16 th – 18 th April, 2013 at ASTURIAS in Spain

1. . Indian CSP Market potential NSM phase II and Lessons of Phase I Great potential, achievements and many challenges 16th – 18th April, 2013 at ASTURIAS in Spain By GOPAL SOMANI 91 8800988399 Email : gopallalsomani@gamil.com Metallurgical Forum at Asturias

2. Indian National Solar Mission The MNRE’s presentation on introduction of JNNSM Phase II program including reverse auction process followed for award of solar projects at cost competitive prices is relevant Metallurgical Forum at Asturias

3. Achievements of Phase I - CSP • Huge cost reduction both in supply of solar field and LEC - Tariff. Solar fields costs from $ 4/ watt to $2 / watt and Solar Energy cost from Rs. 15 65 to Rs. 10 57 • Localization of 45 % in Parabolic trough and 65% in CLFR AREVA technology achieved. • EPC turn key suppliers are now available. • The BOS and electrical items are resourced locally • Experience and expertise gaining momentum • The first CSP plant of 50 MW from Godavari is getting ready for grid connection. Metallurgical Forum at Asturias

4. Summary of Lessons of Phase I • India had no real CSP projects even at pilot scale on ground to check performance when Phase I CSP program was announced • Reliable DNI site specific data were absent when bidding under NSM phase I happened • No CSP experience was available in India to build commercial projects of 50-100 MW capacity when developers made bids. • Lack of awareness about severe variability in weather and low DNI at CSP sites mislead to developers. • Sourcing components locally has been difficult. Metallurgical Forum at Asturias

5. Lessons - Low DNI -weather conditions • Huge gap in NREL supplied data from MNRE / C wet DNI reports and assessment made by Phase I developers. DNI NREL 2150 / 2260 dropped to 1850 / 1950 KWH / M2 • Developers spent extra time and money in re engineering solar field layouts and equipments to compensate lower DNI values. • Low DNI required 25-30% extra solar field and additional cost to meet generation commitment made in PPA • There are no standards prescribed world over about specifications, engineering, construction, testing and commissioning of CSP technologies. Metallurgical Forum at Asturias

6. Lessons – Selection of Land, Technology and Financial close • Land selection and allocation, PPA, approvals, infrastructure placements and land development all took longer than expected. • Issues in technology selection, contracting and timely supply commitments for items like Mirrors, Receiver Tubes, HTF • Sourcing experienced construction manpower was difficult • Lenders took time in project appraisals and financial close delayed, key issues: • Reliability of solar DNI data, • understanding technology and concept, • accurate energy yield estimation Metallurgical Forum at Asturias

7. Fact sheet - CSP phase I development LOW DNI • DNI at CSP sites in Rajasthan by C wet / MNRE - 1702 Kwh / m2 (Source- MNRE) • DNI at Rajasthan Solar Park - 1676 Kwh / m2 (Rajasthan CSP tender) • Experts feel that the DNI level at Rajasthan sites must be higher than the one specified in Rajasthan CSP tender and MNRE report. • DNI assessment carried by phase I developers stands in the range of 1800 -1950 kwh/m2. • High dust, moisture, fog, high temperature and wind loads are responsible for low DNI Metallurgical Forum at Asturias

8. Fact sheet - CSP phase I development • Indian CSP sites have low DNI compared to sites in US: 2560 - 2700 KWH/m2, Spain: 2070 - 2360 KWH/m2, SA: 2400 – 2800 Kwh / m2, MENA region where CSP plants are operational / built • The weather conditions i.e. Temperature, Dust, AOD, Moisture, Wind loads, fog etc. has large variability compared to CSP sites in US, Spain and SA. • Low DNI, large variation in weather conditions, high AOD in Indian CSP sites required large size solar field involving higher cost of solar block, high auxiliary consumption compared to operational CSP plants world over. Metallurgical Forum at Asturias

9. Fact Sheet – CSP Feasibility • High technology costs, bankability issues, affordability of rate payers, falling PV costs and limited experience in technology are the issues developers may stay away making investment decision in Phase II CSP program. • The prescribed time frame for completion has been insufficient for a new technology brought in for the first time. CSP tender in Rajasthan resulted to no bid. Reasons are known. • Phase I projects are delayed by 6 to 12 months and may be more. Metallurgical Forum at Asturias

10. CSP – Historical facts • Low DNI in CSP potential sites, severe variability in weather, high dust, long period cloud travel have great influence on operational performance. compared to CSP sites in US and Spain. • All operational 50 MW (+) CSP plants across the globe based on Parabolic Trough Technology allowed fossil fuel (NG) backup to the extent of 15-30 % for sustained operations. • Consistent operation of Power Block is a issue during cloud cover, high dust storms and monsoon without fossil back up and storage. Metallurgical Forum at Asturias

11. CSP – Specific to Indian scenario The CUF i.e. outputs, land use, solar field layout needs careful design depending on DNI conditions specific to Indian sites. • CSP is losing its popularity and proportionate share internationally against falling PV costs. The cost and affordability are the key drivers. • The CSP technology is complex and needs precise engineering, reliable DNI data, expert supervision in installations. Unfortunately these aspect lacked and all NSM Phase I CSP projects though progressing got delayed. Developers requested for extension grant in completion time for minimum 12 months. Metallurgical Forum at Asturias

12. History – CSP Technology • Parabolic Trough technology is mature, time tested and most advanced till recently as large capacity CSP plants are operational since 1986. • Plants on Tower and CLFR Technology were built at demonstration / commercial scale in recent past. 24x7 operations got demonstrated with Tower Technology. GEMASOLAR 19.7 MW CSP plant using 15 hours of solar thermal storage brought in service in 2011 in Spain. • R&D on achieving higher steam parameters, adding storage, scaling higher capacity, cost reduction etc. are aggressively carried out by technology suppliers, research institutions and government agencies Metallurgical Forum at Asturias

13. NSM Phase I – Bidding Process • Developers made bid aggressively without reliable data, weather conditions, site selection and technology studies. • However, the cost competitive bidding process followed by Indian Government and award of 480 MW CSP projects under NSM phase I has shifted the FIT trend globally. Process discovered real CSP costs. • Cost competitive bidding / auction process will result now affordable cost to rate payers. • Realization of Phase I CSP projects will set future trends. Indian CSP communities will lead new emerging CSP market at affordable cost. Metallurgical Forum at Asturias

14. CSP - Merits and Advantages Challenges • Deployment of CSP technology in the stand alone format does not make sense against falling PV costs, its low gestation and modular in implementation. • Low DNI compared to US, Spain, MENA, SA etc. uncertainties in operations, investment risks to developers and bankability issues with lenders are challenges for CSP at the moment. However, • CSP will have preference over PV and wind because of its technical ability to be attached with Solar Thermal Storage, fossil back up and hybrid. Metallurgical Forum at Asturias

15. CSP Technology-Merits / Advantages • CSP plants can generate electricity according to the demand and thus could replace conventional power plants in long run. • CSP capable to achieve 24x7 operations through large thermal storage and hybrid with gas / biomass. • The only route for CSP to stay with aggressive cost cuts on all fronts Metallurgical Forum at Asturias

16. Suggestions- Phase I and Phase II • Allow extension in PPA and completion time to all Phase I projects by 12 – 18 months • For future large CSP project a minimum time of 36 Months in completion should be allowed. • Do not wait for the results of Phase I as important lessons from Phase I already known and projects are progressing. Bring in CSP hybrid program early. • Supply reliable DNI site specific data. Evaluate more sites having feasible and reliable DNI predictions (+) 1900 kwh/m2 • Allow use of 15% fossil backup for operation stability even to phase I projects • Allow use of PV to supply to offset self auxiliary consumption and parasitic losses. Metallurgical Forum at Asturias

17. Suggestions- contd. • Multiple CSP projects are suggested to be built at the identified DNI potential same site in a solar park. • The solar alone plants would be significantly more expensive and less efficient. • DNI vary widely by location. Performance adjustment factor shall be required for DNI at different sites • To achieve long term objectives large size Parabolic Trough and Tower technology plants with efficient cost effective thermal storage will have higher CUF and efficiencies. Metallurgical Forum at Asturias

18. Suggestions – contd. • Regulatory support for minimum 15% fossil back up and 4 -6 hrs. thermal storage as mandatory – through independent bench mark tariff for electricity supply. • Bankability issues for CSP technologies to be addressed for early financial close Metallurgical Forum at Asturias

19. Suggestions - NSM Phase II Local Manufacturing support • Incentivize heavily to local manufacturing and BOS supply chain in Phase II. • Develop large salt storage added to CSP for load balancing, non solar period operations, reduce start / stop cycles and meet peak demand. • Promote hybrid / air cooling to reduce water consumption. • CSP mirror, receivers , collectors, salt storage device should be added to the list of Thrust Areas for promotion of Solar Manufacturing Capability in phase-II • Incentives should be included either directly for establishing manufacturing lines or via VGF in tariff. Metallurgical Forum at Asturias

20. CSP Hybrid concept -24 x7 operation • Hybrid - Incentivize power plant hybridization between solar and fossil such as natural gas, biomass or coal, to vastly increase CUF through: • Higher tariff for higher solar portion (otherwise all project will get ‘stuck’ at the minimum level required). • Higher tariff for electricity supplied during peak demand time • Hybrid CSP plant has the ability to function as base load station at all times. The higher solar share shall effectively reduce the consumption of fossil fuel and decrease greenhouse gas emissions. • CSP hybrid facility shall result in higher capacity utilization, enhance efficiency, deliver higher output, reduce fuel consumption and limit the fuel cost inflation in long run. Metallurgical Forum at Asturias

21. CSP Hybrid concept -24 x7 operation • CSP technology had matured but concept of hybrid, higher solar thermal storage and ISCC are still young and costly. Technology demonstrations have been carried on solar boost in existing coal power plants, ISCC, 24x7 operation with (+) 15 hours thermal storage. • Both CSP hybridization and CSP thermal storage options with dry cooling facility will continue to offer a contrasting range of advantages and disadvantages - but as fossil fuel prices go up and PV prices continue to fall, fossil fuel resource scarcity and environmental concerns will place an upward pressure on hybrid system energy prices. • On maturity of thermal storage options and costs decreases, a dedicated 100% solar systems will dominate CSP deployment Metallurgical Forum at Asturias

22. CSP hybrid MARKET POTENTIAL IN INDIA • MNRE announced a separate program of CSP hybrid demonstration pilot plants. Following are the proposed options • A 50 MW project CSP with hybrid cooling with object to reduce water consumption • A 50 MW CSP with steam temperature 500*C • A 50 MW with (+) 10 hours of solar thermal salt storage to achieve 24x7 operation • A 50 MW CSP with 30% Natural gas support • The options will be site specific in identified states. DNI, Grid interface and water and low cost funding will be provided under VGF. CSP Today Delhi 12 03 2013

23. T H A N K Y O U GOPAL LAL SOMANICell No.: 91 8800988699email- gopallalsomani@gmail.com Metallurgical Forum at Asturias