Industry experts are making a strong case for promoting distributed generation of solar power that cuts down on transmission and distribution costs, and makes renewable energy more attractive

An irrigation pump powered by off-grid solar panels (Photo by Orb Energy)

Although the Indian government says all villages in the country have been connected to the power grid, nearly 240 million Indians continue to lack access to electricity, according to the International Energy Agency (IEA). “One out of every five people around the world without access to power lives in India,” the agency states in its India Energy Outlook. In such a scenario, distributed solar power is a good way to electrify remote habitats in a cost-effective way, experts say.

Power consumption is distributed and the technology for distributed generation is definitely available, said Abhishek Gupta, President of Sunipod, a solar power company. “It has been proven that a lot of solar power can be generated and with different technologies evolving, besides storage, even the back-end source of energy can be generated from solar,” he told indiaclimatedialogue.net.

Distributed solar power generation plays a great role in terms of energy security, he said. “If there is a localised problem, it can be resolved locally without impacting the rest of the city or community, state or even the national grid,” Gupta said. “It (distributed solar) is resilient in the sense that it allows localised isolation of problems and also allows for localised resolution of problems.”

Concurring, Damian Miller, co-founder and CEO of Orb Energy, another solar company, believes that there are two factors in support of distributed solar for India. First, the electricity rates are going up (22% over the past four years), and secondly, almost 23% of electricity generated in India is lost in transmission and distribution. However, rooftop solar is complementary to the grid for any country that is struggling to extend the grid to rural customers, or where grid power is highly unreliable, he said.

Rooftop solar, a popular form of distributed solar, can be used to generate power and help utilise spaces that are not occupied, according to Anshuman Bhatnagar, co-founder and director, Sunshot Technologies. He cites the instance of a vacant roof which is not in use commercially but has sunlight and that can be used to generate electricity with a payback between 2 to 3.5 years depending on the tariff.

“For example, if it is a commercial estate in Maharashtra that pays Rs 14 a unit tariff or a commercial customer in Tamil Nadu, who gets 15% to 20% of blended power from diesel generators, the payback of rooftop solar power plant can be achieved in two to 2.5 years, whereas if it is an industrial customer, the payback time would be around 3 to 3.5 years,” Bhatnagar told indiaclimatedialogue.net.

Cost-effectiveness

Solar tariffs hit the lowest level of INR 2.44 (3 US cents) per unit for the second time in the latest 2,000 MW auction conducted by the Solar Corporation of India (SECI. The fact that solar panel prices have fallen by nearly 85% over the past five years has now made distributed power much more economically feasible as well, industry insiders said.

As far as the economics is concerned, there are two aspects that need to be considered, said Gupta. One is capital investment and the other is operations and maintenance cost. “When we look at a larger grid, or a big national grid structure that India has presently, obviously there is capital investment required, in terms of generation, and then there is investment required to get that electricity to the end user,” Gupta said. “So, there are costs in terms of transmission, distribution and then are costs in terms of maintenance of that grid. Those costs are extremely high. It is believed that it may cost around INR 200 billion to INR 300 billion to simply upgrade one part of the national grid.”

When one compares those kinds of numbers to the localised small investments required for distributed generation, then distributed solar power starts making a lot of sense. In fact, the levelised cost of power from solar power can be much cheaper than what the power from the grid can be, reasons Gupta.

Miller avers that while conventional electricity prices continue to go up, the cost of solar power has been declining. Rooftop solar is now cheaper than grid electricity for almost all commercial and industrial customers in India. Commercial and industrial customers pay INR 6 to INR 9 per kWh for their power, whereas the 25-year costs of a rooftop solar system is less than INR 3 per kWh. Also, the payback is fast for a commercial and industrial customer, which is within 3-4 years.

The drop in solar costs has opened up new segments in Indian industry, notably rooftop solar for commercial and industrial customers, Miller said. Moreover, distributed solar saves commercial and industrial customers a lot of money, he said. When solar power is generated on-site, there are no transmission and distribution losses commonly associated with conventional grid power.

Sometimes getting electricity to those in the last mile is not financially viable. With solar distributed generation, however, power can be provided as and when and wherever required, without incurring the cost of infrastructure. This clearly it is an indication that there is need for distributed solar generation, Gupta stresses.

Role of policy

To encourage distributed generation of solar power, the government can provide support by ensuring that commercial and industrial customers do not face adverse charges or approval processes from their local distribution companies when they decide to invest in a rooftop solar system, the experts said.

Also, the government should continue the positive benefit of accelerated depreciation that commercial and industrial buyers receive when they invest in a rooftop solar system. Moreover, the government can consider how to extend a similar tax benefit to residential customers as well, they said.

“A better way to do it is to simply provide that incentive to those who put up solar power plants. It means the people who put up solar are liable to get their own incentives and to make their own financial case for implementation distributed solar generation,” Gupta told indiaclimatedialogue.net. “When one takes the burden of trying to push or provide incentives to solar distributed generation from the government and put it into the hands of the public, it becomes easier for people to adopt.”

Bhatnagar says the states must implement their net metering policies. “The 1 MW cap on net metering should be removed and distribution companies must implement electricity open access as per the Electricity Act,” he said. “Distribution companies will suffer financial losses and this is where the government should support them. This is a wider policy decision that the government must take if they want to promote distributed solar power in the country. ”

The government also needs to focus on the 40 GW of rooftop solar installation target. The current rooftop installations are only 1.5 GW. The government also needs to resolve and clarify issues related to the goods and services tax and custom duties, the experts said. With regard to permissions in India, each state has its own ways to implement energy policies. There must be a uniform solar policy so that rooftop solar power generation will get propagated in a right way, said Bhatnagar.

 

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