China is taking over the world wind market. It’s true.

Arvinder Singh

(a) Argentina Plans Biggest Wind Project With Loan From China
(b) Ming Yang Forms Strategic Partnership with Reliance Group

Yes, it’s happening now. With China Development Bank in tow, China turbine OEMs are conquering the world with sure-shot project financing backed-turbine supply deals that are hard to resist especially when home grown financing terms don’t make sense. And now I am wondering if this is true for India too?

Long have MNRE/CWET through their [should/can I say] “protection” policy tried to limit the export of China turbines into India with a 15 MW cap per project and a must-have manufacturing base in India – was this intended to safeguard our very own OEMs that are refusing to be competitive on turnkey supplies? [Though I just read Gamesa India speaking of INR 5.5 Cr – INR 6.5 Cr range per MW]. I recall Sinovel making a hard pitch back in January this year with several road-shows to IPPs across India seeking IPPs with land, wind data, permits and Sinovel supplying turbines and project finance from CDA. I’m not sure of the success rate at this stage but am sure it got a lot of people talking and excited, especially when the objective is to achieve the lowest cost per MWh.

Now, the news of Ming Yang and GWPL. GWPL has been around for a few years but really never took off. With MY in GWPL it makes it to be a very interesting story. MY has a history to back its projects with CDA and other means of project financing. Good news is that tt provides India IPPs/and other investors with an option for turbines at (possibly) lower prices making IRR/ROE better since FiT’s are still the same level. I believe with all this excitement in the industry turbine prices should come down by at least 7%-10% (my best guess) per MW – what do you think?

I am sure this is just the beginning of China OEMs in India. Other are eying Indian shores to make their entry thru the M&A route (which makes the most sense now) and I know that there are other “soft targets” (Indian OEMs) who have not yet been able to get their footing despite best efforts and are struggling.

Are Solar PV projects following in footsteps of Wind in terms of underperformance?

Arvinder Singh

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.

Arvinder Singh

my notes from “Solar Power in India” conference

Arvinder Singh

I just attended the “Solar Power in India” conference in New Delhi and the message there (more or less) is a possible move towards onsite (ground-based) solar resource measurements and use of radiation data collected onsite in conjunction with long-term satellite data to mitigate the overall resource uncertainty that affect energy prognosis, project bankability and financing terms.

The perception however (sadly) is that solar resource measurement is an expensive proposition as CWET (Centre for Wind Energy Technology as part of their Solar Radiation Resource Assessment program SRRA) and Govt bodies have been talking about measuring DNI using high cost instruments, but the irony is that the focus and way forward is PV development (India’s National Solar Mission Phase-2 calls for 9GW of Grid-connected PV by 2017) and in that case one needs to measure GHI and it eliminates the need for expensive instruments. Also Notwithstanding the fact that these instruments are expensive, they are very difficult to install, maintain and make sense out of the measurements made.  They are power guzzlers and very sensitive to winds.

All the developers I spoke to would like to measure but have been deterred due to lack of knowledge about what to measure, lack of the choice of various cost effective pyranometers and measurement systems.

CWET is spending ~USD $50K+ per solar met station – they want to create a solar atlas for India for both GHI and DNI. CWET currently has 51 stations and are planning to add 60 additional stations – that is not enough. Another approach could have been to install cost-effective systems in several hundred numbers across the country.

WMO/WRR/ISO 9060 standard sensors mounted along with other met sensors can be in the range of ~USD $10K – $15K.

Have a look at the following Solar Resource Assessment System

The system is a “low cost” full monitoring system designed to measure GHI data and assist in development of PV projects.

Arvinder