Wednesday 11 March 2020
Sunday 30 July 2017
There will be a huge increase in electricity bills from October
THE energy regulator has approved a huge increase in the levy on domestic electricity bills.
The move comes despite warnings from advocacy group St Vincent de Paul (SVP) that poorer families would not be able to cope with higher bills.
The Commission for Energy Regulation said it had agreed to allow a 30pc increase in the “green” levy on household electricity bills. This will add €25 to the annual cost, once valued added tax is added.
It will apply to bills from October.
Known as the Public Service Obligation (PSO) levy, it is in place to subsidise the production of electricity from peat, renewables and to pay power plants to produce energy to ensure we have a steady supply to the network, what the regulator calls security of supply.
Energy experts said the 30pc hike in the levy would more than wipe out much of the price cuts announced recently by Electric Ireland.
Bills for the 1.2 million Electric Ireland electricity customers fell recently by 6pc from, knocking €57 off the average bill.
And the levy proposal comes after a report found that electricity prices here are the third highest in the European Union.
Eoin Clarke of price comparison site Switcher.ie said the move would see the annual PSO levy go from €80 a year on electricity bills to almost €105, once VAT is added to the levy cost.
St Vincent de Paul said recently it was particularly concerned at the impact the increases would have on the families and individuals it visits who cannot afford to pay additional charges on top of other costs they face.
Jennifer Thompson, of the society, said: “Autumn is a particularly difficult time for families, who have just faced back-to-school costs and are worrying about upcoming Christmas expenses and getting through the winter months, when energy bills are highest.”
SVP said it was concerned about the changes in electricity and waste charges, which it said were coming in September and October.
The society said it accepted the pricing structure for waste removal should encourage waste reduction and recycling, but called for waste charges to be properly regulated and poverty-proofed.
Solar Water Heater
Solar water heater, device that uses solar heat energy to produce hot water. A typical solar water heater consists of a solar collector mounted on the roof of a building and connected to a water-storage tank. Depending on the system, unheated water either can be circulated from the tank through the collector to be heated directly or can be heated by a high-capacity heat-exchange fluid that was warmed in the collector and transfers its heat through tubes in the water in the tank. While heat transfer from the solar collector to the unheated water can be facilitated passively without mechanical means, “active” solar hot water systems use electricity to circulate the heat-exchange fluid and to operate mechanical pumps and controllers.
Although the practice of using the sun for heating water for domestic use can be traced back to several ancient cultures , it was not until 1891 that the first patented solar hot water system was sold commercially. Invented by Clarence Kemp in Baltimore, Maryland, the system was called the “Climax” and was popular in California and other warm American states. Given the comparatively high cost and inconvenience of using conventional fuels to heat water, many households were eager to invest in these solar hot water heaters. However, the Climax system was limited in that the heating element doubled as the storage tank, thus restricting the amount of hot water available. In 1909 William J. Bailey patented a system that separated the water-storage tank from the solar heating element, forming the basis of the design of solar hot water heaters used today.
Active And Passive Systems
Active solar hot water systems use mechanical pumps and differential controllers to regulate and direct the flow of the heat-transfer fluid or water from the solar collector to the tank. The controllers sense the temperature difference between the water in the tank and the temperature in the solar collector and switch the pump on when the water in the tank cools below the temperature of the collector. Some pumps run on mains electricity (line electricity), and others operate on electricity generated by a solar photovoltaic panel. While some solar-powered systems circulate the fluid only when the sun is shining and store the heated water in well-insulated tanks for nighttime space heating, others use mains electricity as a backup for nighttime and overcast days. In active solar hot water systems, the water-storage tanks can be located inside the roof space or in any other location that will minimize heat loss to the cold air, as the flow of water does not depend exclusively on gravity. These tanks can therefore be combined with the hot water cylinders in domestic space heating systems, and the solar hot water system can be used to preheat water in the cylinder in winter for space heating.
Passive systems, which rely on gravity rather than electricity, are most efficient in hot climates where night or wintertime freezing is not present. Some passive systems use a thermosiphon configuration that uses gravity and convective heat flows. Cold water from a height flows down by gravity to the solar collector, and, as the water passes through the collector and heats up, it rises through convection to reach the storage tank again. Another type of passive system is the integratedcollector storage system, in which the collector forms the top of the water-storage tank and heats the water directly in the tank.
Design And Efficiency
The output of a solar hot water system generally depends on the efficiency of the collector and the effectiveness of the whole system design. Designing an efficient solar hot water system requires an appropriate sizing of the collector and storage tank according to the use requirements for hot water. Individual collectors and whole systems are rated separately for their efficiencies because the collector efficiency depends on the performance of one component (the solar absorber) while the whole system efficiency depends on many factors (water and ambient temperatures, system configurations, insulation, water volume, the type of collector, heat-exchange mechanism efficiencies, the location and local weather at the installation, the amount of sunlight received by the collector, etc.).
Additionally, temperature limitation and overheating mitigation measures need to be built into all solar water heaters, especially when installed in hot climates.
Street vendors in India can soon tap into solar energy
The National Association of Street Vendors of India estimates that there are around 30,000 street vendors in Bengaluru. Small businesses like these face innumerable challenges, given their make-shift existence. Availability of light in the evening is one of them.
It is this challenge that non-profit Selco Foundation is hoping to address. The foundation has been finding sustainable solutions for marginalised communities. It called for entries to build sustainable, cost-effective energy kiosks that can be used by street vendors and marginalised immigrant communities for their daily energy needs through the competition Design + Build 2017 in May.
Two entries, one by a team comprising Sampath Reddy, a urban systems designer, architect Aditya Venkat and solar expert Akshay Harikumar, and another by Nilesh Roy, a final-year student at the department of architecture, National Institute of Technology, Trichy, were chosen for the project which starts next month. The pilot, to be built at a cost of Rs. 6 lakh, is to be set up at the Clarence School bus stop in Richards Town. Using solar power, it would be able to charge 60 lights, which would be rented out at Rs. 10 per light to vendors and community members on the street.
Says Reddy, “We've followed a frugal innovative design approach. The structure that will cost `50,000 to build is designed to be on wheels with an anchoring system. It can be parked or towed away as per need, and has minimal need of water, civil and welding work in the building process."
Roy, whose structure Zen Vendor can be built at a cost of Rs. 1,50,000, says his design is an exploration into a new user experience. “While keeping the comfort of the user in mind, the structure also focusses on the aesthetic impact of the kiosk on a neighbourhood," he adds.
Rachita Misra, senior program manager, Selco Foundation, said the cost of power from these kiosks would be cheaper than kerosene lamps. In the long term, these kiosks could help in rural areas, for migrant or low-income communities and in disaster and relief situations.
Tamil Nadu maintains lead in solar rooftop installations
Tamil Nadu continues to lead in installation of rooftop solar projects in the country.
The state has outperformed all its peers in rooftop solar installations. India has added 678 MW of rooftop solar capacity in 2016-17, growing at 81 per cent Y-o-Y, reaching total installed capacity of 1,396 MW as of March 2017.
With an installed capacity of 163 MW as of March this year, Tamil Nadu topped the rooftop capacity addition table, according to a report by Bridge to India, a global renewable energy consulting firm.
Industrial segment
Industrial segment remains a major driver for rooftop solar installations in the country with a share of 590 MW. In Tamil Nadu too, industrial segment contributed about 124 MW.
Tamil Nadu, Maharashtra, Rajasthan, Gujarat and Karnataka contributed to 40 per cent of the country’s total rooftop solar capacity of 1.4 GW.
“Indian rooftop solar market is finally beginning to realise its potential. Industrial and commercial customers remain the biggest market segment. These customers can make excellent savings from cheaper solar energy and also reduce their carbon footprint,” said Vinay Rustagi, Managing Director, Bridge to India.
Public sector segment
Public sector segment is also expected to show robust growth in the coming years because of strong government push combined with 25-30 per cent capital subsidies.
However, net metering still remains a sore point for the market with Discoms and state agencies either ill-equipped or unwilling to adopt rooftop solar.
Bridge to India expects India’s rooftop solar capacity to cross the 2 GW mark in this fiscal, partly driven by several ongoing and recently completed rooftop solar tenders. The public sector segment is expected to grow at an impressive 205 per cent during this fiscal.
Companies such as Delta and SMA (including Zever) accounted for 60 per cent of the total rooftop solar inverter market share in the country in 2016-17. CleanMax, CleanTech, Azure, Amplus and RattanIndia led the solar project development business in the same period.
Improving economics of rooftop solar, government tenders and improving net-metering implementation across key states would be the biggest drivers for the segment and the total rooftop solar capacity is expected to reach of 13.2 GW by 2021.
GST shines on renewable energy sector
The renewable energy sector is quite content with GST provisions. Contrary to earlier fears of sale of solar equipment – panels, modules and inverters – being taxed at high rates, the GST on such sales has been set at 5 per cent.
“The net effect on solar projects will be 3.5-4.5 per cent,” said Raj Prabhu, co-founder and CEO of Mercom Capital Group, which tracks the segment. “There will be issues with power purchase agreements as they will vary from state to state but 5 per cent GST is much more palatable than the expected 18 per cent.”
The only worry is that for very small installations of 100 kw in residential sector, solar inverters used will invite 28 per cent GST.
Similarly, in wind segment, sale of turbines and other equipment will attract GST of 5 per cent, the same as VAT did earlier. However, most wind equipment manufacturers also take on the task of setting up projects for developers, and this being a service, will attract 18 per cent GST, up from 12 per cent tax on engineering services earlier. “All engineering services are currently in 18 per cent bracket,” said D V Giri, secretary general, Indian Wind Turbine Manufacturers Association.
“We have asked for the entire gamut to be brought into 5 per cent slab.”
Solar projects involving civil and works contracts will be taxed at 18 per cent.
Future of renewable energy: Sunny investment climate for solar technology in India
On May 12, 2017, India recorded its lowest-ever solar tariff of Rs 2.44/unit of electricity. That is a 73% fall since 2010, and compares favourably with India’s cheapest power source–coal, electricity from which now ranges between Rs 3/unit and Rs 5/unit.
The new low solar cost was announced at a reverse auction–in which the role of buyer and seller is reversed and the seller with the lowest bid obtains the business–by the state-owned Solar Energy Corporation of India Limited (SECI) at the Bhadla solar park in north-west Rajasthan. This was mainly possible due to a drop in the cost of solar modules (largely due to technology advances), the prices for which fell 29% in India in the first quarter of 2017 over the previous year.
Renewable energy could generate 49% of electricity in India by 2040 because more efficient batteries–to store electricity when the sun does not shine–will provide flexibility of use and boost the reach of renewables, cutting the cost of solar energy by a further 66% over current costs, according to the Bloomberg New Energy Outlook 2017 report.
Buckley, 50, has been a financial analyst through his career, 17 years of which were spent as a managing director at Citigroup, a bank. A long-distance runner in his private life, Buckley became involved with the energy sector a decade ago after a discussion with his then chairman, Chris Cuffe (an Australian financial markets leader). Buckley asked Cuffe why he was interested in the technology development of renewable energy and his reply stuck: Along with food and water security, energy security drives strategic thinking in all nations.
Buckley believes that the rise of technology innovation in energy markets is driving “profound change” globally, and he is “fascinated” by India’s commitment to pursue an energy transformation that aims at increasing non-fossil fuel capacity in its generation mix from about 33% currently to 40% by 2030.
Q: What is causing the cost of solar-cell technology to drop so drastically and how much of a contributor is this to the drop in price of solar power?
The cost of solar modules is free falling due to rapid and sustained technology improvements adding to the massive economies of scale being achieved. Production volumes globally are growing 10-30% annually for the last decade. By selling at close to zero profit margins, China continues to subsidise the production and exporting of solar modules to gain global market share, and India is a key beneficiary of this.
Solar’s sustained volume growth is driving the construction of whole new plants every month, and this is accelerating the deployment of the latest technology at very fast rates, and makes old solar module manufacturing plants of just four to five years of age to be outdated. The only choice the plant owner has is to upgrade the technology employed or heavily discount the price of old module production. So module prices have halved in the last two years, and IEEFA expects this decline to continue over the coming decade.
This is a key contributor, but not the only one. India has a very strong, clear and transparent renewable energy policy framework, and this provides investors the certainty to invest.
Indian solar has also benefited from the falling cost of debt (from 12-14% per annum two years ago to 8.5-9.5% today), following exchange rate stability, falling inflation rates and the government’s provision of strong counterparty risk management on renewable tariffs (through NTPC, India’s largest power utility, and the central government’s SECI).
The cost of debt is a major input into the cost of solar generation, given the operating costs are near zero once built. The rapid upscaling of investment has also encouraged learning by doing, driving the costs of implementing solar down along the entire value chain from finance, regulatory approval, engineering, procurement and construction (EPC), and land acquisition to grid connection.
Global capital flows into India are playing a key role as well, endorsing, supporting and encouraging the positive policy moves of the Indian government. Energy Minister Piyush Goyal is also taking the learnings of each solar tender and replicating the factors that are driving down tendering prices. For example, land acquisition, grid connections and payment certainty are all major risk factors affecting power sector investment in India, so the latest solar tenders provide clarity on all of these pre-bidding. Tenders also have 12-18 month time limits and performance requirements to ensure the state governments get clarity and on-time project delivery in return.
Q: How sustainable is this trend of dropping prices? Do you expect prices to fall further or have they reached the lowest point, staying steady now?
IEEFA would expect some stabilisation of solar tariffs around these record lows of Rs 2.44-2.62/kWh (kiloWatt hour, a unit of energy) seen in May 2017. These new low prices are truly phenomenal, prices don’t need to go lower, at these levels solar is the low cost solution for India’s growing electricity needs. A major long term win for Indian electricity consumers, is also that these solar tariffs are fixed in nominal terms for the 25-year contract duration. This means contracted solar prices will fall some 5% annually in real terms over the long term. Electricity’s long history of inflationary pressures is now looking to a future of sustained deflation, a powerful added incentive for India.
But at US$38-40/MWh (Megawatt hour, which is 1000 kWh), Indian solar is still 20-30% above the record low global prices seen in 2016 of US$24-30/MWh in the UAE, Mexico and South America. Chilean solar prices have also come in lower than in India. So, as Indian borrowing costs continue to fall, and technology advances, medium term, IEEFA would expect India will see even lower solar prices.
Q: Will falling prices make developers wary of further investment in the sector, and if so, to keep the momentum going, what kind of policy interventions might be required?
The bids of May 2017 were extremely competitive with a multitude of global and Indian majors tendering into the very transparent bidding process; they all went in with their eyes open.
But investors will be alarmed that solar tenders signed off and won back in 2016 are now being stalled by lack of approval progress from the state governments, who are questioning if they should honour solar contracts entered into 12-24 months ago at tariffs that were commercial back then i.e. Rs 4-7/kWh, but now in hindsight look expensive. Failure to honour legal and policy commitments could destabilize investor confidence in the whole solar programme.
Given targets of 100GW of solar by 2022, catalysing $100 billion of investment requires global investor confidence. Moves by state governments to undermine the rules of engagement could damage this. Short term penny pinching undermines massive transformational long term gains for the people of India and the economy overall.
Q: The levelised cost of electricity from solar photovoltaics (now almost a quarter of what it was in 2009), will become cheaper than coal in China, India, Mexico, the U.K. and Brazil by 2021. It is already at least as cheap as coal in Germany, Australia, the U.S., Spain and Italy. (Levelized cost of electricity is all expenses of generation from a power generating plant, including site development, permitting, equipment and civil works, finance, operations and maintenance) But if we count the price of solar power and storage together, it is far higher than thermal (coal) power, so can we really say that cost of solar generation has fallen below or is at par with coal powered electricity?
Solar today represents only 3% of installed capacity and just 1% of total Indian electricity generation, so there is no storage cost involved, solar helps solve the peak power shortages evident in the middle of the day when industry is operating.
When we fast forward to solar being 10-20% of generation across the whole of India – say in five to eight years time, then grid integration and supply/demand balancing will really become a material barrier to ever more solar additions. That is why it is important that India also continue to develop other generation capacities, eg. biomass, wind and hydro, particularly pumped hydro storage capacity, and invest aggressively in both expanding overall national grid capacity and modernising the grid infrastructure. International grid connectivity (Bhutan, Bangladesh, Nepal, Sri Lanka) can also play a larger role in the next decade, as it already does across Europe.
The grid system also needs to become smart – so storage costs will rise, but if there is a smart grid system, pricing signals will improve – the development of time of use pricing structures will then incentivise all electricity producers to generate and/or supply electricity at times of peak demand. These technologies already exist, and are getting cheaper by the month. So India’s grid will need to expand and transform, along with generation. PowerGrid Corp of India (the state-owned electric utilities company) is leading well, but sustained state-owned electricity distribution company reforms are a critical prerequisite to India’s successful electricity transformation.
Looking at solar and storage costs combined means looking at the cost and more importantly the value of peak electricity demand – best served by a time of use tariff to address the evolution and modernisation of the Indian grid. Entirely manageable with the right regulatory signal and leadership.
Q: How will the solar renewable sector be affected when subsidies are removed or reduced gradually, say, in five years time?
The solar sector in India is not based on massive subsidies. That is one of the great positives that Energy Minister Piyush Goyal has achieved. Any subsidies are generally available to all power generator technologies, for example, tax holidays and accelerated depreciation. So any gradual move to level the playing field and remove all subsidies for power generation will actually help drive solar investment, given coal fired power generation has the most subsidies of all – that being the right to externalize many of their operating costs in terms of air, particulates, carbon and water pollution, and insufficient coal ash waste disposal compliance.
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