Aw Harnessing Energy from the Sun.Cdr
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SOLAR ROOFTOPS LEARNINGS FROM GLOBAL AND INDIAN EXPERIENCES Countries all over the world are faced with climate change and energy security concerns. An estimated 700 million people in South Asia do not have access to electricity. About 90 percent of them live in rural areas. To help address these concerns, IFC is working to eradicate energy poverty by focusing on both grid connected and off-grid energy through innovative and market transforming initiatives. This white paper explores the growing interest in developing countries in using grid-connected rooftop solar PV to provide access to green power for large numbers of people. It also looks at how private participation can support dissemination of rooftop solar PV systems. This white paper draws lessons from global experiences in designing and implementing rooftop solar systems, identifying success drivers and potential challenges. It is based on industry consultation, and the development of case studies from recent rooftop solar initiatives, such as the Indian state of Gujarat’s Gandhinagar experience with the public-private partnership approach. In this publication, ‘rooftop solar PV systems’ refers to solar photovoltaic power systems installed on rooftops and elevated areas on consumer premises. A solar rooftop PV system can be either one or a combination of two arrangements, namely, (i) building-attached PV systems and (ii) building-integrated PV systems. Building-attached Photo: Azure Power 19 PV systems are added on to the rooftops and elevated areas such as parking areas and canopies, but not directly related to functional aspects of the building or the premises. These generally include rack-mounted arrays and are used both to retrofit and for new buildings. Building-integrated PV systems are functional parts of the building structure, or architecturally integrated into the design of the building and elevated areas. This category includes designs where PV material replaces the normal roofing material, such as shingles, tiles, slates, roof, skylights, or facades. This white paper explores how technological advances, production expansion, and the shifting of manufacturing bases to low-cost Asian regions have led to a rapid decline in the cost of PV, and looks at the two main approaches to develop rooftop solar: (i) the utility-driven route, and (ii) the consumer- driven route. Globally, rooftop solar PV installations have led the development of the solar photovoltaic sector. Ground-based projects, on the other hand, have developed due to enabling policies and regulatory frameworks as defined by the laws of each country. This white paper identifies the phases of a maturing rooftop solar sector, based on the experiences of countries such as Germany, Japan, and the U.S., to highlight how the market grows from a concept stage where pilot models are tested, to become a mature market based on self-replication. Harnessing Energy from the Sun looks at the opportunities provided by rooftop solar for developing countries like India and highlights the common barriers that prevent the development of the rooftop solar sector. A key driver of rooftop solar PV development across the globe has been the design and implementation of models which combine policy and regulatory frameworks with market dynamics to deliver bankable and sustainable projects. Globally, implementation models vary in terms of ownership (self-owned versus third-party-owned) and metering (gross versus net metering). This document identifies six distinct models based on solar system ownership patterns and on the manner in which electricity generated is consumed and sold. It provides insight on how these models have evolved in response to specific policies and regulations suited to particular market conditions. 20 India and many other developing countries benefit from reliable solar radiation, and are keen to convert this into energy. But they are also challenged by the scarcity of land to develop large ground- mounted projects. This paper explores the regulatory path followed by India to create the enabling environment to support the growth of the rooftop solar market. It draws lessons from the preparation and implementation of the rooftop solar program piloted in Gujarat, India. Incorporating private sector participation in the rooftop solar market can help its rapid development. However, forming a well-balanced complementary relationship between public and private sectors is challenging, and can have consequences on a wide range of stakeholders. The process needs to be carefully managed through adequate planning and implementation. International experience indicates that several administrative and institutional challenges need to be addressed to allow each stakeholder to participate in the transition to a mature self-replication phase. This white paper explores these challenges and also the fundamental steps in successful project preparation, based on the rooftop solar program piloted in Gujarat. Finally, this paper brings together the roles and responsibilities of each stakeholder: government, manufacturers and developers, rooftop owners, and utility companies in particular. It shows how interaction between these stakeholders can benefit each one of them, and society as a whole. 21 HARNESSING POWER FROM THE SUN Photo: Azure Power Countries all over the world are faced with climate change and energy security concerns. Declining costs, and improved efficiency and reliability, are making the renewable energy sector attractive. This is leading to increased investment in renewable energy resources. Among renewable energy resources, solar photovoltaics are the third most important renewable energy source in terms of installed capacity, after hydro and wind power. As per the REN21's Renewables Global Status Report 2013, total renewable power capacity (not including hydro) reached 480 gigawatt in 2012, up about 21.5 percent in 2011. 2012 saw further movement in activity from developed to developing economies, although the former group still accounted for more than half of global investment. In 2007, developed economies invested two- and-a-half times more in renewables (excluding large hydro) than developing countries; in 2012, the difference was only 15 percent (figure 1 shows the growth of renewable energy installed capacity from 2004 to 2012. 23 Figure 1: Global penetration of renewable energy (installed capacity) 500 450 400 350 300 250 Gigawatt 200 150 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 Wind Solar Biomass Others Source: REN21's Renewables Global Status Report 2013 Overview of the Global Solar PV Market Globally, solar energy is becoming the fastest-growing power generation technology. Figure 2 shows that the growth in global operating capacity of solar photovoltaics (PV) reached the 100 gigawatt milestone in 2012, from 20 gigawatt in 2007. From 2008 to 2012, the installed capacity of solar PV grew at the average annual rate of 56 percent (figure 2). These capacity additions are driven by rapid technological advances such as increase in efficiency, new manufacturing techniques, use of new materials, declining production costs, and shift of manufacturing bases to low-cost regions in Asia. However, in most mature markets such as Australia, Japan, Germany, Spain, Australia, and the U.S., the main driver has been the establishment of enabling policies, solar promotion programs, and incentives to increase penetration of solar power applications. Figure 2: Growth in solar PV global capacity Gigawatt 120 100 80 60 Gigawatt 40 20 0 1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201 2012 Source: REN21's Renewables Global Status Report 2013 24 Due to increasing production scales and advances in technology, there has been a rapid decline in the cost of solar PV system installations from $3.50 to $4 per watt-peak in 2004 to about $1 per watt- peak in 2012.1 Figure 3 shows the declining trend in solar PV system prices globally between 2008 and 2012. Figure 3: Solar PV system price trends 5 4.5 4 3.5 1.8 3 2.5 1.5 2 1.3 1.5 2.7 0.9 1 1.8 1.5 0.5 0.8 0 2008-09 2009-10 2010-11 2011-12 Module Balance of system Source: The Rising Sun, Grid parity gets closer - A point of view on the Solar Energy sector in India, September 2012, KPMG http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/Rising-sun-2-full.pdf) Global Deployment of Grid-connected Solar Energy Installations The development of grid-connected solar programs has followed two broad approaches (table 1): one under which utilities or third-party developers undertake solar energy development to fulfill renewable purchase obligations or preferential tariffs, as in the U.S. and India, and the second where retail customers drive solar energy development to benefit from attractive and facilitating policies and regulatory environments, as in Germany. 1 Reconsidering the Economics of Photovoltaic Power, available at http://www.bnef.com/WhitePapers/download/82 25 Table 1: Two key approaches followed globally to develop grid-connected solar programs Utility/third-party-driven programs Customer-driven programs Utilities or third-party developers undertake projects Governments and regulators create facilitating primarily to address regulatory and policy policies and regulations to encourage consumers to requirements (for example: renewable purchase invest in and develop small solar projects on their obligations). These projects are usually large premises. megawatt scale with a focus on optimizing costs. These projects are usually developed either by the Decentralized, distributed solar generation models utilities themselves or by third party developers who have become popular among consumers due to the enter into long-term power purchase agreements declining cost of solar energy, proliferating fiscal with the utility. The cost of procurement is eventually incentives like feed-in tariff, net metering and tax spread out and passed on to customers served by rebates, and increased costs of grid-based the utility. conventional energy. Several hybrids of the above approaches have emerged in specific markets, depending on regulations, market opportunities, and role of intermediaries.