Crossing the hurdles lying in the road of achieving “The Solar Energy Dream” in India

Tuesday, May 24, 2011 3 comments

What are the single most factors that determine the success of a solar energy project? They are data and more importantly useful data. We need dynamic maps, GIS data and analysis tools to determine the profitability of a power plant. The reason why USA is a forefront in every aspect of business is because of their hands-on exhaustive relevant data. An example of the same for solar energy domain is NREL's website for people interested in solar energy. And, this where India is currently lacking.

Many banks and other financing institutions need to establish that they are assured of fixed payments after they disbursed the huge capital outlay required for a solar energy plant. After googling for a while, I found MNRE provides such data. Also, the website provides a direct link to the NREL website as I have provided above. But the question remains, "Is this all we need to establish that the solar project once commissioned would be successful?"

On the flip side, there is some good news coming your way. The union ministry for environment and forests (MoEF) has clarified that there would be no environmental clearance required for Solar PV projects in India. This would ease the whole bureaucratic process the solar project developers face in obtaining financial closure. Finally a breather for all solar power project developers in India!

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Building a case for utility companies to turn to renewable energy sources in India

Where are the utilities companies in the renewable energy race? Taking a cue from their US counterparts, one important lesson to learn is "better buckle up than sorry". Utility companies are nearest to the sustainable energy value chain. Carbon reporting may soon be made mandatory in USA, and as the trend goes, developing countries such as India would soon follow it. This would be an important move leading to more transparency and accountability. On its adoption, it would bring focus right up on companies how to be more energy efficient and reduce their carbon foot-print. Socially Responsible Investing (SRI) is no longer a fad but an acceptable norm for investment companies (pension funds, hedge funds, venture capitalists et al.) looking to invest in companies in future. Companies having high carbon footprint can then forget about getting new round of investments and/ or raising money in the debt market.

Now where does the utility company fit in this bill? Utilities can route the surplus cash generated through steady flow of revenues towards implementing the renewable energy projects. For e.g. a concentrated solar power plant can be used alongside a coal/ gas –fired power station. As shown in the figure above, with the base plants already in place, heat up the water using solar energy during the day and use your conventional sources during the night. What do you get? Better sustainability rating, ability to generate renewable energy certificate and/ or secure the lucrative carbon credits.

Closing on a good note, according to MNRE, 24 project developers have confirmed achieving financial closure for their solar projects. The total of solar projects allocated in the year till date has reached 686 MW. Hope the same figure we can see in the installed capacity by end-of-the-year.
Image Source: www.abengoasolar.com
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Is Renewable/Cleantech Energy sector losing its “Shine” in India?

Monday, May 2, 2011 0 comments

This question often pops up when we are dealing with any new sector. "Is the dot-com really burst?", "Will the nuclear power plants go under new fission processes after the Japan debacle?" so on and so forth. While the dot-coms came resurgent after 1999-00 bubble burst, it was primarily attributed to the Web 2.0 and the companies that surged learning from the mistakes of others. The cleantech/ green/ sustainable/ renewable energy are running on a similar line. Its called the "industry cycle". So in which phase exactly is the cleantech industry?
The number of companies which can take in the fresh in-flows of capital through private equity and venture capitalist players is very less. Many investors feel concerned of smaller players trying to enter without any prior experience. According to Cleantech Group, VC and PE funds invested $816 million in fiscal 2011, compared with $828 million in last year. This comes as a surprise as the economic scenario is particularly improving in most parts of the world. Indian companies needs to build in internal efficiencies and operational effectiveness to bring down their costs and enter in newer untapped markets.
To add salt to the wound, many companies are backing up a bit after very aggressive plans. Google recently declared that "Renewable energy is long-term effort". I am not sure what to read in between the lines, but then one thing is for sure: Renewable needs a different approach to handle project and technology improvements. The government is doing round of revisions of targets without any major policy changes in India. It can support the project by providing wind velocity and density, DNI solar irradiation data, etc. The different state and central departments needs to be revamped for providing these and related data at a price or for free. This data could help the companies to cut down the initial costs of identifying the sites for projects by conducting their own feasibility studies. The companies in turn need to showcase that they have positive EBITDAs and Net Profits to make the investor world make believe in the them and hence, the cleantech sector.
What do you feel needs to be done by companies to improve their worthiness for the investors?
Image Source: www.clipartof.com
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