What has prompted me to write this blog is the article I read today posted by Panchabuta “Will debar threat crack Moser Baer?
“Tata Power Delhi Distribution Ltd, a joint venture between Tata Power Company and the Delhi Government, has called for “debarring of Moser Baer Photo Voltaic Ltd for poor performance of solar projects.”
This raises a serious issue no doubt. Are we doing enough third party (independent) due diligence before project commissioning? What is the lender’s engineer and/or owners engineers take on this? Are we estimating “realistic” preconstruction P75/P90/P99 energy generation or are we just interested in putting numbers [MW] on the board? What are the benchmarks for performance and how are we defining them? I love the enthusiasm Solar PV brings to all stakeholders, but are we really concerned about injecting solar power into the grid and making it sustainable over the project life [25 years?] or is it a typical “Indian solution” of live and learn and risk the impact and usefulness this energy could bring to the nation.
I heard at the Delhi conference recently some interesting yet confusing statements/comments (1) the estimates made by one of the leading consulting firm in evaluating overall PV potential in India is based on 19% CUF [this is quite misleading in my view, I’m not sure though it’s too early to say that PV projects will hit this CUF number]; (2) “there may be installation issues” commented one senior industry developer when I asked about what are their performance benchmarks in commissioning projects [don’t know if they have independent engineers on their roll]; and (3) a well know lender showing excitement on project viability on evaluation of 9 months of performance data and making it a “solar” success [data is too less to even make a comment on; typically 2-years running operational data is needed to make any judgement].
To me really why should underperformance be an issue especially in PV which is not even or can be described as a nascent sector. Why aren’t developers, lenders, nodal agencies, and lenders/owners engineers being tasked for due diligence. This reminds me of what the Wind sector was like back in 2006/7. Wind in India [as most know by now has a track record of underperformance]. I believe it could be as much as by 25%, but unfortunately there is never any “public” performance data available to make the real judgement – my fear is that it could be worse than 25%. Have we already started with solar underperformance as this article suggests? What’s the way forward for several hundred developers commissioning projects under various schemes? What is driving this?
One issue I see is the short commissioning schedules that JNNSM mandates developers to complete the projects on award of the bid. I believe its 13 months. It’s too short a timeframe realistically to build “quality” projects per the preconstruction estimates/blue-print. With financial closure taking anywhere between 4-6 months the EPC folks just don’t get enough time to build the right way as it’s intended. And so, how is construction due diligence to be performed? One other culprit is the “reverse bid” process. Now we are all excited about getting us “very competitive tariffs”, but it also means EPC quality issues. How does a developer make money at the tariffs that are being bid at the moment – I fail to understand.
As it was in the case of wind, or that is what I believe, is the issue of overestimation at preconstruction stage especially the wind measurement and data assessment and subsequent micrositing, and added to that the issue of turbine and grid availability, which continue to impact the performance. Are solar developers doing enough due diligence with on site solar resource assessment? What is leading to estimating high CUF rates? Are we overestimating at preconstruction to get financing and all relevant approvals to get the project commissioned? Only time I guess can tell.