Feature

Germany helps fund India’s largest solar power plant


Sarosh Bana

One of the world’s largest solar power projects is to be built in Sakri, in the western Indian state of Maharashtra.

Scheduled to be commissioned this year, the 125 MW Shivajinagar Sakri Solar Power Plant is the result of a deal between Frankfurt-based development bank, KfW Entwicklungsbank and Maharashtra State Power Generation Company (Mahagenco).

The German government-owned bank finalised the €250 million loan agreement on behalf of the German Federal Ministry for Economic Cooperation and Development. The plant will have a capacity of 125 MW and could be expanded to 150 MW.

The total cost of the Sakri Solar Power Plant, including the expansion option, amounts to €370 million. With KfW providing the reduced-interest loan of €250 million, Mahagenco will contribute the balance. Sakri is a small village in Maharashtra’s Dhule district and is known for its proximity to two prominent pilgrim centres of the Jain community.

Currently, Andasol in southern Spain is the world’s largest commercial solar power plant - following the commissioning last September of its third 50 MW unit, bringing the combined installed capacity to 150 MW. The Indian facility, however, is far cheaper. Each of Andasol’s three units is estimated to have cost between €300 million and €350 million.

Getting bigger in solar

India’s largest solar power station to date is a 30 MW complex from Moser Baer Solar Limited that will be commissioned shortly in Patan, in the western state of Gujarat. The project, comprising two units of 15 MW each, has entailed an investment of Rs450 crore.

In addition, Torrent Power Limited, a major electricity distribution company, recently entered the solar sector and is building a 50 MW solar project in Gujarat.

But apart from Azure Power’s 10 MW plant in Sabarkantha, Gujarat, which was commissioned in June, and the 5 MW Sivaganga Photovoltaic Plant completed last December, most of the solar plants established in the country are of 1, 2 and 3 MW capacities.

The Sakri project will comprise five 25 MW generation blocks. Three of the blocks will be built using c-Si panels (Lanco Solar will be the the EPC contractor). The other two 25 MW blocks will use thin film solar panels (EPC by Megha Engineering and Infrastructure).

Lanco Solar is partnering Bangalore-based Juwi India Renewable Energies Private Limited, while Megha Engineering has tied up with Spain’s Aries Ingenieria y Sistemas and the US’s GreenBrilliance Energy Private.

Mahagenco’s EPC tender determines the capital cost of the project to be Rs11.5 crore (€1.78 million) per MW. The feed-in tariff for the project is likely to be Rs12.61 (€0.195) per kWh. At an average 17 per cent plant load factor, experts estimate that the project is likely to generate 186,150 MWh of power.

Germany-India partnership

German financial cooperation is channelled through KfW, which acts as the implementing agency for Berlin. It is one of the largest banks in Germany and is also the largest financier of renewable energy projects under development cooperation worldwide.

The bank began supporting India in financing renewable energies and energy efficiency as far back as 1999. It has financed new power plants and the rehabilitation of old inefficient ones, and has also provided credit lines for private sector investment through Indian development banks.

The bank has been active in the areas of energy, sustainable economic development and environmental protection in India since 1958 and currently has a portfolio of around €2.5 billion. Its activities in the field of renewable energies and energy efficiency amount to roughly €1.1 billion. During 2010, KfW granted €101.50 million funding to India compared to €338.67 million in 2009. It plans to lend €800 million to various Indian agencies for renewable energy infrastructure expansion.

India’s Solar Mission

According to Prabodh Saxena, joint secretary in the Department of Economic Affairs of India’s Ministry of Finance, the Indian subcontinent’s favourable geographical position provides it with natural resources and good conditions (high solar irradiation) that enable optimal use of solar energy.

“Reflecting the government’s policy to promote the use of solar energy through various strategies, the last Union budget allocated Rs1,000 crore (US$223 million) towards the Jawaharlal Nehru National Solar Mission and towards the establishment of a clean energy fund,” he remarks. “This registered an increase of Rs380 crore (US$84.7 million) from the previous budget.”

The budget also encourages private solar companies by reducing customs duty on solar panels by 5 per cent and exempting excise duty on solar photovoltaic panels. This is expected to reduce the cost of a roof-top solar panel installation by 15 to 20 per cent. The budget also proposed a coal tax of US$1 per tonne on domestic and imported coal used for power generation.

Additionally, the government has initiated a Renewable Energy Certificate (REC) scheme designed to drive investment in low-carbon energy projects. The Ministry of New and Renewable Energy (MNRE) provides a 70 per cent subsidy on the installation cost of a solar photovoltaic power plant in North-East states, and a 30 per cent subsidy in other regions.

 

 

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Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity

 

Comments

GERHARD WEINREBE said

27 January 2012
Of course do I agree that a comparison of cost is of interest, but to make it meaningful, electricity generation costs have to be compared, not (only) investment cost, as annual full load hours differ significantly.
Moreover, in the special case discussed here, investment cost quoted for the Andasol plants are not correct; at least for Andasol 2 and 3 they are too high.

Anonymous said

26 January 2012
My comparison between Sakri and Andasol was entirely on the price, and not technological, front. With its relatively nascent foray into solar power generation, India has been opting more for PV plants precisely because of their more affordable capital costs and shorter gestation. -- Sarosh Bana

Anonymous said

26 January 2012
Hi - thanks for the comment. I agree to a certain extent, but just because one project is PV and the other CSP I don't think this makes the point irrelevant. There is a huge debate raging currently about the relative costs of PV vs. CSP technology. I assume the author was talking about capital costs anyway. Yes, Andasol has storage, that storage technology clearly adds a premium to the capital costs and currently (and this is evidenced by a number of projects having been switched from CSP to PV) the jury is out as to whether this additional premium makes a project investable, in comparison to a PV utility scale plant. The cost needs to come down. I agree, some CSP technology has compelling advantages (storage for one) and in certain markets will hopefully have a great future. But currently times are tough for getting CSP projects off the ground and the decreasing costs of building PV projects unfortunately for CSP keep the capital cost issue at the forefront.

Anonymous said

21 January 2012
Why the progress of solar energy installations so slow?
Capital costs get multiplied by involvement of several corporate players as well as governmental and political involvement. Everyone agrees that the capital costs are high.
Does anyone bother to explore the possibilities of reducing these costs?
There is possibility of reducing the costs by 25 - 30% by most conservative estimates which is not a small amount if you consider multi-megawatts installations. CSP Thermal technology could be cheaper than the PV panels. There has to be a strong will.

Anonymous said

19 January 2012
The comparison between Sakri and the Andasol plants is completely misleading for three reasons:
1) The Andasol plants are parabolic trough power plants which in general generate substantially more electricity per installed MW of capacity than PV plants do.
2) The Andasol plants are equipped with storage systems that allow for about 7 hours of operation at full load without solar radiation. Of course they have been built with the appropriate ‘oversized’ collector fields.
3) Last but not least: Parabolic trough power plants are strongly affected by economies of scale. Therefore three 50 MW parabolic trough power plants mean higher electricity generation costs than one 150 MW plant (Remark: In Spain power plant size is limited to 50 MW by law).
I am disappointed by such an article clearly showing that the author is not familiar with solar power plant technology and economics.

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