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Asia Report: Four Reasons Why Solar Can Unseat Coal in India This Decade

Coal contributes 60 percent to India's power mix today; solar is less than 1 percent. But what was a factor-of-seven difference between the cost of coal and solar two years ago shrank this summer to just a 1.8x gap. Can solar catch up within the next ten years?

In 2011 big coal plants were signing PPAs with tariffs for INR 2.8/kWh while solar was as high as 18/kWh. Now large grid-connected solar can be had at INR 7/kWh, while imported coal, on the rise to help offset a ~10 percent power deficit (baseload) exacerbated by rapidly rising power demand, is pushing INR 4/kWh without taking into account subsidies or cost of externalities. And that doesn't begin to address the challenges of grid-connecting villages, much less the hundreds of millions of citizens who remain off-grid.

The answer to this lies in domestic solar power, both centralized and distributed, built relatively fast at any size and requiring less than 1 percent of the nation's land. Four factors have to come into play, though, for solar to truly supplant coal in India in the next decade, according to Tobias Engelmeier, managing director at Bridge to India:

- Looking at longer-term costs. Getting solar costs down to INR 5/kWh in the next couple of years, and lower beyond that, will require improved materials, production, and efficiencies, but long-term solar costs are heading downward. Costs of non-replenishing fossil fuels including coal, meanwhile, will increasingly depend on foreign supply and demand markets.

- Costs of infrastructure and grid management. As an infirm power source, solar's higher incorporation will require extra investments in a number of areas from storage to demand response. On the other hand, adding more coal plants and imports will mean more infrastructures in mining and a supply chain for imports. It's still unclear how those all will compare.

- Measuring externalities. Beyond simple end market pricing, coal has several arguable cost-adders that should be factored in, most notably pollution and greenhouse gas emissions, water usage, soil degradation, etc. Factoring in all costs will increasingly be important.

- Valuing energy security. Notice how U.S. foreign policy decisions, including wars, made in the past few decades have been linked to dependence on imported oil? Don't expect India to follow that lead, given global politics and current supply situations.

Have an Idea for Renewable Energy In India? In May 2014 the 5th annual Renewable Energy World India exhibition and conference returns to New Delhi in 2014, now alongside DistribuTECH India and co-located events POWER-GEN India & Central Asia and HydroVision India. The call-for-papers deadline is this Friday, October 25; topics can range from solar to wind to biomass to geothermal and heat pumps, waste-to-energy, hybrid plants, energy storage, resource forecasting, and numerous related issues.


IN THE NEWS

Japanese Cleantech Funds Seek Local Backing: Ohisama Energy Fund Co. and Japan Green Fund Co. are seeking up to ¥2 billion (US $20 million) from local banks, credit unions, and citizens to help set up local renewable energy projects and keep funds in the area. Projects in line for funding include solar and biomass in Nagano Prefecture and other projects in Hokkaido, Fukushima, Kanagawa and Yamaguchi prefectures by early next year.

Is This China's Next Solar Heavyweight? Shunfeng Photovoltaic reportedly is the frontrunner in bids to provide funding for Suntech as the company works through its bankruptcy woes. That's interesting since Shunfeng also bought 20 percent of LDK, notes Doug Young. Also interesting is who apparently they're beating out for Suntech: GCL Poly, Wuxi Guolian, and earlier Yingli and Trina.

Update on Fukushima Offshore Floating Wind Project: A consortium of Japanese companies led by Marubeni and Mitsubishi are making progress on an offshore floating wind farm project off the coast of Fukushima, a project underway since March 2012. The undersea high-voltage cable and dynamic cable have been laid and connected from the now-moored 2-MW turbine and 66-kV floating substation to the onshore transmission line tower. Power is expected to start flowing in late October, with operations commencing in November pending weather and sea conditions.

China's Huaneng Investing in Renewable Energy Projects: Huaneng Power plans to invest 445 million yuan in a 48-MW wind farm in China's Hunan province, with funding to come from bank loans and internal resources. The company also wants to pour 1.21 billion yuan into a 237-MW gas-fired distributed power project in the Guangxi Zhuang Autonomous Region. Huaneng Renewables, meanwhile, is seeking to raise about US $200 million from a proposed sale of about 582 million shares, roughly 17 percent of its H shares. The placement price of HK $2.71 is about 7 percent lower than its Oct. 11 closing price.

Wind Turbine Manufacturing in Taiwan: Opening the wind turbine market to the private market, particularly given local electronics manufacturers' applicable skills, would create jobs and help state-owned Taiwan Power Co. bring on more renewable energy, but there's still disagreement whether there's enough support to unseat support for nuclear energy in the near-term, according to debates at a forum in Taipei.

Biomass Update in Thailand: Ratchaburi Electricity is looking for new biomass projects in Thailand's south where there's agricultural waste to support it and feasibility studies underway for several potential sites, according to CEO Pongdith Potchana. The company's 9.9-MW Songkhla biomass plant is currently under construction and expected to come online next summer. The government wants to double its biomass generating capacity by 2021 to 3.63 GW.

European Group Invests in Manila Renewables: ThomasLLoyd Group is investing $210 million to partly fund 120 MW of renewable energy projects in the Philippines. Site development and construction has already begun for the four 20-25 MW biomass projects and a 22-MW solar project.

Green Light for Two Filipino Hydro Projects: SUNWEST Water and Electric Co. is pledging to begin construction next year on two hydropower projects: the 15-MW Main Aklan in Libacao, and the 6-MW Pinacanauan plant in Peñablanca, both of which have been deemed commercially feasible by government energy authorities. Both are scheduled to be completed in 2017. SUWECO recently opened up a 600-kW hydro plant in Sorsogon City, and is developing a 8-MW plant in Bugasong, to be operational by year's end.

Japan-Built Geothermal Unit in Indonesia: Japan's Sumitomo Corp. has won a contract to work PT Rekayasa Industri and Fuji Electric for the new 35-MW fifth unit of the Kamojang geothermal station in Garut. Construction will be done in 2015.


A DEEPER LOOK

Inside India's Latest Solar Policy Guidelines: India's Ministry of New and Renewable Energy (MNRE) has approved guidelines for the next phase of the country's National Solar Mission (NSM), which called for bids for 750 MW of solar plants, offering about 18.75 billion rupees ($303 million) in grants. Here's a summary of the latest draft proposal's high points and key changes, from a sizable domestic content provision to a tweak to viability gap funding (VGF) and some reassurances for both developers and state manager SECI.

India's Plan to Harness Biomass: The New York Times takes a closer look at India's goals for biomass as a growing renewable energy source and economic enabler for its agriculture sector which supports more than half the nation's population. Taking its cues from Europe's embrace of biomass, India sees the potential to generate at least 18 GW of electricity, part of overall plans to more than double its renewable energy supply to 55 GW by 2017. That runs somewhat contrary, though, to another report that a dozen biomass power plants have scaled back their output since demand for the costlier power source has plummeted in the past year.


ON THE HORIZON

Government Support for Biomass In Rural Malaysia: The Ministry of Energy, Green Technology and Water wants to help rural communities better organize and develop "a more entrepreneurial bent" to help drive more biomass projects and products, including energy. The country is targeting 800 MW of renewable energy by 2020, and part of that will require 6-9 million tonnes of biomass, which the government calculates will translate to about RM 9 billion in gross national Income (GNI). "Biomass is [...] poised to play a very important part in our economic future," noted Deputy Minister, Datuk Seri Mahdzir Khalid.

IN CASE YOU MISSED IT

September 4-October 2, 2013 Asia Report: Five Reasons Why China's Solar Demand Could Surprise You

August 8-September 3, 2013 Asia Report: What's Driving, And Hampering, India's Wind Market Momentum

Lead image: Taj Mahal sunrise reflection in river with blue sky, via Shutterstock

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