Solar power: truth versus hype

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The tariff for solar power has fallen from Rs.18 per unit a few years ago to an unprecedented level of below Rs.5 per unit—a big step in promoting clean energy. Photo: Bloomberg

Before the Paris climate summit, India had pledged to increase its share of non-fossil fuels to 40% of the total power generation capacity by 2032. India has an ambitious plan to add 100 gigawatts (GW) of solar power by 2022. Keeping in mind India’s high import dependence and chronic energy poverty, it is imperative that solar energy should be given impetus. The tariff for solar power has fallen from Rs.18 per unit a few years ago to an unprecedented level of below Rs.5 per unit—a big step in promoting clean energy. However, one must look critically at the reasons behind the massive cost reduction of solar cells and modules, along with the techno-economic feasibility of India’s solar ambitions.

Unfortunately, the reduction in the cost of solar power is not the result of a technological breakthrough in terms of enhanced conversion efficiency, but due to the dumping of cheap imported solar cells and modules by foreign cell manufacturers who enjoy massive state subsidies to practise predatory pricing and, thereby, destroy the domestic solar industry. High import dependence on solar cells and modules has its own ramifications on India’s energy security. While solar power developers in India are bidding aggressively, they are not leaving enough room for cost escalation. The contract for solar power doesn’t include a tariff revision provision. Though solar power projects do not involve any cost associated with fuel, their pricing projections are exposed to risks related to foreign exchange fluctuations and equipment replacement costs.

Further, a massive injection of solar power of the scale envisaged may perturb grid stability. Solar farms, unlike coal and nuclear power plants, cannot deliver the same amount of continuous electricity. To maintain grid frequency, grid operators must be able to predict precisely what the solar energy input at any given hour will be. But such an exact prediction every time is impossible. A small error in judgment will trigger frequency fluctuations and, thereby, instability in the grid. Moreover, India needs to have massive backup power plants and a delicate balance between base and peak load power plants when power from solar energy would not be available.

Massive land requirements to erect solar panels amplify the issues further. A 1 megawatt (MW) solar photovoltaic (PV) power plant should require around 2.5 acres. However, owing to the fact that large ground-mounted solar PV farms require space for other accessories, the total land required for a 1 MW of solar PV power plant would be around 4 acres. So investment in solar power must provide for a mammoth hidden cost.

Even from the environmental standpoint, while solar power plants involve much lower carbon emissions over their lifecycle than coal-based plants, solar power is not entirely clean. Manufacturing a PV solar cell requires huge amount of energy, starting from the mining of quartz sand to coating the cell with ethylene-vinyl acetate—most often derived from the burning of dirty fossil fuels. While there is no carbon emission associated with the generation of electricity from solar energy, there are emissions associated with various stages of the PV lifecycle, including the extraction of raw materials, production of materials, module manufacture, and system and plant component manufacture. All these cast serious doubt on the feasibility of India’s ambitious solar energy programme.

Germany’s solar experience

India must learn from Germany’s experiment with an ambitious solar energy programme. In Germany, the high rate of returns on solar projects encouraged huge investment for around 38GW though solar power, contributing just 6% of the total electricity demand in 2014 (according to Germany’s federal ministry for economic affairs and energy). Solar power is still the least efficient among Germany’s other renewable energy technologies, but 50% of total green energy subsides go to solar power. To address unaffordable and unreliable solar power, which increases power tariff and government subsidies, Germany renewed its focus on renewable technologies. According to Bloomberg, German utilities have started using lignite, a cheap and inferior coal with low heat content that spews more greenhouse gases than any other fossil fuels, for power generation.

The New York Times also reported on 8 April 2014 that key German industries have repeatedly expressed concern that the rapid and costly expansion of renewables could undermine the strength of the country’s industrial base, ultimately putting 800,000 jobs at risk. High usage of solar and other renewable energies is also causing instability to Germany’s electric grid, which prompted industrial consumers to purchase generators and other emergency backup systems to protect equipment from being damaged during disruptions.

Road ahead

India must explore all supply options, which include conventional and renewable energies like solar, wind, small hydro and biomass, to bridge the burgeoning demand-supply gap.

The focus should be on cleaner coal technologies along with nuclear power for India’s base load power generation. Cleaner coal technologies like super and ultra-supercritical combustion as well as coal-to-gas have the capability to minimize the emission of greenhouse gases from thermal plants due to their higher thermal efficiency. Domestic coal should be our major source in order to make energy affordable.

It is also important to accelerate India’s three-stage nuclear programmes so that we can utilize our vast thorium reserves to produce electricity at stage three. The renewed interest in nuclear energy in advanced economies like the US, France and Germany provides an important signal of its viability and safety.

Energy conservation and energy efficiency improvements have a significant potential to reduce energy consumption, which has a direct bearing on emission reduction at lower cost.

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