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Cover Story | April 2017

Lack of accurate DNI data and forecasting techniques are roadblocks

However, Amit Kumar, Partner v Energy & Utilities, PwC, feels that CSP is a maturing market which will eventually prosper with time.

How do you see the progress of solar policies and on-ground implementation of solar power plants in India? What are the major reasons for the extended delay in CSP projects in the country?
With India eyeing such ambitious targets to magnify its solar capacity to 100 GW by FY 2022, the growth in the sector has been promising, but requires more impetus. On the policy front, although all the states have come up with dedicated solar policies with well-defined targets, there is barely any focus on CSP.

One key reason
is the sluggish deployment and CSP is perceived risky, compared to PV which has a successful track record of deployment in India. There have been numerous such instances with CSP projects, be it ACME solar, commissioning only 2.5 MW, out of the planned 10 MW (and that too shut down right now) in Bikaner, Rajasthan or Cargo Solar's plan of commissioning 25 MW under Gujarat Solar Policy, but failing to do so. Under Phase 1 of the National solar mission, 470 MW CSP projects was awarded by NTPC Vidyut Vyapar Nigam (NVVN) but almost half of it was not installed.

Even for that matter, power giants like NTPC are also lagging in their commitment towards developing CSP projects, with latest being a 15 MW project in Anta, Rajasthan. All these examples clearly highlight the fact that a major revamping is required in this sector. But there isn't much India can do about it as it has never been a driver for CSP. Lack of accurate DNI data and forecasting techniques, leading to changes in project component specifications, including additional land requirements can also be attributed as one of the major roadblocks faced by developers today. But, nonetheless, CSP is a maturing market which will eventually prosper with time.

CSP has seen a slump, especially given the fast shooting emergence of the more comfortably priced PV module plants, can the JNNSM really provide a positive backing to this sector? What will be the scope in the next two years, or for that matter till 2022?
Obviously, there can be no comparisons made between bolstering solar PV market and slowly maturing solar thermal technology, with former progressing both in terms of R&D and latest pricing trends.

The rapid decline in the solar module prices in conjunction with improvements in cell efficiency, including government's strong agenda and support towards developing solar parks and solar PV rooftop (recently upscaled to a 40 GW target by 2022) in the of form of various schemes has led to a strong momentum in favour of solar PV technology.

On one hand, we are witnessing a major downfall in CERC solar PV benchmark costing to a level, likely to go below Rs.5 cr/MW, and on the other, solar thermal is still hovering around the Rs.11-12 cr/MW levels.

This clearly signifies more exploration and research is required in the field of CSP. The previous failures, especially delays associated with commissioning has not helped the cause and made the government even more sceptical for further efforts. As a result, there are no major upcoming schemes/plans anticipated in solar thermal field from Govt. of India in near future.

In terms of project execution and sustainability, what are the key challenges that CSP has to face and overcome, especially when competing today with more varied preferable options?
A substantial stimulus in CSP market is required today if India needs to feature in the top CSP industry hubs, starting firstly from understanding significant areas of intervention. Although, the DNI situation in India is improving with more and more SRRA stations being installed by NIWE, it becomes all the more crucial for the Ministry to update the solar radiation maps from time to time, for clear identification of potential locations.

Additionally, there are various grassroot level issues, such as availability of water, securing lands, availability of materials like glass, thermic fluid which are having limited suppliers, proving to be major hindrances in CSP today.

The uncertainty factor growing amongst developers is also one of the key worrying issue. Unsure of their returns in CSP sector, especially with competitive solar PV lurking around, developers are shifting towards a more profitable technology mature market. In other words, the incentive mechanism also needs further transformation and strengthening.

What can be done to improve bankability of CSP projects and encourage project developers in India to take it up, at least in incremental volumes? Is it even a viable option anymore?
Considering the current scenario, it doesn't seem a much viable option. Most of the CSP projects in India are installed with support from German and Spanish players, with hardly any strength with Indian bankers, regarding it to be a µtoo riskier proposition' to invest, with failure of many recent projects.

This was also true for the 100 MW CSP plant in Rajasthan (based on Fresnel technology); foreign development banks and an export credit agency provided debt with substantially longer maturities than local financial institutions, making the project appealing to the local developer even at a very competitive power tariff for CSP. Hence, GoI needs to re-vitalise the funding options available to CSP and come up with investor friendly schemes for project developers to mitigate any risks related to financing.

At the bidding level also, significant barriers do exist which require further relaxation. A probable solution to this problem, can be introduction of Viability Gap Funding (VGF) based bids for firm power to create more favourable domain for CSP. Hence, moving forward, with technological upgradation and increasing thrust of government towards grid stability, the prospects for CSP are likely to improve.

What potential do you see for CSP in the Indian solar market and how is it similar or different from other world markets? Do you see its future rising from the ashes or will it dilapidate completely? Ten years from now what is the future of CSP in our country?
The take off of CSP technology in Indian markets is directly dependent on how quickly the best practices from international arena penetrates the country. Tower CSP is most likely to be the CSP of the future because it is the most economical technology to incorporate storage. And increasingly, storage is becoming a requirement of CSP. For utility-scale applications, the thermal storage possibly with tower CSP is typically cheaper, more durable, and longer lasting than battery storage. The latest CSP project in Ivanpah, Chile is a perfect example of the above technology capable of producing electricity 24 hours-a day. SolarReserve bid a world-record-breaking low price at just 6.3 cents per kWh ($63/MWh) for dispatchable 24-hour solar. CSP with thermal storage can be answer to one of the major complexities faced in RE sector today - the problem of grid integration, due to lack of availability of flexible generation resources.

The role of government, here, becomes extremely consequential on how it perceives the current situation. It may look to devise an altogether separate policy for CSP for targeting sizeable growth or act according to how the prices fluctuate for competitive solar PV technology. At least, for the time being CSP is not amongst the priority issue for GoI.

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