New Hampshire, USA — Three weeks ago India’s Union Cabinet of Ministers officially approved the revived generation-based incentive (GBI) scheme that was pulled off the table 17 months ago, with some minor changes including low-interest financing, an offshore wind authority, and an increase in the total subsidy a wind plant can claim (INR 10 million/US $160,000, up from INR 6.2 million/$100,000).
The GBI, whose return was announced this spring, will cover wind plants built between 2012-2017. There’s still no decision on an accelerated depreciation benefit, though, notes Make Consulting. The firm counts 470 MW of commission-ready turbines that remain idle, and a mandate to project next-day generation on quarter-hourly basis could challenge grid operators. Nevertheless the government has stuck with its target of 15-GW of new installations by 2017; Make suggests current budgets and caps would support 1-GW, so new financial support will be required.
There’s another hurdle for India’s wind sector to overcome, however. A sudden and steep devaluation of the rupee vs. the US dollar — 17 percent this year, and an eight percent slide in August alone — translates to higher costs for financing sourcing components. “If the rupee doesn’t recover in the next couple of months, it will start impacting everything from turbine prices to interest rates, and thus project profitability,” according to Bloomberg New Energy Finance analyst Shantanu Jaiswal. Domestic turbine maker Suzlon is especially feeling the pinch, though it also helps the company when doing business in overseas markets.
IN THE NEWS
China’s New Solar FIT Emphasizes Distributed Generation: China’s National Development and Reform Commission (NDRC) has set down a new feed-in tariff (FIT) structure for both utility and distributed solar PV generation. It comes in two flavors: ground-based utility generation, ranging from RMB 0.9-1.0/kWh, and distributed generation solar PV which gets a RMB 0.42/kWh for systems under 6-MW capacity. Both will be paid out from an increased charge on electricity sales, to RMB 0.015/kWh from RMB 0.008/kWh. (Here’s the original NRDC announcement, with English translation.) One quick takeaway: the distributed generation subsidy likely will make commercial roofing more attractive. “The prioritization for self-consumption of PV power generation by the Bureau of Energy appears clear now,” so look for a surge in China’s solar PV rooftop segment in the next few quarters, observed Solarbuzz’s Steven Han.
Rooftop Solar, Net Metering Enacted for India’s Uttarakhand: The Uttarakhand Renewable Energy Development Agency (UREDA) has released a rooftop solar scheme, including INR 9.20/kWh to compensate for “net metering”. The scheme has a 5-MW limit, which translates to about 50 rooftop systems. Bridge to India suggests this “could be a good business proposition,” assuming the MNRE’s proposed 30 percent subsidy is availed, though this might not be easy given a backlog of subsidy claims.
Japan’s METI Seeks More Clean Energy Funds: Japan’s Ministry of Economy, Trade and Industry (METI) is seeking roughly ¥198 billion (US $2 billion) to support “clean energy,” roughly a two-thirds increase from the current fiscal year’s budget. (Japanese language version is here.) About half of that (¥84 billion) will be put towards new technology evaluation and development, roughly double the past year’s spending, with another ¥46 billion going to strengthen the country’s power grid.
Massive China Solar Debts, Deadlines Rattling Investors: Recent delays and default in hefty debt payments by LDK Solar and Suntech are bringing home a disturbing reality to many solar investors: China’s 10 biggest solar PV companies carry more than 100 billion yuan ($16.3 billion) in debt, and half of it will be maturing within the next year or so. Companies saddled with huge debts in a sector suffocated by overcapacity is a recipe for severe pruning, depending on what investors and the government — often one and the same — choose to do about it. Suntech’s situation has led several directors to resign questioning the company’s business plan.
Eurus Sets Sights On Japan’s Biggest Solar PV Plant: Eurus Energy Group is preparing to start construction of a 115-MW (AC) solar PV plant in Rokkasho Village, Aomori Prefecture, billed as the nation’s largest. The plant spanning over 250 hectares and two sites in the Mutsu-Ogawara Industrial Park will incorporate more than 500,000 modules, supplied by Mitsubishi Electric and SunPower. Operation is planned for late 2015.
Hydro Link from Malaysia to Indonesia: A new is being built to connect a hydro plant in Sarawak, Malaysia, to West Kalimantan in Indonesia plus a new distribution line, feeder extensions, and substation, capable of transmitting up to 230 MW/hour. The Asian Development Bank and French development firm Agence Française de Dévelopment have agreed to invest $49.5 million each, with another loan now being arranged to finance the line on the Malaysian side. Indonesian state-owned electricity company Perusahaan Listrik Negara (PLN) expects to drop the cost of power generation in West Kalimantan to $0.18/kWh, from $0.25/kWh currently using oil.
Bargain-Basement Solar in India: Bids are opened in the state of Karnataka for 130-MW of solar capacity, with “letters of interest” expected to be issued to 16 developers. Successful bids average INR 7.06/kWh, with the lowest being INR 5.51/kWh — that’s the lowest ever bid in India, points out Bridge to India, at which point there’s not much return-on-equity to justify investments. And with the Indian rupee’s severe devaluation in recent months (see lead item above), plus possible antidumping duties, costs are rising across the board. Note that the Tamil Nadu Electricity Regulatory Commission’s (TNERC) recent proposed tariff of INR 5.78/kWh isn’t much better. If similar tariff levels carry into the next phase of the National Solar Mission (NSM), for which the government is expected to determine a INR 5-6/kWh tariff, they warn that “the government would end up paying nothing for the Viability Gap Funding.”
Thailand’s New FIT Means 1 GW of Solar: Thailand installed roughly 1 GW of solar PV from 2006-2010 thanks to an aggressive feed-in tariff (FIT) program. Now Thailand’s National Energy Policy Commission (NEPC) has approved a new FIT that will add about 1 GW of rooftop and ground-mounted solar PV capacity, most of it reserved for community-owned projects — and all of it has to be installed by the end of 2014. Overall Thailand plans to increase its electricity production from renewable energy to 25 percent of total output over the next 10 years, jumping from around 9 GW to nearly 14 GW by 2021.
Another EC-China Solar Finding: The European Commission reportedly has concluded that Chinese solar panel makers did indeed receive subsidies, which could increase the change of EU tariffs on imports. This is the second of two such inquiries; the first concerning antidumping was narrowly avoided in early August with an agreement by both sides, setting price and volume limits on Chinese solar panels.
Japan’s Nonresidential Solar Surge: Japan approved nearly 19 GW of nonresidential solar applications in the fiscal year ended in March, according to METI and reported by Bloomberg. Japan’s the global leader in 2013 for adding solar capacity, thanks largely to a big push by the fiscal year-end to take advantage of especially friendly incentives, which were reduced in the new fiscal year starting in April.
A DEEPER LOOK
One In Ten Australians Using Solar Power: The Climate Commission’s latest report has some updated statistics about the country’s solar energy progress. Over 1 million rooftop solar PV systems have been installed in Australia, up from 8,000 in 2007, and the country has over 630,000 solar hot water systems. About 2.6 million people, roughly 11 percent of Australia’s population, get their electricity from the sun; by 2050 that’s expected to jump to 29 percent of national solar PV usage.
Solar Opportunities in Central Asia: China and Japan get the vast majority of attention as solar end-markets, but there other opportunities to do business in Central Asia as well. Solarbuzz’s Steven Han explores the growth ambitions and investments planned by several countries from Kazakhstan to Uzbekistan.
ON THE HORIZON
Renewable Energy Challenging Coal in China as Power Sector Doubles: China will add nearly 1.6 GW of power generation capacity, reaching 2.7 GW by 2030 at a 5 percent growth clip (88 GW) per year, according to a report from Bloomberg New Energy Finance. By that date, half of that new capacity will come from renewable power sources, rising by 47 GW/year, pulling even with coal capacity which is seen decreasing 25 GW annually. On top of that China will need to invest $57 billion annually — over $1 trillion in total — for supporting infrastructure, from transmission to energy storage and demand response.
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Lead image: Desert wind-driven generators in desert Thar near Jaisalmer, India, via Shutterstock