed to be executed in three phases of 250 mw, 500 mw and 250 mw. During the current financial year, the company has approved an investment of Rs 1,779.25 crore for the Anantapur Solar PV Project, Stage-I.

NTPC, as per its corporate plan, envisages capacity addition of 128 gigawatts with a diversified fuel mix: 56% coal, 16% gas, 11 per cent nuclear, 8 per cent hydro and 9 per cent renewable energy sources. The company has already commissioned seven solar power projects aggregating 110 mw.

Half of this capacity is located on the spare land available at its thermal power stations. The remaining include 5 mw at Port Blair in Andaman & Nicobar Islands and 50 mw at Rajgarh in Madhya Pradesh.

NTPC is also planning to set up solar projects in Madhya Pradesh (750 mw), Rajasthan (1000 mw) and Telangana (500 mw). Discussions are in progress in Uttar Pradesh, Odisha and Pondicherry, which have shown interest in joining hands with the company and providing it land to develop solar projects.

The company also intends to set up rooftop solar panels at all its upcoming thermal plants. It is estimated that panels to produce roughly 1 mw can be installed at each station.

India’s ‘absolutely power neutral’ airport to inaugurate 12MWp PV project       

Original Post By Andy Colthorpe 

•  
  Malaysia's Kuala Lumpur Airport has 19MW of PV, spread across ground mount, rooftop and carports. Image: SunEdison.
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  Kansai Airpot's 11.6MW solar power plant, Japan. Image: Solar Frontier.

An airport in the Indian state of Kerala will become “absolutely power neutral” when it inaugurates a 12MWp solar power plant onsite next week.

Cochin International Airport will unveil its green initiative on 18 August with Kerala’s chief minister, Ooomman Chandy, in attendance, according to local reports.

The commissioning of the PV plant is the third and biggest move so far in this direction by the airport, which installed a 100kWp rooftop plant in 2013 and another shortly after that with 1MWp capacity. According to the airport this was the first megawatt-scale solar PV plant in Kerala.

The latest move adds 45 acres of ground-mounted array, using 265Wp modules by Chinese manufacturer ReneSola and 1MW inverters by ABB India. The project was executed by German engineering company Bosch.

Cochin International Airport’s press release said that the array, when combined with the existing 1.1MW of installed capacity will “technically” make the airport “’absolutely power neutral’”, meaning the PV plants will produce as much electricity as the entire facility demands.  

Other significant airport PV installations in Asia include an 11.6MW PV plant at Kansai Airport in Japan, commissioned in March 2014 and a 19MW plant in Kuala Lumpur, Malaysia.

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2020 Annual Solar Installations To Reach 92 GW (Report)

August 12th, 2015 by Adam Johnston 

Originally published on Solar Love.

Global solar installations will rise by to 2020 to 92 GW yearly, according to a new report from Apricum, compared to 42 GW annually in 2014.

The Berlin-based cleantech consulting firm said most of the 50 GW in annual increases from 2014 until 2020 will come from China, the US, and India, with 36 GW combined.

Image Credit: Queen of the Apostles Solar via Flickr Some Rights Reserved

The Middle East/North Africa/Africa (MENA) region will represent 6 GW, the rest of Asia 5.6 GW, the non-US Americas 4.1 GW, and Europe 3.5 GW.

However, Japan expects to see declines yearly  (-5.2 GW) as it looks to slow its hot growth.

Apricum also notes cumulative installations will reach 604 GW, from 178 GW six years earlier.

In regards to cumulative installations, China will lead with 180 GW, followed by the US (83 GW), Japan (57 GW), Germany (46 GW), and India (41 GW). Concerns over air pollution and climate change will help China with its steady growth.

Meanwhile, the US will see continued growth as more regions hit socket parity and grid parity. Apricum predicts a good 2015, followed by a drop in utility-scale installations as the federal tax credit drops from 30% to 10%, due in 2017.  However, strong rooftop demand, thanks todeclining solar prices will continue to bolster US markets, Apricum suggests. Recent clean power legislation and Hillary Clinton’s plan of reaching 140 GW by 2020 may also have positive effects.

While China, the US, and India remain strong, Apricum’s report points to new “solar boom zones” within the Middle East and North Africa (MENA) and Africa. Insufficient energy will drive African countries towards solar, while MENA countries including Israel, Morocco, Jordan, and Egypt are going towards cleaner and cheaper solar energy. Competitive tenders have helped keep prices low (with record lows of 4.9 cents/kWh and 5.84 cents/kWh set within the past year).

Brazil’s strong growth through aggressive auctions and many manufacturers setting up shop there will help push Latin America forward as well. In Q2 of 2015, 363 MW of utility-scale solar energy were added. Brazil was fourth in Q2, behind Honduras, Chile, and Panama, according to GTM Research’s Latin American PV Playbook. While Brazil has potential, recent numbers suggest Brazil will need to do more work to reach Apricum’s fearless predictions.

Europe’s PV market will fall, according to the report. On a positive note for Europe, France is expected to increase renewable energy adoption as it closes its nuclear power plants, which could benefit solar a good deal.

In the future, Europe could see another solar growth period after 2020, when battery storage will reportedly hit grid parity in Italy and Germany. This could help advance residential and commercial installations.

Apricum’s analysis of global markets until 2020 is a unique perspective of where solar energy is heading. However, there are always major X factors which could benefit or detract from the growth. This includes the upcoming Canadian federal election, where the New Democratic Party (NDP) of Canada is leading the polls narrowly against the Conservative Party. An NDP or Liberal Party government would be more inclined to support renewable energy and climate change initiatives than the current Conservative government.

Nonetheless, hotspots like China, India, and the US will remain good places to invest in solar almost invariably, while Latin America, MENA, and Africa are becoming real contenders in the solar energy game. The future looks bright… if also hot. 

India Approves Renewable Energy
MoUs with France & Mongolia

August 14th, 2015 by Smiti Mittal  

Originally published on Clean Technica

The Indian government has given its final approval to memoranda of understanding on cooperation in the renewable energy sector with France and Mongolia signed earlier this year.

The agreements were signed by the countries involved during Prime Minister Modi’s visit to the respective countries. The agreement with France will have significant consequence in the development of renewable energy infrastructure in India.

While the agreement calls for technical cooperation on an institutional level which may include sharing of expertise between universities and technical institutes, India would like to get access to the much needed financial aid for achieving its ambitious renewable energy targets.

Agence Française de Développement (AFD) has already pledged a credit line of €1 billion for the next 3 years for the development of clean energy projects in India. The Indian government is believed to have approached several international development banks to raise low-cost debt to finance for setting up renewable energy projects; AFD may thus increase its financial commitment to India.

During Prime Minister Modi’s visit to the France it was also announced that French companies are looking to develop 8-10 GW of renewable energy capacity in India over the next few years. Several French companies are active in the Indian solar power market. These include Solairedirect SA, which was among the first companies to set up solar power projects under the National Solar Mission. The renewable energy arm of French state-run utility Electricite De France SA (EDF), EDF Energies Nouvelles (EDF EN), has stake in another pioneering solar power developer in India – ACME Cleantech Solutions. ACME plans to set up 7.5 GW solar power capacity in India over the next 5-7 years.

The memorandum of understanding with Mongolia is aimed at encouraging technical cooperation in the renewable energy sector. However, the agreement seems more of a strategic gameplay in ‘China’s backyard’ and is unlikely to help India achieve its own renewable energy targets. The knowledge exchange, however, may eventually help Mongolia develop a strong renewable energy infrastructure as it has significant wind as well as solar energy resources.