By Jason Deign

Sunbelt location, renewable power demand, a benign regulatory environment: India ticks many of the boxes that would make it a perfect location for CSP. So why is the technology having such a hard time getting established?

Solar power generating capacity has soared across India in recent years on the back of an ambitious countrywide scheme, the Jawaharlal Nehru National Solar Mission (JNNSM), and state-specific programmes.

The total installed solar generating capacity today is above 2GW, according to the Indian Ministry of New and Renewable Energy (MNRE). A further 1.7 GW of new solar capacity is expected to come online in 2014, says Mercom Capital in its latest forecast of the Indian solar market.

However, practically most of this is PV, with only 420 MW to come from CSP projects that did not get installed in 2013.

Progress of JNNSM projects

“State governments have not been enthusiastic about CSP mainly because of the slow progress and uncertainties related to the commissioning of the projects under the JNNSM,” states Madhavan Nampoothiri, founder and director of Chennai-based RESolve Energy Consultants.

“Only one project out of seven has been commissioned.” Nampoothiri was referring to the Godawari Green Energy 50 MW CSP plant, which was commissioned back in May 2013.

The next CSP project to come online will likely be Reliance Power’s 125-MW CSP plant in Rajasthan, which will utilize AREVA Solar’s CLFR technology. This will be the first of two planned projects, each with a capacity 125 MW.

“Steam blowing is a critical milestone towards pre-commissioning activities of the solar CSP plant. The project is all set to be commissioned by March 2014,” Reliance Power said in a recent statement.

According to Jayesh Goyal, global vice president for sales at AREVA Solar, the CSP plant, which is located in the middle of the Thar Desert, has already encountered and withstood two sandstorms, proving the robustness of the solar field.

“We’ve already had two sandstorms at the site, with no damage to the solar field. There’s a wind sensor at the site, which detects at any time if the wind exceeds a certain limit”.

“The plant is supposed to go online on March 7th, based on the MNRE’s target date, but we’ve already commenced operations, in the sense that we’ve done the steam blows. Thus, we’ve started evaluating the performance of our steam generators on a daily basis,” Goyal told CSP Today.

Raj Prabhu, CEO and cofounder of Mercom states that 150 MW of the 470 MW CSP projects are believed to be in advanced stages of development. “Once commissioned, these projects will receive tariffs between Rs.10.49-12.24 (~$0.18-$0.20), a premium of almost 40-50% over new PV projects”.

As for the five other projects, undertaken by developers including Lanco Infratech, Rajsun Technies, and Corporate Ispat Alloys, it is yet to be seen whether they have progressed enough to meet the March 2014 deadline.

Promising start

According to Belen Gallego, founder of CSP Today, India’s placement in the global CSP market has slipped significantly over the past year.

“In our 2012 CSP Today Markets Report India was ranked as the most promising CSP market. It has now slipped to fifth place in CSP Today’s 2014 Markets Report due to slow progress under phase 1 of JNNSM, amongst other factors”.

That is pretty poor going considering the first phase of the JNNSM gave an equal allocation of 500MW each to PV and CSP-based generation. A year ago, that promising start was already faltering badly.

CSP developers discovered their satellite-based direct normal irradiance (DNI) estimates did not take into account the dust and soot clogging Indian skies. Elsewhere, finding American companies that could deliver heat transfer fluids (HTFs) proved a problem.

Bloomberg reported: “India expects half of the projects to be delayed and some to be scrapped as US supplies stall and dust-clouds diffuse the radiation required to drive generation.”

Since then things have only got worse. Says Nampoothiri: “CSP has been experiencing a slew of challenges: the falling price of PV, non-availability of accurate DNI data, supply constraints of HTF and a few other components, high dust levels and fairly new technology.”

CSP innovation program

As discussed in the December 2013 edition of the CSP Today Quarterly Update, the difficulties faced by developers and the reverse bidding system in Phase 1 brought a number of key issues into the limelight.

While they wait for the remaining CSP projects under Phase 1 to begin commercial operation, investing in innovation and research may be a good way for India to restore faith in the market and attract international bidders back into the market.

In November 2013, a pre-bid meeting was held to assess the potential for new innovative CSP projects in India. Here the Solar Energy Corporation of India (SECI) and Asian Development Bank (ADB) provided some additional information regarding the upcoming research and development program in India.

SECI and ADB commented that they were still reviewing feedback and pending issues, but that a final tender for the projects was expected to be launched in March 2014 and the awardee announced in May 2014. CSP Today has been told that a number of big names have indicated their participation in this bid.

It is likely that one project will demonstrate hybrid cooling with 3-4 hours of thermal storage, while the other project will demonstrate higher operating temperatures (minimum 470˚C), also with 3-4 hours of storage.

Developers will be allowed to choose their own locations, although project ownership could fall to SECI. An EPC will be selected through an international competitive bidding process and will be subject to Viability Gap Funding.

The VGF is a once-off or short-term capital assistance that bears a part of the high capital investment required in setting up a CSP project. This could take various forms, including credit enhancements, supplementary grant funding, loans, and interest subsidies.

It seems as if the government has listened to feedback and are now allowing projects under the innovation program to make use of natural gas backing. Additionally, they have more accurate DNI readings available and the VGF should make for more achievable financing.

Alternative applications

Plus there is the potential for CSP to deliver process heat in settings ranging from enhanced oil recovery to dairy pasteurisation.

GlassPoint’s vice president of business development, John O’Donnell, says: “We have seen keen interest by a number of folks for all the process steam applications. It’s a completely separate market from the PV. You’re competing with the price and availability of gas.”

Nampoothiri confirms that “there is some interest for industry process heating using solar thermal” across the country. O’Donnell points out that there are only a few industrial process, such as smelting or cement production, that require thermal energy at a temperature above what CSP can yield.

“Something like 60% of the primary heat used in industry is in a temperature range that our technology can provide,” he says. “And some of it is in the temperature range that evacuated tube water heaters can provide.”

Picking a specific industry that could benefit from CSP process heat in India is tricky because of a lack of detailed information about each sector’s requirements and access to capital and/or alternative energy sources.

However, O’Donnell believes, it might not take much for a viable process heat market to emerge in the country. “We think there is certainly a wave of growth and deployment that is non-competitive with PV,” he points out.

To comment on this article, please write to the author Jason Deign.
 

In response to this article, CSP Today received the following comment from Mark Jeffrey, Market Development Manager at Solutia Inc., a subsidiary of Eastman Chemical Company:

"The article mentions several reasons for the challenges facing the Indian CSP market, among them the lack of accurate direct normal irradiance (DNI) data. It also references American companies supply constraints on heat transfer fluids (HTFs).

We at Eastman Chemical Company provide heat transfer fluids and would like to shed light on that particular reason. We are a global leader in synthetic high temperature heat transfer fluids, providing over 50 years of performance, reliability, and industry-leading service.

While it may have been true a few years back that supply was tight as several large CSP plants came online simultaneously, we have always had product available for viable large-scale solar projects. We do not think it is fair to blame the lack of progress for Indian solar projects on a single raw material, heat transfer fluid. And now, we certainly have product available for the solar market. We have successfully debottlenecked existing facilities.

As we mentioned in a press release last summer, we also have additional capacity coming online in late 2014. We are committed to helping our customers meet demand by providing a reliable supply of heat transfer fluids. The message to the market is that the Eastman Therminol team is well positioned to handle the needs of the marketplace even in a strong demand scenario. We welcome your inquiries on heat transfer fluids".