By Vincent Kapur
Recently, India has become a hot topic among those looking for the next big market to emerge for photovoltaics. PV technologies are being imported to India from other nations with vastly different fundamental energy situations. Unfortunately for your business as well as for consumers and authorities in India, technology deployment models which have seen success in Europe and North America will not succeed in this market. Before your company banks heavily on the Indian market, let¡¯s take a look at the situation on the ground.
Where Is the Grid?
A common misconception, particularly among the community of investors looking at the Indian market, is that PV systems are essentially plug-and-play. Other established markets, such as Germany, already offer the benefit of general access to a reliable utility grid. In contrast, India possesses a very broad geographic territory which has yet to be blanketed with full access to grid power. Local and inter-regional distribution and transmission networks will require serious upgrades, expansions, and overhauls to accommodate the addition of many large-scale PV installations. Therefore, financing for grid-tied projects will have to cover the necessary extra costs and delays are certain to occur.
A greater concern is the reliability of the grid as it currently exists. During summer afternoons in Delhi, blackouts are very common. Most residents switch over to backup generators with home inverters while factories in industrial zones often run directly on generators to avoid production stoppages. This scenario presents a challenge for planning utility-scale PV projects, especially because intermittent availability during daylight hours will reduce the amount of power the system can feed to the grid. As a result, grid reliability presents a significant stumbling block for imported bankability models.
Don¡¯t Count on Concentrators!
One thing that India has plenty of is atmospheric particulates, especially due to heavy use of coal as well as innumerable open cooking fires. In fact, the high level of airborne particulates occasionally causes a breakdown in the dielectric properties of air, resulting in electrical shorts along power transmission lines. This is one cause of frequent blackouts. Another effect of pollution is a reduction of direct incident sunlight available, limiting the effectiveness of PV systems which rely on concentrator lenses.
CPV enthusiasts have proposed projects for deployment in the Thar desert in the Northwest state of Rajasthan, which will not only require extension of transmission lines but will also face serious challenges from the elements. The desert is subject to frequent sandstorms from January until June, which will cause serious maintenance issues for tracking systems as well as for the lenses themselves. Monsoons arrive later in the summer and despite being a desert, the rainy seasons has become increasingly more prolonged in recent years. Both sand and rain will block the direct incident light and significantly reduce the power output of the system. Consequently, conventional PV panels convert a portion of diffused light in addition to direct light, making them a much better match for conditions in India.
Plan for Local Manufacturer Preferences
India¡¯s Ministry of New and Renewable Energy plans to implement its National Solar Mission (NSM) with the stated objective to ¡®establish India as a global leader in solar energy¡¯ through creation of favorable ¡®policy conditions¡¯. This has naturally raised concerns about cheap PV modules flooding into the market from neighboring China. Indian entities worried about China¡¯s competitive disadvantage are calling for local preference requirements for module suppliers but domestic production capacity is insufficient to meet the NSM¡¯s goals. In order to satisfy these concerns, some Indian groups are subcontracting manufacturing to China to receive with Indian brand labels.
In general, however, many foreign PV companies are exploring opportunities for manufacturing in domestically or entering into strategic partnership in order to secure access to the Indian market for the long term. Either way, cost will ultimately become a factor for successful market entry. Companies will struggle to gain a foothold if their technology portfolio based on high manufacturing costs, weak value chain position dependent on wafer supply and outsourced module assembly, or suboptimal materials utilization. Companies should be wary of rushing into technology selection for manufacturing in India without fully evaluating the value chain from raw materials to deployment in the field.
Liberate Your Business Model from Grid Slavery
Too often, companies seek to gain market access in developing countries by offering simplified versions of products and solutions designed for industrialized nations. India is much too large of a market to treat so lightly and new entrants will be penalized for being out of touch with market realities. The inescapable reality is that India¡¯s short-term and long-term energy future will require off-grid or microgrid PV solutions. The demand is huge and the very profitable financial models are available. By examining the unmet needs of potential customers in the market today, it will become clear that potential for explosive growth awaits companies who take the proper strategic approach. This will require manufacturers to integrate considerations for off-grid systems into the design of their products.
Unfortunately, prospective domestic PV manufacturers remain focused on ramping production of PV modules exclusively for utility-scale grid-tied systems. These companies are importing the dominant business model from abroad which has assumed that growth for the foreseeable future would come from the global demand for utility power generation. In particular, companies which have chosen to produce amorphous silicon modules with a large area format have not made an impact in the domestic market due to the fact that their products are limited to utility-scale developments only.
Off-grid applications offer the benefit of short project development cycles and provides power directly where it is need in the market. The externalities related to grid-reliability and grid expansion are completely avoided and the value added to the local economy for applications including water pumping, refrigeration, lighting, etc. allows for price per watt flexibility for modules above the range required for high volume sales into the utility market elsewhere. For example, large quantities of customers can afford to pay US$2.50-US$3.00/Watt for kilowatts of modules while utilities will require prices below US$2.00/Watt in high volumes. For a domestic market with a largely unsatisfied demand for power, the distributed market offers better pricing in potentially large volumes.
Where There is Diesel, There are Market Opportunities
In order to achieve volume sales in the off-grid market, PV companies have to shift from focus on power providers to direct B2B sales. It is important to realize that India already possesses a thriving system of distributed power generation. Businesses across a wide variety of sectors have to provide their own power through diesel generation and fluctuations in fuel prices can severely impact their bottom lines. While other nations have the luxury of adopting PV out of concern for the planet, India will have to deploy PV out of pure necessity to mitigate the effects of peak oil on economic growth. In many cases, deployment of PV systems in diesel abatement scenarios will pay for itself in fuel savings alone within a few years. The economic and environmental impact of replacing even a fraction of current diesel consumption will be enormous.
India¡¯s PV Future
Despite the limitations of most conventional models, PV will definitely make a positive impact on India¡¯s energy portfolio in the near future. Many technologists and business executives are investing a lot of time and energy into developing the right solutions for the unique conditions and requirements of this massive and rapidly mobilizing nation. Armed with the right strategy, businesses can position themselves to take full advantage of the what may turn out to be an energy revolution for India as well as the rest of the developing world.
Vincent Kapur is an expert in emerging photovoltaic technologies and thin-film CIGS production. He presently works for International Solar Electric Technology (ISET), where he has held positions in Production Operations Management, Business Development, Product Design, Applications Engineering, and Advanced Technology R&D. Kapur is also the founder of 2K Pacific Global LLC, which provides consulting services to startup companies looking to establish a position in ¡®Blue Ocean¡¯ market segments where photovoltaic technologies provide value-added power generation capability. Prior to entering the Solar Energy industry, Kapur worked in the Aerospace field, perform stress analysis for military and commercial aircraft structures. Kapur received his B.S. in Aerospace Engineering from UC San Diego, U.S.A.
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