Concentrated Solar Power: Delays Indicate Severe Challenges
BMI View : We believe that the delays experienced by all seven CSP projects allocated under the JNNSM indicate the severity of challenges experienced by the project developers. Some of the factors that project developers attributed the delays to include difficulties in sourcing water and procuring key equipment, as well as technical issues. At present, we maintain our view that the majority of the 470MW of CSP capacity under the first phase of the JNNSM will come online by end-2013 and early 2014.
On June 9 2013, Godawari Green Energy (GGEL) commissioned a 50MW solar thermal power plant. The plant is the first concentrated solar power (CSP) plant to be commissioned under the government's Jawaharlal Nerhu National Solar Mission (JNNSM) which aims to promote solar energy generation in the country. A total of seven CSP projects with a combined capacity of 470MW were allocated under phase 1 of the JNNSM in 2010, and these were expected to come online by May 2013. However, the government has since extended the deadline until March 2014 due to major delays in most of the projects.
We believe that the delays experienced by all seven CSP projects allocated under the JNNSM indicate the severity of challenges experienced by the project developers. All seven projects are being developed by large companies with significant experience in developing and operating thermal power plants, such as Lanco Infratech and Reliance Power. Despite this wealth of experience, six of the seven projects remain significantly behind schedule.
|Company||Promoter||Size (MW)||Bid (INR/kWh)||Location (State)|
|Ministry of New and Renewable Energy, Council on Energy, Environment and Water|
|Aurum Renewable Energy||Aurum||20MW||12.19||Gujarat|
|Corporate Ispat Alloys||Abhijeet||50MW||12.24||Rajasthan|
|Megha Engineering||Megha Engineering||50MW||11.31||Andhra Pradesh|
|Rajathan Sun Technique||Reliance||100MW||11.97||Rajasthan|
|KVK Energy Ventures||Lanco||100MW||11.2||Rajasthan|
Some of the factors that project developers attributed the delays to include:
Difficulties in sourcing water: CSP plants require large amounts of water for cooling and other purposes. However, regions most suitable for CSP generation are often relatively arid with limited water supply. For instance, five out of the seven CSP projects are located in Rajasthan, which is an extremely arid. Reliance Power has said that delays in laying a water pipeline in its project located in Rajasthan was responsible for a six month delay.
Technical delays: Most of the companies involved do not have experience in developing CSP plants, and there is a severe lack of skilled labour in this respect. Additionally, several of the companies said that ground-measured direct normal irradiance (DNI) data provided by the government was inaccurate and insufficient, which led to delays due to redesigning of projects.
Financing issues: Most of the developers complained about difficulties in achieving financial closure due to structural issues and unfamiliarity with the technology. Funding requirements were also significantly higher due to the size of the projects.
Difficulty in procuring key CSP components: Several of the developers involved complained of difficulties in sourcing for key CSP components, including CSP-specific turbines and heat transfer fluid (HTF). Locally-manufactured turbines are not designed for CSP specifications (which requires intermittent operations), and HTF fluids are not available locally. This led to long turnaround times and major redesigning. For instance, all the turbines used in phase one were sourced from three international turbine suppliers (Siemens, General Electric and Areva), and HTF was also sourced from three companies (Dow Chemicals, Solutia, and Lanxess).
At present, we maintain our view that the majority of the 470MW of CSP capacity under the first phase of the JNNSM will come online by end-2013 and early 2014, in line with the new government deadline. This belief is underpinned by announcements from the companies developing the other six CSP projects. For instance, Reliance Power has said that its 100MW project should be completed by end-2013.
Additionally, we highlight that the difficulties faced by CSP developers in the first phase of the JNNSM will provide valuable experience to these developers for subsequent CSP projects. The second phase of the JNNSM is expected to start later this year, and the seven developers which participated in the first phase are likely to take part in this new round, especially if the government were to introduce new criteria for participation.