India is hot! You can walk around in a t-shirt in streaming sunshine in January, a period that we in Northern Europe call “winter” and during which we may be ice skating or skiing! The Indian food is hot and spicy as well. And the economy in India is “hot” - all excellent conditions which forecast a sunny future for their PV market.
Potentially one of the richest countries
During the Conference “The Solar Future: India” last week in New Delhi it became clear that India is on its way to becoming a solar super power. The question is not if, but rather when. The majority of the experts and participants present at the Conference believe India will be ranked among the major solar PV markets within 5 years.
There is of course good reason to believe this. There is abundant sunshine for at least 300 days per year. The country has much more sun than Spain. The permanent power shortage leads to power cuts, mainly during peak hours at midday, when the sun shines brightest. The economy, population and energy demand are increasing year by year. And India has no energy sources other than the sun. In a way, it is therefore one of the potentially richer countries in the world in terms of potential energy supply. What is needed to kick-start the development of India’s solar market?
Never seen a PV panel
This fundamentally comes down to one thing: education and information. There is no lack of solar entrepreneurial spirit among the Indian people and companies. Many Indian businessmen have been educated in Europe or the US and have close ties to experienced foreign companies, suppliers, EPCs eager to enter India. Indeed, this is not the most difficult part of India’s market development.
More challenging is the financial banking sector. And financing is key in the development of any PV market. Unfortunately, it is not easy to import financing from foreign (experienced) institutions. The Indian financial sector will need to be educated right from the bottom. Indian bankers who have probably never seen PV panels before are now being asked to finance grid-connected project developments costing over 10 million dollars. No wonder they have many questions and take time to evaluate their risks. The country is not familiar with project financing for renewable energy systems, and definitely not used to loans spanning more than 10 years. Basic information needs to be spread. What is solar PV? How reliable is this energy technology? What are the risks involved? Does it make sense to invest money in this energy source?
It takes 4 years to develop a market
As they say, “Seeing is believing.” More real-time monitoring of data, developers with track records, and real panels on the ground are necessary. No doubt this will happen. In a few years these Indian bankers and investors will see that solar projects probably are the most steady cash flow generators possible. It is just a matter of time before the financial sector will embrace solar PV.
As stated in a previous blog, it takes time to educate and develop a market. For most markets it takes some 3 to 4 years to develop into a market of several hundred megawatts in annual installations. Let us recall Spain; in the first year, with the world’s most generous feed-in tariff, Spain did installed “only” 13 MW of new grid-connected installations. Four years later (2008), Spain had the world’s largest market, with 2600 MW. In 2008, the PV market in the whole of India, which is larger in size than Europe with at least four times Europe’s population, installed less than 15 MW. It is expected that this figure could rise to around 500 MW in 2011. Based on the many State programs and initiatives, this figure will surge to more than 2000 MW by 2013.
Take the Indians on a European PV tour
The Indian market will be kick-started by the National Solar Mission and the Gujarat PV Program. These two initiatives alone could lead to more than 500 MW of new installed PV power in 2011. And many more Indian States will follow suit. With a global solar industry looking for larger markets besides Germany, it might be an idea to help the Indian bankers and investors - taking them on a tour of Germany, Spain or the USA; showing them the hundreds of large-scale projects already implemented; teaching them about real-time data monitoring; informing them about financing possibilities and the risks involved - in essence, showing them that solar PV is a mature technology and not rocket science, and hence building their trust. The sooner these Indian financial stakeholders are convinced, the faster the Indian PV market will grow.
Take the Indian bankers to cold Europe
There is no longer a lack of modules or investors in the global market, and there is no shortage of EPCs willing to implement projects in India jointly with local people. The main obstacle is lack of information and trust among financial stakeholders. This does not have to be the most difficult task. Let’s arrange a European large-scale PV project tour for the Indian financial executives. The costs for this will be worth the money as it will help to develop the huge new booming PV market.
Indeed, the biggest problem may well be that of rendering the tour attractive to these Indian visitors - taking them from their hot climate to one which is cold not only in terms of the below zero degrees climate but in terms of frozen economies - and to top it all, non-spicy takeaway food!
Solarplaza is ready to organize this European PV tour for Indian PV financial executives. Which of our stakeholders are willing to contribute?
Posts tonen met het label India. Alle posts tonen
Posts tonen met het label India. Alle posts tonen
dinsdag 1 februari 2011
maandag 6 december 2010
Why the Indian PV market will grow fast
India will not wait for centralized electricity grids
Why is India set to soon become one of the world's largest PV markets? Because all the necessary ingredients are there: Permanent energy shortages, strong economic growth, growing energy demand, lack of fossil energy sources, and abundant sunshine. Solar PV is already competitive in India in several market segments such as for powering telecom towers. Tens of thousands more will be built in the coming years. Interesting market... But let’s take it one step further. Solar PV will be competitive with grid electricity in India within 5 to 10 years.
We are talking serious business
Average electricity consumption per household in India is expected to show a stunning growth, from a little over 600 kWh to more than 1000 kWh. So wake up Europe and the US - this is still per year and not per quarter as is the case for us! Because India’s population is more than double that of Europe and the US combined, we are talking serious business. How to power the rapid economic growth in India?
Can anyone make a serious guess as to coal prices in 20 years’ time?
Import more fossil fuel? Build more coal and nuclear power plants? Like in most democracies - and India is the world’s largest - it takes a couple of years to have such a plant available for power supply. Bureaucracy comes with democracy. Let’s say the plan to build a new central power plant starts today. You will be a winner if the power supply is operational in 5 years’ time. Plus, you will need expansion of the grid. On the other hand, what will the cost of (decentralized) solar PV systems be in 5 years’ time? At the very least, a lot cheaper than today - and likely close to grid prices. But even more important, you can calculate the exact cost of the produced (solar) energy for its 25 years’ lifetime. Those costs will be flat and completely predictable. Put that against the cost of electricity from coal or oil over the next 25 years - not forgetting possible CO2 taxes. Can anyone make a reliable prediction? So, if you are an investor and you don’t like risks in your business model, what makes more sense?
Skip the old-fashioned cable phase
No wonder the Government of India is taking first steps with solar energy under the National Solar Mission. The target: 20,000 megawatts of cumulative installed solar power by the year 2022. This seems an impressive number, but the program might indeed become reality...
Let’s make a comparison with telecommunication systems. Countries like China and India went straight from no telephones to mobile telephones for everybody. They never went through the era of cabled phones. Phones with wires - how old-fashioned is that? Now, will it make sense for India to invest its money into expensive and financially risky projects like centralized fossil power plants and grid expansion? With solar PV sure to become competitive in India within 5-10 years, this outdated approach can be skipped. Like with mobile phones, India can go straight to a decentralized power supply from financially more attractive and predictable PV systems.
No waste of money on old-fashioned technologies
In fact, their growth and development stage gives India a clear advantage. They don’t have to waste money on old-fashioned technologies. They will learn from the mistakes we made in the past - and this in a period of strong economic growth. Compare that with financially struggling economies in the Western World, where government budget constraints hinder investments in renewable energies.
Bureaucracy? Talk to a Californian installer!
There are some hurdles here and there - such as bureaucracy and corruption. But, is that much different from the Western world? Ever talked to a Californian solar entrepreneur about all the paperwork required for a new PV installation?
Power to the wireless people
It won’t surprise me if market development in India progresses at a faster rate than the National Solar Mission is targeting. Within a decade people in India will not wait for the Government stimulus programs in order to use solar power - just as no-one waited for the Government in order to install cables underground for “new telephone connections.” Photovoltaic energy systems will just provide the cheapest energy. This decade, no-one will wait for expensive centralized fossil power stations and grid expansions. People and new entrepreneurs will use and provide decentralized cheap solar energy. More than ever it will be “Power to the people!”
Why is India set to soon become one of the world's largest PV markets? Because all the necessary ingredients are there: Permanent energy shortages, strong economic growth, growing energy demand, lack of fossil energy sources, and abundant sunshine. Solar PV is already competitive in India in several market segments such as for powering telecom towers. Tens of thousands more will be built in the coming years. Interesting market... But let’s take it one step further. Solar PV will be competitive with grid electricity in India within 5 to 10 years.
We are talking serious business
Average electricity consumption per household in India is expected to show a stunning growth, from a little over 600 kWh to more than 1000 kWh. So wake up Europe and the US - this is still per year and not per quarter as is the case for us! Because India’s population is more than double that of Europe and the US combined, we are talking serious business. How to power the rapid economic growth in India?
Can anyone make a serious guess as to coal prices in 20 years’ time?
Import more fossil fuel? Build more coal and nuclear power plants? Like in most democracies - and India is the world’s largest - it takes a couple of years to have such a plant available for power supply. Bureaucracy comes with democracy. Let’s say the plan to build a new central power plant starts today. You will be a winner if the power supply is operational in 5 years’ time. Plus, you will need expansion of the grid. On the other hand, what will the cost of (decentralized) solar PV systems be in 5 years’ time? At the very least, a lot cheaper than today - and likely close to grid prices. But even more important, you can calculate the exact cost of the produced (solar) energy for its 25 years’ lifetime. Those costs will be flat and completely predictable. Put that against the cost of electricity from coal or oil over the next 25 years - not forgetting possible CO2 taxes. Can anyone make a reliable prediction? So, if you are an investor and you don’t like risks in your business model, what makes more sense?
Skip the old-fashioned cable phase
No wonder the Government of India is taking first steps with solar energy under the National Solar Mission. The target: 20,000 megawatts of cumulative installed solar power by the year 2022. This seems an impressive number, but the program might indeed become reality...
Let’s make a comparison with telecommunication systems. Countries like China and India went straight from no telephones to mobile telephones for everybody. They never went through the era of cabled phones. Phones with wires - how old-fashioned is that? Now, will it make sense for India to invest its money into expensive and financially risky projects like centralized fossil power plants and grid expansion? With solar PV sure to become competitive in India within 5-10 years, this outdated approach can be skipped. Like with mobile phones, India can go straight to a decentralized power supply from financially more attractive and predictable PV systems.
No waste of money on old-fashioned technologies
In fact, their growth and development stage gives India a clear advantage. They don’t have to waste money on old-fashioned technologies. They will learn from the mistakes we made in the past - and this in a period of strong economic growth. Compare that with financially struggling economies in the Western World, where government budget constraints hinder investments in renewable energies.
Bureaucracy? Talk to a Californian installer!
There are some hurdles here and there - such as bureaucracy and corruption. But, is that much different from the Western world? Ever talked to a Californian solar entrepreneur about all the paperwork required for a new PV installation?
Power to the wireless people
It won’t surprise me if market development in India progresses at a faster rate than the National Solar Mission is targeting. Within a decade people in India will not wait for the Government stimulus programs in order to use solar power - just as no-one waited for the Government in order to install cables underground for “new telephone connections.” Photovoltaic energy systems will just provide the cheapest energy. This decade, no-one will wait for expensive centralized fossil power stations and grid expansions. People and new entrepreneurs will use and provide decentralized cheap solar energy. More than ever it will be “Power to the people!”
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