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Monday, September 17, 2012

Industrial Rooftop Solar Projects in India Picking Up as Diesel & Power Costs Increase

Little did people realize two years back, when the National Solar Mission was released, that there could be a real contribution to Indian solar from rooftop solar projects. But that has become a reality today, thanks to the long power cuts and also increasing rates of electric power from the grid.
When you add the additional incentive provided by the REC mechanism, rooftop solar suddenly appears like an excellent idea, especially for industrial rooftops.
Now, I am going a bit too fast. Let me take a breath and start all over again.
Go back three years. You are in 2009. Hardly anyone in the country, be it from the industrial or the domestic sector, spoke about solar power. Of course, there were severe power cuts then too. But we simply put up with it. At that time, at EAI we got perhaps one enquiry per month for rooftop solar.
Fast forward 2012, and things could not be more different. Since 2009, the cost of solar panels have fallen by over 50% (more than halved), and there are companies today that claim to provide you panels at less than $1/W (Rs 50/W). While the rest of the system (balance of system such as inverters, batteries etc) have not seen similar cost drops, the overall cost of having solar panels have come down significantly. Three years back, I put in a post on the cost of solar power being Rs 15 . The same me, 38 months hence, am glad to say that the cost of solar power is about Rs 9 today.
Rs 9 is still costlier than grid power, you might say (grid power for industries could cost, on average, Rs 6-7, including purchase of power from exchanges). But that is not the entire picture. Our industries use diesel for backup power production in a big way, and the cost of power production from diesel is as high as Rs 15 per unit and will only increase in future (and as I speak, the government has again increased the price of diesel). Thus, we have this rather interesting scenario in which solar is already much less costly than power generated from diesel, and this benefit differential will increase further in future. Imagine a likely scenario three years hence when diesel could cost Rs 70 per liter making diesel based power cost above Rs 20 per kWh, and solar power could cost as low as Rs 7 per unit! (see another blog post of mine about 9 months back comparing diesel power to solar power).
But is the diesel based power production likely to be a long term phenomenon for it provide a strong business case for solar? Even if power cuts become a relic of the past, power from the grid will be much costlier in future than it is now. Many analysts in India feel that the grid parity for solar for the industrial sector (when power from solar will cost the same as power from the grid) could be as early as 2015. This means that, regardless of the fossil fuel source used, solar will be price competitive. This is  the real business case for solar on industrial rooftops.
All the above reasonings only point to an almost inevitable scenario – thousands of Indian companies will be keenly exploring having solar panels on their rooftops.
As EAI works out of Chennai, there are two industrial rooftop projects in Chennai worth writing about. One is at L&T (Manapakkam L&T ECC campus) and the other is at Scope International.
Details about the 406 kW solar PV at L&T campus are provided at this post we wrote a year and a half ago (appears like a very long time!). The 100 kW system on Scope International, implemented by SunEdison, is more recent. Each of these two rooftop systems will serve as excellent pioneering efforts that will provide the rest of those data and the confidence to go ahead with their own.


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