Financial Evaluation of SPV Lanterns for Rural Lighting in India

ELSEVIER Solar Energy Materials and Solar Ceils 44 (1996) 261-270

Financial evaluation of SPV lanterns for rural lighting in India

Seemin Rubab, Tara Chandra Kandpal * Centre for Energy Studies, Indian Institute of Technology, Delhi Hauz, Khas, New Delhi 110 016, India

Abstract

Financial evaluation of solar photovoltaic (SPV) lanterns has been undertaken. The factors influencing the capital as well as the maintenance cost of SPV lantern have been analyzed. Cost per hour of illumination and cost per unit useful energy have been used for comparison of SPV lanterns with other options of rural domestic lighting. The benefits accrued to the user of an SPV lantern have been quantified in terms of the monetary worth of the conventional fuels being saved.

Keywords: Solar photovoltaic lantern; Domestic lighting; Financial analysis

I. Introduction

The solar photovoltaic (SPV) lanterns are presently being promoted in India as a domestic lighting option for rural households with no direct access to grid electricity. In the past year several incentives have been introduced to motivate the potential users to purchase the SPV lantern. These include provision of direct subsidy and soft loan to the users [1,2]. The large scale acceptance of SPV lanterns in rural areas will depend upon a variety of socio-techno-economic factors. Since the initial cost of the SPV lantern is relatively very high as compared to other domestic lighting options, the financial viability of an investment on an SPV lantern would play a crucial role in its dissemination. A modest attempt to analyze and study some of the issues related to the financial viability of SPV lanterns is made in this paper.

* Corresponding author. Email: [email protected]

2. Analysis

2.1. Design of the SPV lantern

The SPV lantern (Fig. l) presently being disseminated in India consists of a PV module, a storage battery, a charge regulator, a light source (generally a compact fluorescent lamp, CFL) with fitting, an inverter, cables, switches, and appropriate housing [3-5]. The charge regulator is used to protect battery from overcharging/deep discharge and also to prevent reverse flow of current. In India, SPV lanterns are normally manufactured using 5 watt or 7 watt CFLs. Some Indian manufacturers (SOPHOS and Ritika) offer lanterns with 9 watt CFL also. These days the casing which houses the electronics (inverter and charge regulator, etc.) and battery is generally made of fiber reinforced plastic. Some manufacturers in India (BHEL and Ritika for example) provide SPV lanterns with aluminum and mild steel casing also. The size of the SPV lantern, in principle, can be specified either in terms of the power rating of the module/CFL or the capacity of the storage battery. In this work the power rating of CFL has been used to specify the size of the lantern and it is assumed that the module and battery are sized for a given duration of lighting (in hours, h) on daily basis. As per the existing practice of SPV lantern manufacturers in India, mono-crystalline silicon solar cell modules of ratings between 9-15 peak watts are

CFL •,,- Modul¢ (-- / indicator [ ~ r~ /

cable Fig. 1. Diagram of SPV lantern. S. Rubab, T. Chandra Kandpal / Solar Energy Materials and Solar Cells 44 (1996) 261-270 263 supplied with CFLs of 5-9 watt rating. Sometimes lanterns are manufactured with a given module and battery size and supplied with CFLs of different power ratings with an understanding that the operating hours of the lantern will be adjusted accordingly. The size of module (in peak watts Wp) corresponding to a given power rating of the CFL (in watt W) may be estimated from the following simple relation [6] Wp = Wh/IGr/b'qi. (1) The factors T~b and r/i, respectively, take the battery and the invertor efficiencies into account and 1G is the annual mean daily global solar radiation in kWh/m2/day at the end-use location. For sizing of the battery, the number of days of storage (N,) and the maximum depth of discharge (D) of the battery are also taken into consideration. The battery storage capacity S in ampere hours (Ah) may be estimated as

S = WhNJVbrlbrli D, (2) where Vb is the battery voltage.

2.2. Capital cost of the SPV lantern

An important aspect in the cost analysis of SPV lanterns is to study the impact of the power rating of the CFL and the duration of lighting on the cost of individual components. Table 1 presents the ratings of modules and battery, along with their costs (as estimated in the present work) for lanterns with (3-11) watt CFLs. Table 1 also gives the costs of other components and the total cost of SPV lanterns of various sizes. It is assumed that the cost of PV module depends linearly on its size. For such small systems, the variation in the cost of storage batteries with capacity is not yet very well established in the Indian market. Since battery capacity and consequently its size and weight increases with load, the housing has to be sturdier and larger for high power rating lamps. As the length of CFL increases with its power rating, the size of the chimney (acrylic sheet) which encloses the lamp will also increase proportionately. Using the estimated costs of lanterns as given in Table 1, the following cost function relating the capital cost C c (in Rs (Indian rupees; 1 US $ ~ Rs 35/- in January 1996)) of SPV lantern with its power rating (W) has been developed by regression analysis C~ = 1366W °6. (3) The capital cost of SPV lanterns shows considerable economies of scale with respect to its power rating. For a specific power rating of the CFL, the size of the components and consequently the cost of lantern will depend on the daily hours of operation only. Fig. 2 shows the variation in capital cost of 5 W SPV lantern with the daily hours of illumination.

2.3. Operation and maintenance cost

The SPV lantern being disseminated in India are normally designed to be a maintenance free unit. As regards the labour involved in the daily operation of the SPV lantern, it merely consists of exposing the PV module to the sun during the day and 4~

Table 1 Component-wise cost of different size SPV lanterns @ Lamp (CFL) Cost of inverter Module Battery (12 V) Cost of charge Cost of cable Total component Market b cost regulator (Rs) and housing (Rs) cost (Rs) C~ (Rs) Power Cost and fitting (Rs) Rating Cost Capacity Cost rating (W) (Rs ~) (Wp) (Rs) (Ah) (Rs) 3 50 200 5 900 6 500 300 250 2200 2750 5 60 200 8 1440 10 600 300 275 2875 3600 7 65 200 l0 1800 15 700 300 300 3365 4200 9 75 200 14 2520 18 750 300 325 4170 5210 2. 11 90 200 16 2880 22 850 300 350 4670 5840

~' 1 US $ = Rs 35/- in January 1996 (Rs = Indian Rupees). h Including an additional 25% of the total component cost as manufacturers and distributors profit. Note: A flat subsidy of Rs 2000.0 per lantern is provided by the government.

4~ 4~

I S. Rubab, T. Chandra Kandpal / Solar Energy Materials and Solar Cells 44 (1996) 261-270 265

6000 , , , , , , ,

5000

v 4000 Ca o

3000

2000

1000 I I i I i I J 0 1 2 3 4 5 6 7 8

Hours of Operation (h)

Fig. 2. Variation in capital cost with hour of operation.

bringing it back to the point of end-use in the evening. On a normal course it would not take more than half an hour per day, the opportunity cost of which may be neglected considering the high level of unemployment and underemployment in rural India. The useful life of the SPV lantern is reported to be 20 years [3], which is actually the life of PV module and the housing. The best estimates of the useful lives of battery, CFL and the electronics are 3, 5 and 10 years, respectively [3]. In the present study the annual maintenance cost of the SPV lantern has been estimated by determining equivalent annual amounts of their periodic replacement within the useful life of the lantern (Table 2).

Table 2 Annual maintenance cost of different size SPV lanterns Power rating of SPV lantern (W) Total annualized maintenance cost C m (Rs) 3 240 5 278 7 315 9 335 11 374 266 S. Rubab, T. Chandra Kandpal / Solar Energy Materials and Solar Cells 44 (1996) 261-270

2.4. Financial evaluation

Two figures of merit -- the cost per hour of illumination (Chl) and the cost per unit useful energy (Cuu) -- have been used for financial evaluation. The cost per hour of illumination (Rs/hr) may be obtained by dividing the annualized cost of the SPV lantern with the total duration of lighting provided by it during a year. Thus

Ch, = [ CcR( d,t~) + Cm]/Uoh, (4) where R(d,t~) is the capital recovery factor for a discount rate d and the useful life t~ of the SPV lantern, and N,, is the number of days in a year on which the lantern can be operated. The use of Chl for comparison of different lighting systems, however, assumes that the levels of illumination provided by them are equivalent. The cost per unit useful energy, Cuu (Rs/kilolumen-hr), may be obtained as the ratio of annualized cost of the lantern to the annual amount of energy delivered by it, coo = 103[CcR(d,t ) + Cm]/U,,4 h, (5) where ~b is the luminous flux (lumen) of the CFL. The monetary worth (B a) of the fuel saved by an SPV lantern annually may be expressed as B a =Nohrfp,-, (6) where rf and pf are, respectively, the hourly consumption rate and the market price (Rs/unit) of the fuel saved by the use of SPV lantern. If it is assumed that the market price of the fuel being saved is escalating at an annual rate e, the present worth of the benefits accrued to the user during the entire useful life of the lantern will be B a P(d,e,t~), where P(d,e,t~) is the present worth factor, expressed as

P( d,e,t~) = d- ,{e l- 1 + d ] 1"1 (7)

The net present value (NPV) of the investment in the SPV lantern may be obtained from NPV = BaP (d,e,t~) - C m P(d,t~) - ( C c - o" ), (8) where o- is the amount of subsidy provided by the government on the capital cost of SPV lantern. It is worth mentioning that in most of the unelectrified villages/households the use of an SPV lantern would save kerosene. However in some cases the SPV lantern may also replace the LPG lamps recently being marketed in the country.

3. Results

The percentage contribution of cost of each component to the total cost of the SPV lantern can be obtained from Table 1. The relative share of different components in the capital as well as annualized cost of a 7 W solar lantern is shown in Fig. 3. It is interesting to note that the cost of module accounts for a little over 50% of the capital nodule 53"7: nodule 35%

lamp lamp 2}" 3~, nverter nverler 6-:," 5% )artery 43% ~sing )al ;ing o,~ 21% ~'harge regulator charge regulator 8% 9% ,apital Cost \nnualized Capital Cosl ;ig. 3, Percentage contribution of the components to the capital and annualized costs of SPV lantern.

.,/ 268 S. Rubab, T. Chandra Kandpal / Solar Energy Materials and Solar Cells 44 (1996) 261-270

Table 3 Comparison of cost per hour of illuminationof SPV lanterns Lamps -* 2 Hurricane lanterns 3 W SPV lantern Petromax 11 W SPV lantern Subsidized Market price Subsidized Market price kerosene of kerosene kerosene of kerosene chl Rs/h 0.36 0,86 0.23 0.33 0.73 0.61

cost of the lantern whereas it is only about 35% of the annualized cost. This is due to the longer economic life (20 years) of the module as compared to that of the storage battery. The scenario is just reverse in the case of a battery. The share of battery in the capital cost is about 20% whereas due to much smaller economic life (3 years), it is about 43% in the annualized cost of the lantern.

3.0 I I I I

Q O Ym~ket Co~

2.5

2.0

1.5 - 0

1.0

0 r~

0.5 i i I i 2 4 6 8 10 12 Power RaU~ of CFL (~ Fig. 4. Variationin cost per unit of useful energy with the power rating of SPV lantern. S. Rubab, T. Chandra Kandpal / Solar Energy Materials and Solar Cells 44 (1996) 261-270 269

Two hurricane lanterns are needed to provide similar illuminance as given by a 3 W SPV lantern when all other conditions are identical. The light output of 11 W SPV lantern is comparable to a petromax. In view of this, the cost per hour of illumination of 3 W SPV lantern has been compared with the cost per hour of illumination of two hurricane lanterns whereas the same figure of merit for an 11 W SPV lantem has been compared with the corresponding parameter of a petromax [7]. The results are shown in Table 3. Two scenarios have been considered for the calculation of cost per hour of illumination of kerosene lamps. While one of them uses the market price (Rs 8/litre) of the kerosene, in the other the subsidized price (Rs 3/litre) of kerosene is considered. The cost per hour of illumination of two hurricane lantems is higher than the cost per hour of illumination of the 3W SPV lantern in both the scenarios. The cost per hour of illumination of 11W SPV lantern is marginally lesser than that of a petromax when kerosene is bought at market rates. The Chl of Petromax is, however, much smaller than the Chl of the 11 W SPV lantern if kerosene is assumed to be available at the subsidized price. The cost per unit useful energy Cuu for SPV lanterns of various sizes has been calculated using Eq. (5) and shown in Fig. 4. The cost per unit useful energy of the 5 W SPV lantern at the subsidized and market costs are Rs 1.5/kilolumen-hr and Rs 2.08/kilolumen-hr, respectively. As an example the cost per unit useful energy of a hurricane lantern is Rs 2.6/kilolumen-hr at the subsidized rate of kerosene, which escalates to Rs 7.5/kilolumen-hr when the kerosene is bought at market rates.

Table 4 Values of various input parameters Parameters Values Source Discount rate (d) 12% - Maximum depth of discharge (D) 30% [7] Fuel price escalation rate (e) 7% - Average daily duration of lighting (h) 4 hours - Annual inflation rate (i) 7% - Annual mean global solar radiation (1G) 4 (kWh/m 2/day) [ 1] No. of days of storage (N~) 1 day - Market price of kerosene (Rs/l) 8.0 - Subsidized price of kerosene (Rs/1) 3.0 - Market price of LPG (Rs/kg) 25.0 - Subsidized price of LPG (Rs/kg) 6.9 - Fuel consumption rate of hurricane lantern (1/hr) 00.04 [7] Fuel consumption rate of LPG lamp (kg/hr) 30x 10-3 [7] Battery efficiency (r/b) 70% [7] Inverter efficiency (r/i) 85% [1,5] Luminous flux of 3 W CFL (lumen) 150 - Luminous flux of 5 W CFL (lumen) 250 [4] Luminous flux of 7 W CFL (lumen) 400 [4l Luminous flux of 9 W CFL (lumen) 600 [4] Luminous flux of 11 W CFL (lumen) 900 [4] Luminous flux of hurricane lantern (lumen) 70 [8] Luminous flux of petromax (lumen) 1200 [7] 270 S. Rubab, T. Chandra Kandpal / Solar Energy Materials and Solar Cells 44 (1996) 261-270

Assuming that the SPV lantern is operated for four hours every day for 300 days a year (on an average), it saves about 60 litres of kerosene. The NPV of investment on a 5W SPV lantern is Rs -1519 at the subsidized rate of kerosene. The NPV becomes positive when kerosene price is more than Rs 5.12/litre. At the chosen market price of kerosene the NPV is Rs 2072. Alternatively if LPG lamps were to be replaced by SPV lanterns, annual fuel savings of about 36 kg of LPG would accrue to the user. This corresponds to NPVs of Rs -704 and Rs 7108 respectively for the LPG available to the user at subsidized (Rs 6.9/kg) and market (Rs 25/kg) rates. All these calculations are based on the subsidized cost of the 5W SPV lantern. Values of other input parameters used in these calculations are given in Table 4.

Acknowledgements

The authors are grateful to Dr. J.C. Joshi for helpful discussions. The financial assistance provided to the first author by CSIR, New Delhi is gratefully acknowledged.

References

[1] B. Bhargava, Solar Lantern Programme in India, Urja Bharti 5(1) (1994) 17-20. [2] MNES, Annual Report: 1994-1995, Ministry of Non-conventional Energy Sources, Government of India, New Delhi, 1995. [3] B. Bhargava and E.V.R. Sastry, Solar lanterns: problems and prospects, Proc. 6th Int. Photovoltaic Science and Engineering Conf., 1992, New Delhi, pp. 885-889. [4] K. Mukhopadhyay, G. Bhattacharya, A. Mondol and H. Saha, Solar photovotaic lantern for rural usage, Proc. 6th Photovoltaic Science and Engineering, New Delhi, 1992, pp. 911-915. [5] K. Mukhopadhyay, B. Sensarma and H. Saha, Solar photovoltaic lanterns with centralized charging system -- a new concept for rural lighting in the developing nations, Sol. Energy Mater. Sol. Cells 31 (1993) 437-446. [6] EMR, PV Systems: A Buyer's Guide, Energy, Mines and Resources (EMR), Canada, 1989. [7] J.P. Louineau, M. Dicko, P. Fraenkel, R. Prolow and V. Bokalders, Rural Lighting: A Guide for Development Workers, Publications in association with Stockholm Environmental Institute, London, 1994. [8] A.K. Rajvanshi and S. Kumar, Development of Improved Lantern for Rural Areas. Publication No. NARI-LAN-1, Nimbkar Agriculture Research Institute (NARI) Phaltan, Maharashtra, 1989.