Whatever is happening to CSP in India?
CSP in India has had a bad run over the last two years. The enthusiastic initial party mood was quickly followed by a collective implementation headache with a number of challenges threatening the viability of projects. Now, further allocations have been postponed. At the same time, the focus shifts from large power plants to hybrid models. India is increasingly able to produce large parts of the value chain locally.
- CSP projects in India are in trouble and policies are on hold
- CSP has lost out against PV
- Hybrid and de-central applications may give CSP a new future in India
In the past two years, Indian CSP projects have faced numerous difficulties: DNI data is not accurate, financing costs in India are high, banks are hesitant to lend (refer to our report on financing solar power in India), government support is waning, gas water and land are in short supply. Timelines are too ambitious and margins too low. The resulting cutting of corners has backfired. The complexity of setting up CSP plants has been systematically underestimated. Today, the only CSP plants up and running in India are a 2.5 MW solar tower in Rajasthan by Acme Telepower and a 3 MW parabolic trough project by IIT-Mumbai in the Solar Energy Center in Gurgaon. Around 500 MW of the NSM Phase 1 capacity is still under construction – all of it with significant delays. Much will likely never get built. Karnataka only managed to get bids for 20 MW out of 30 MW on offered last year. Rajasthan received no bid for its 100 MW offered this year. Currently, under the National Solar Mission (NSM) Phase II, CSP has been put on hold.
At the same time, solar PV has taken the limelight. There have been hick-ups in PV as well, but because the technology is simpler, faster to build and projects come in smaller ticket sizes, the learning curve has been faster. In addition, the cost reduction of PV globally has outperformed that of CSP.
CSP power plants retain a key benefit over PV in that they can produce better quality (more stable, predictable) power. This is crucial for a country with a fragile power grid infrastructure such as India. However, this advantage over PV might become less pronounced as policies start to shift from grid-connected, Feed-in-Tarff (FiT) driven to encouraging de-central solutions as in Tamil Nadu (refer) and Kerala (refer).
However, CSP might yet still stage a comeback in India. And if it does so, it will be on its own terms, increasingly de-hyphenated from PV. The availability of DNI data is improving. A local supply chain has already developed. Indian companies have started to manufacture tube receivers, frames, curved mirrors and other key components. Costs are falling, with much more potential for localization of manufacturing.
What can help CSP even more, is a policy shift towards hybridization of CSP with other technologies. In 2012, the Ministry of New and Renewable Energies (MNRE) has released a dedicated program for 20-50 MW CSP hybrid plants. The MNE will provide support in the provision of land, water resources, grid connectivity, geo-technical reports, PPA distribution licenses and the environmental clearance. The hybrid plants shall include the following combinations: a CSP plant with hybrid cooling to reduce water consumption, a CSP plant with steam temperatures higher than 500°C, a CSP plant with more than 10 hours of storage to achieve 24/7 operation and a CSP plant with 30% natural gas support. The focus of these hybrid plants is clearly on developing solutions tailored to Indian challenges and requirements.
In addition, CSP would be able to provide process heat solutions to factories reeling under power shortages and rising power process across the country. This would be relevant especially for industries with high energy and heat demands such as pulp and paper, steel, cement, or textiles. What needs to be done at this stage is to provide more working examples of how solar technology can reduce energy costs and improve energy security.
Tobias likes to write about solar business models, solar and energy policy and wider issues of sustainability, development and growth.
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