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Home > Frequently Asked Questions Frequently Asked Questions About Solar Energy
About Solar EnergyWhat is Solar Energy? Solar power is the technology of obtaining usable energy from the light of the sun. Solar energy has been used in many traditional technologies for centuries, and has come into widespread use by integrating it to grid connections or by using it off grid (where other power supplies are absent, such as in remote locations and in space). [ TOP ] How is Solar Energy produced? Photovoltaics enables sunlight to be transformed directly into electrical power. Certain materials naturally release electrons when they are exposed to light, and these electrons can then be harnessed to produce an electric current. Photovoltaic cells, also called solar cells, are made from the same semiconductor materials used in computer chips. All solar cells have at least two layers with a positive and negative charge. The electric field across the junction between the two layers causes electricity to flow when the semiconductor absorbs photons of light and releases electrons, as shown in the image below. Electrical contacts attached to the front and back of the cell enable it to become part of an electrical circuit. Over 98 per cent of solar cells are made with silicon. These cells are quite brittle, so several cells are wired together and enclosed in a rugged, protective casing called a module or panel. A group of these modules is called an array. [ TOP ] How are Solar systems being connected to the Grid? "Grid-connected" systems - those systems that use an inverter to connect to the utility
grid instead of relying on batteries - now make up the largest part of the market. The
picture below explains how grid connected systems operate. Solar cells in the modules
(1) convert sunlight directly into DC (Direct Current) power. A component called
an inverter (2) converts this DC power into AC (Alternating Current) power that can
be used in homes or industries. The amount of power produced is measured in watts
(W), kilowatts (kW - thousands of watts) and megawatts (MW - millions of watts) and
can be monitored by a digital monitoring system (3) and/ or by an utility meter (4).
The maximum power output of a photovoltaic array is typically expressed as kilowatts
of peak capacity power (kWp) and power output over time is measured in kilowatt hours
(kWh). During the day, if the solar system produces more electricity than a household
uses for all kinds of devises (5) or that a manufacturer is using, the utility may allow
net metering or the crediting of the utility account for the excess power generated being
returned to the grid. The system is interconnected with your utility. The utility would
provide power as usual at night and during the day when the electricity demand exceeds
that is produced by your solar system. [ TOP ] Is Today's PV Safe to Make and Use? Yes. Photovoltaics are safe with far fewer risks and environmental impacts than conventional sources of energy. PV produces no pollutants during operation, making it a preferred option for offsetting emissions that result from fossil fuel use. In fact, an EPA study (Demonstrating Pollution Reduction Capability of Photovoltaic Systems) showed that 1 kW of PV could offset between 600 and 2300 kg of CO2 per year, as well as substantial amounts of other pollutants. [ TOP ] All solar panels are priced per watt of energy produced. According to The Information Network a 20MW amorphous silicon plant in the U.S. can cost $60 million in equipment. In addition, there is an annual investment of $40 million in yearly expenses. The cost of ownership is as high as $2.20 to $2.50 per watt. The price of the modules are going down year on year as the module efficiency is going up every year. [ TOP ] About IndiaWhat is India’s role in the Renewable energy sector? India is the only country in the entire world to have a separate ministry for renewable energy source. India is one of the few countries to have recognised the power of renewable energy sources. In fact, in India, the potential of renewable energy sources was first recognised as early as the 1970s. The Ministry of New and Renewable Energy Sources came into existence in 1992. The Jawaharlal Nehru National Solar Mission (JNNSM) of India aims to install 22 gigawatt (GW) of solar power plants by 2022. Implementation guidelines have been already issued by the respective regulatory authority at the federal government level. Find herewith the JNNSM Road map
[ TOP ] What are the incentives provided for PV manufacturing in India? The government’s special incentive package for semiconductor manufacturing announced in February is touted to be an investor friendly by many experts. As per the policy, the Government would give financial incentives up to 20 and 25 per cent of the project cost in a SEZ and non-SEZ. Learn More [ TOP ] What are the incentives provided for PV power producers in India? As you are observing, the Launch of Jawaharlal Nehru National Solar Mission (JNNSM) has made India the next multi gigawatt Solar power market of the world. It has a 1st phase target of 1100 MW of on-grid installation by 2012. To encourage and develop the Solar Industry, India through her Solar Policy has the following to offer:
[ TOP ] What is the total investment required for a Grid Connected Solar Power Plant, per MW? The investment ranges from Rs 15cr to 16.9cr per MW depending on the technology. CERC's norms specify Rs 17cr per MW in general without mentioning the technology but solar module prices have come down significantly in the recent past.[ TOP ]
Hot destinations are Rajasthan, Gujarat and MH, MP, Andhra, Karnataka, Tamil Nadu as far as solar radiation is concerned. Presently, only Rajasthan and Gujarat have a clear policy and guidelines on the procedures for setting up solar power projects. Other states may also initiate the policy and procedures soon now that Jawaharlal Nehru National Solar Mission has been launched by Government of India. [ TOP ] How do you choose an ideal location within a particular state for setting up of a solar power project? Many states have identified certain areas for setting up solar power projects. A project can be located in such designated areas (give the advantage of sharing common infrastructure that is available or will be made available) or a private land can also be used provided the land meets the required criteria for setting up solar power projects. In addition, we have to do prospecting using Geographical Information Systems (GIS) covering parameters like annual average solar radiation levels, protected areas like forests, water bodies, land use, highways, proximity of transmission lines. Based on this prospecting, physical survey can be done for site selection. Thereafter, detailed solar resource assessment studies have to done through satellite data and computer models to obtain the hourly solar radiation data to simulate the estimated generation. This process is a must for MW size power projects (even if a State has selected some area for Solar Farms) as otherwise the power projects' generation cannot be assured. If the estimate power generation calculations are not accurate, there could be problems for the project approval by the power purchasers (NVVN) besides problems with Bankers for sanction of the loan or even at post commissioning stage. [ TOP ] What is the space / area / land required for the plant? Generally, it is assumed at 3.5 to 4acres for crystalline silicon (c-Si) technology and 6 to 7 acres per MW for thin film solar (a-Si or CdTe) technology. In reality, it depends on other parameters like cost of land, Ground Coverage Ratio (GCR) (to avoid inter array shading, GCR can be 0.45 to 0.65 and generation will vary based on GCR) and choice of sun tracking systems (with sun trackers the land required will be about 6acres per MW for crystalline solar modules). [ TOP ] What is the time required from date of commencing the project, before the plant can go 'live', and revenues starts? About 6 to 8 months from the date of financial closure is a safe assumption considering the permits / approvals for grid interconnection. Signing of PPA and financial closure can take 3 to 6 months. [ TOP ] Is the tariff for solar power guaranteed by the State / Central government? The tariff period will be 25 years as per Central Electricity Regulatory Commission (CERC) norms and all power purchasers will adopt 25years only for solar power. The tariff is guaranteed based on the PPA that will be entered into which in turn will be based tariff order of CERC for the specified control period. The payment guarantee mechanism has to be built into the PPA with the state utility or DISCOM or Energy Trader. Under the National Solar Mission all purchases will be made by NTPC Vidyut Vypar Nigam Ltd (NVVN). [ TOP ] What is the Payback? The payback is dependent upon many financial parameters like cost of debt, depreciation, the Capacity Utilization Factor (CUF or PLF which are in turn dependent on solar resource at the site and the technology adopted c-Si or thin film solar), tariff etc. But as per the Tariff Regulations in India and the financial parameters therein, the payback could be about 7 years (i.e the cash flows will recover the equity capital but the loan will be cleared in 10 or 12 years). [ TOP ] What is the return of the investment? RoE post tax will be about 16% and a maximum allowed equity is 30%. Equity above 30% will be treated as debt only for the purpose of tariff determination wherein benchmark project costs and other financial parameters and operating expenses are considered. Interest allowed may be PLR or PLR plus 1% as per the CERC norms. RoE before taxes will be 19% for the first ten years (as MAT is 17% including surcharges and E.cess) and thereafter 24% for the next 15 years. In reality, as surcharges, cess and tax rate vary from time to time, the purchaser reimburses for the tax component based on the payment challans for taxes paid. [ TOP ] Are Banks interested in financing solar power projects? The Debt Service Coverage Ratio (DSCR) works out to an average of 1.49 which is considered quite acceptable to commercial banks for sanction of loan. The maximum debt that is permitted as per CERC norms is 70% and most banks should be find this acceptable based on the financial strength and net worth of the company / promoters. The present policy driven by the National Solar Mission and PPA for 25 years with a central PSU like NTPC's subsidiary should provide adequate confidence to Banker to finance solar power projects. [ TOP ] Critical mass / scale required for cost per MW to come to an optimal level (installed cost) and cost per unit of production to be minimum (operating cost)? Atleast a 5MW plant in a single location could be considered as an optimal size for installation and maintenance. The operating costs are quite negligible and have been considered by CERC as Rs 9lakhs per MW which does not include insurance cost for the plant. [ TOP ] What are the guidelines for allotment of a 5MW project under NVVN Scheme? Guidelines have been announced on 25-Jul-2010. Please click the following link to read
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