pManifold Indis_Solar PV_IIES_Workshop_report

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Solar PV System - Technology, Risks, Manufacturing, EPC, O&M, InvestmentCoverage Report from IIES Workshop

29th Jan 2011

Co-chair:

Rahul Bagdia, Co-founder pManifold, Head Energy Practice, [email protected]

Akash, Founder & CEO INDIS, [email protected]

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professional people perspire partners

persevere prepare policy process plan price

project potential profit pursue performance

promote progress preserve plural planet

INDIS EnergyGreen Energy Solutions

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PP

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Industrial Association Partner

Workshop Speakers

Workshop Sponsors Workshop Organizer

www.iies.in

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Solar PV Business Models – Workshop Objectives and Stakeholders

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Objective of Workshop

• Educate participants about various consumer – oriented solar products

• Cover the basics of Off – Grid Solar PV Plant Design

• Discuss challenges & opportunities for cost reduction in MW Size Solar Pv Plants

• Outline typical production processes for Solar products – PV Modules & LED Lights

• Understand the financing issues & concerns from a Banker’s perspective

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4Solar PV – Workshop Content and Speakers3/16/2011

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Activities/Topic Organization Speakers Position

Topic 0: Solar PV Business Models pManifold Rahul Bagdia(Co-Chair)

Cofounder

Topic 1: Consumer products – applications and potential Session 1: LED Lighting SolutionsSession 2: Other consumer products

IntellizonSolkar

AdithyaRagunathan

R&D HeadFounder

Topic 2: Off-Grid / Rooftop Solar Solutions for BuildingsSession 1: PV System DesignSession 2: Case Studies, Financials, ROI

INDIS EnergySolkar

Akash (Co-Chair)Ragunathan

CEOFounder

Topic 3: Grid connected (MW Size) Solar PV plants

INDIS Energy Akash CEO

Topic 4: Component Manufacturing and Processes in Solar PVSession 1: Module ManufacturingSession 2: LED Light Manufacturing

SolkarIntellizon

RagunathanAdithya

FounderR&D Head

Topic 5: Financing Solar/Renewables - Bankers Perspective

SBI AbhijitChakravorty

AGM

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5Solar PV – Gap Analysis

Elements Dimensions & Rationale

1 Initial Cap Ex• CapEx very high compared to other sources like a DG High Cap Ex is limiting its

adoption but trends in cost reduction encouraging

• For solar products like LED lights, high initial cap ex limits its popularity

2Skill &

knowledge

base

• Awareness and activities both in academia & industry is historically limited more funding might be needed. More training to be imparted to have a large base of professional Solar PV installers

3Solar

insolation

Database

• Accurate & reliable Solar insolation data is not easily & freely available

• Local environmental data like pollution & dust also not available

4 Financing

• Banks skeptical about Government payment guarantees at such a high rate

• Lack of solar insolation data further increases uncertainty for the banks

• Limited skill & knowledge base both in the banking industry & the Infrastructure companies

4 key gaps for scale-up of Solar PV in India – High initial Capex; Limited knowledge,

awareness & skill base; Lack of accurate solar insolation data; Lack of Easy Financing;

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From Akash’s @ INDIS ([email protected])

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SOLAR PHOTOVOLTAIC (PV) - BUSINESS MODEL OPTIONS

& CRITICAL SUCCESS FACTORS (CSFS)

Source: KPMG, India

PV Business Value Chain

Pro

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Stand Alone Applications

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Excerpts from Rahul Bagdia’s @ pManifold presentation @ IIES 2011

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MARKET SIZE AND GRID PARITY FOR SOLAR PV

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India has more capacity of electricity generation

compared to other countries.

India has low price of power per watt at peak

hours compared to other countries.

India has low price of power consumption per household

as compared to other countries.

India has a potential market size comparable to other

countries leading solar PV industry.

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Excerpts from Rahul Bagdia’s @ pManifold presentation @ IIES 2011

WHAT RISK EXPOSURE3/16/2011

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Development PhaseRisks

Excerpts from Rahul Bagdia’s @ pManifold presentation @ IIES 2011

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9LED Lights – 56% OF RURAL INDIA BURNS BIOMASS, WAX CANDLES & KEROSENE LAMPS, SPENDING RS. 2-5 PER DAY FOR LIGHTING

3/16/2011

Excerpts from Adithya’s @ Intellizon ([email protected])

LEDs13%

Battery15%

Solar Panel22%

Electronics20%

Mechanical22%

Others8%

LED Lamps – Intelizon specs• Dual Light Setting

• High: 3-4 hours &

• Low: 7-10 hours

• 95% Efficient System with 100lm/W LEDs

• Portable (400 gms)

• Safety – No smoke, fire hazard, Electric Shocks

• High Quality & reliability (1 yr warranty)

• Variants

• Solar only, Solar + Grid charging

• Anytime Mobile backup charging

• Long Range > 250m focus light

Customer’s perception – Need to Demand

•Farmers: In hut / House & in field“I feel safe to go in fields at night , My hut / House & family has 100% safe & bright light”

•Black Smith: Used to illuminate his workplace“I can work after sunsets & that has increased by income”

LED Street Lightning - Intelizon specs

•2 – 3 X cheaper than existing Solar based streetlight solutions

•1 LED & 3 LED variants

•1 LED

•Light – 5 lux (avg) over 25 Sq ft area from 10ft height

•3 LED

•Light – 23 lux (avg) over 25 sq ft area from 10th height

•Comparable to 40W tube light based streetlights over 400 sq ft from a height of 19ft

Cost breakdown of LED Street Light

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10LED Product Manufacturing/Assembly3/16/2011

Electronics – 30%

Solar Panel - 12%

Mechanical – 20%

Others – 10% LEDs – 10%

Battery – 18%

Standards

• Component standards – Specification based – Industrial / Consumer

• Outsourcing standards – Internal / ISO 9000

• Product build standards

• Build time & efficiency to maximize output

• Internal / ISO 9000 / Six Sigma

• Finished goods tracking for better servicing

Certifications

• Process certification

• Product certification

• BIS standards like IS 9000

• MNRE, STQC

• IEC

Developing Distribution channel is the Key

• Vendor Development / Establish Suppliers

• Local Suppliers for better logistics

• Primary Suppliers

• Secondary Suppliers – backup / alternate

• Procurement

• Negotiation for pricing & payments

• Better lead – times

• Customs & duties clearance

• Quality

• Component level – SQC

• Sub Assembly level

• In – process quality

• Testing

• Product level testing

Scope

• Huge market to tap – India & other developing nations

• Fill the gap – See where you can fit based on your expertise

• Product Development

• Channel Development

Cost breakdown of LED Lamp

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Excerpts from Adithya’s @ Intellizon ([email protected])

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11Solar PV Off-Grid / Rooftop Solutions3/16/2011

Excerpts from Akash’s @ INDIS ([email protected]) presentation @ IIES 2011

Parameters

• Site Details

• Location (Shading) & Orientation

• Latitude

• Solar Irradiation / Insolation

• Others (Dust, Soiling)

• Temperature & Weather Patterns

• Wind, Cloudiness, Rain, Snow

• Area available & Array Size desired

• Foundation required (type of roof, on ground)

• Government Incentives (<100 KW or >100 KW)

• Utility Conditions (440V)

Other Decisions to be made

• Panel Technology (C-Si, M-Si, Thin Films)

• # of strings, # of panels in series & parallel (Array total voltage & current)

• Comparison of panels from different Panel Manufacturers (Panel Specs)

• Derating factor (75% to 80%; could be as low as 60% -70% in India due to dust)

• Applicable sun hours available (4 hrs to 6 hrs is typical; safe to assume an avg. of 4.5 hrs)

• Array tilt angle & orientation

• Conductor sizing (current, safety); Voltage drop

• Grounding

• Autonomy

Other Key Considerations•Do not mix & match panels of different types or manufacturers

•PV Panel I – V curve important

•Temperature dependence (derating) is important

•Data on insolation should be accurate

•System sizing done backwards: Load Sizing first, followed by inverter sizing, battery bank sizing, charge controller sizing, & PV array sizing

•Site Details

•Utility Conditions (440V)

•Some things to know

•Rajasthan will produce less power in summer than Himachal Pradesh (Temp effect)

•Thin films have less temperature deration than M-Si or C-Si

•Improper installation of PV modules might disqualify them from the Warranty

•PV modules comprise ~70% of the total cost

•Plenty of opportunities for innovation in Modules, Racking (mounting), BOS, Processes

Cost of 1 KW Solar System

• With Battery – Rs. 3.00 lakhs

• Without Battery – Rs. 2 lakhs

• Power generated – 5KW hr a day

• No. of days in a year – 320 days (location dependent)

• Total units generated per year – 1600 units

• Life of the solar module – 20 – 25 years

System Design – Decision Points & CriteriaC

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12MW Size Solar PV Plants3/16/2011

Excerpts from Akash’s @ INDIS ([email protected]) presentation @ IIES 2011

Current Issues & Challenges

• Successful project finance depends on making the numbers work for investors with a high degree of predictability

• Project promoters need to arrange working capital & some personal investment (skin) to make the financing math work

• Inexperienced Developers

• Due to the slower uptake & launching of projects, module vendors might get more vertically integrated & get involved in financing projects

• Availability of engineering talent & an indigenous eco-system

PPAs & What they are good for

• Finance ability of large utility scale projects remains difficult because of project size, PPA pricing, siting risks, land availability & cost, transmission line (evacuation issues), grid stability, technology risk & other factors

• Selling PPAs / Acquiring Land – rather than executing projects –might be a short-term trend

• Prices in PPA may be too low to be financeable – leads to cancellation of the project

• The proposed feed in tariff (LCOE) for PV was Rs 17.91 per kWh but with reverse bidding project developers had to submit a discounted tariff which they could offer. Bids for PV projects have been in the range of INR10.95/kWh to INR12.76/kWh with average feed in tariff being INR12.1/kWh

• Large projects need to actually come online & actually deliver electricity (in California 7GW of PPAs signed but only 100-200 MW have come online)

Optimal Solar Project Financing Profile & Team

• A larger number of investors can make financing very complicated

• Developers prioritize on highest PPA prices with creditworthy power purchasers where the speed to commercial operation date is the fastest

• Experienced Developer (or International tie ups)

• Minimum project size

• Bankable Modules & EPC

• Valid PPAs and site control for the life of the PPA

• Team approach that reduces transaction costs

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13MW Size Solar PV Plants – Cost Reduction Opportunities3/16/2011

Excerpts from Akash’s @ INDIS ([email protected]) presentation @ IIES 2011

Many incremental opportunities for cost reduction are available across the value chain

>50% Reduction in LCOE is possible using new innovation

Balance of System (BOS) cost can be reduced by Rs. 10/W – Rs. 40/W

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14Solar PV Module Manufacturing3/16/2011

Excerpts from Ragunathtan’s @ Solkar ([email protected]) presentation @ IIES 2011

Throughput

•For typical dimensions of a module, possible to cure 3 modules per run

•A run is around 20 minutes, depends on curing time of the material used

•Single‐stack laminators usually designed for 10-20 MW production capacity

•Multi‐stacks laminators designed for bigger capacities, like 25 MW lines

Lamination Area

•Effective lamination area is actually not an issue for laminators

•The module makers are free to choose the size of the laminator

•No trend from module makers to ask for very large area. Except in thin film

•where AMAT’s technology require equipment able to process 5.7m² modules

Uptime

•Uptime an important parameter for the customer to choose their equipment

•A key parameter to have a good uptime is the cooling system for the modules located after the lamination unit. Then, the lamination area keeps the operating temperature

Few Points to Note

• Amorphous cells – Obsolete , low efficiency 6-8% - low cost – low life

• Mono/Multi crystalline – proven technology, long life, high efficiency 18 – 20%, high price

• Thin Film Cells – emerging technology , yet to prove commercial , high efficiency 13- 16%, low price, long life – yet to mature commercial scale

• THE FUTURE WILL BE THIN FILMS WITH EFFICIENCY 18% AND PRICE USD 1 PER WATT BY 2013…

Solar Cell

Cell Testing &

Sorting

Stringing

Busing

Lamination

Framing

Module Testing

Module

Process Repeats

Module ProductionLine Steps

Processes

1) Cell Testing In the case the module manufacturer is not sure about the quality of the cells

2) Cell Sorting Cells are sorted into performance groups

3) Stringing Cells are aligned and ribbon is deposited straight

4) Busing Cells are connected by soldering string ribbons

5) Lamination The EVA, the cells and the back sheet are bonded together

6) Framing The laminated assembly is framed

7) Module Testing The final module is placed in a sun simulator in order to test its performance

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15Solar PV Project Financing3/16/2011

Excerpts from Abhijit’s @ SBI ([email protected]) presentation @ IIES 2011

From Banker’s Perspective of Debt

•PROJECT

•PROMOTER

•DEBT : EQUITY

•VIALIBILITY

•TENOR, DSCR

•STATUTORY CLEARANCES

•SECURITY

Solar PV Debt Proposal

• DPR with proven technology tie up

• PPA

• Tariff, Discounts Rs.10.95 against Rs.17.91

• NVVN or Gujrat Model

• D : E -- 70:30 60 : 40 50 : 50

• DSCR – 1.75 1.50

• Tenor

• Technical Evaluation by Independent Technical Consultant acceptable to the Bank

• EPC Contract : Fixed Time – Fixed Cost

• Credentials of PV Module Suppliers

• Domestic Suppliers – Guarantees

• Health of DISCOMS

• Capacity Utilization Factor, Radiation Data reliability

• Evacuation set up

• Off Grid Captive Units appraised on the basis of overall cash accruals of the business entity

Key Take Aways

• The Banks are not skeptical on PV funding. Several proposals of PV projects with sizes between 20-25 MW are being appraised by SBI. However, this being a sunrise sector with no industry benchmark data, the projects will undergo in depth due diligence by the Banks

• Unsure about health of Discoms & Govt backed guarantees to buy electricity at Rs. 17/unit for 25 years

• Promoters should try to de-risk the business proposal for the bankers

MID CORPORATE SBU OF SBI CATERS TO CLIENTS WITH CREDIT REQUIREMENT OF Rs.10 Cr AND ABOVE

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16PMANIFOLD – GROWTH SOLUTIONS FOR EMERGING BUSINESSES

RESEARCH, ONLINE/OFFLINE STAKEHOLDER ENGAGEMENT & CONSULTING3/16/2011

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• [email protected] (+91 95610-94490)www.pManifold.com

• Akash [email protected] (+91 97181-12443)www.indis-energy.com

Thank You

pManifold Energy Practice Team

• Smart Distribution

• Energy Conservation

• Green Generation