Solar investments in India – Profitable yet risky

Solar investments can be put at risk by climatic factors, inappropriate component selection and poor handling and installation quality: Study - By Subhajit Roy, Group Editor

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Endowed with vast and viable solar energy potential, India is making significant strides towards becoming a global solar superpower. Now the country has geared up to achieve its ambitious 100 GW of solar energy capacity by 2022 and has already installed solar capacity of 23.12 GW till July this year.

In a written reply to the Rajya Sabha, Power and New and Renewable Energy Minister R K Singh said, “The Ministry of New and Renewable Energy (MNRE) has planned a detailed trajectory so as to meet the target of 100 GW by 2022. A capacity of 23.12 GW was already installed up to July 2018. Projects of around 10 GW are under implementation and tenders for additional 24.4 GW have been issued.”

Corrosion caused by humidity and salt in the air can reduce the performance of plants in the long term.
Picture Courtesy: PI Berlin

Also, the favourable policies have led to record-low tariffs for adding solar power generation and today solar power costs even lesser than thermal. However, the ‘profitable yet risky’ for project developers and investors in photovoltaics (PV), reveals to a study by PI Berlin, a German technical advisory firm.

PI Berlin analysed six projects in India in collaboration with the MNRE and two state-run organisations, the National Institute of Solar Energy (NISE) and the Solar Energy Corporation of India (SECI) between 3-14 July 2017. These plants were chosen based on India-specific environmental factors: various climates, modules and mounting structures, and state-wise solar capacity.

“While large-scale projects of over 100 MW are now common, the investment risks caused by the climate, poor installation, and lack of proper maintenance is on the rise,” PI Berlin said in a statement.

The Climatic Factors

In most regions of the world, solar PV projects are primarily affected by a few climatic stress factors, such as salt in the air, high UV radiation, high humidity, heat, sand or strong winds. But, according to Asier Ukar, Senior Consultant at PI Berlin, in many parts of India, PV projects often face a large number of these factors at the same time. Citing an example, he said, “In Rajasthan in particular – which is an especially lucrative place for PV projects due to the high level of solar radiation – PV modules and other system components have to battle against many climatic stress factors at once.”

To avoid outages, investors and project developers need to ensure that PV projects are designed appropriately from the outset. “For instance, earthing connections made from aluminium or featuring suitable coatings will not corrode as easily in soil with a high salt content,” says Ukar. “In addition, India has some of the highest solar irradiation rates in the world but that can also lead to faster component degradation.”

Signs of improper handling, such as footprints on modules, suggest operational errors.
Picture Courtesy: PI Berlin
Cell fractures often develop during the production or transportation of modules and are easy to detect.
Picture Courtesy: PI Berlin

Price over quality!

In July this year, solar tariffs once again matched the record-low rate of Rs 2.44/unit in the latest auction. Such fall of tariffs puts pressure on the profitability and long-term viability of projects. According to Ukar, “The price pressures… frequently means that little attention is paid to PV module quality.”

For example, PI Berlin observed faulty electrical joints and delamination in several PV projects. “Defects like these could be avoided before and during production of the PV modules,” suggests Ukar. “PV modules were observed at all sites with cracked cells that were likely caused during transport, installation and maintenance. These defects could have been prevented if the PV modules were handled proficiently.”

He adds that investments are jeopardised as much by defects in the field as they are by lack of clarity in contracts. Contracts with EPCs and O&M companies often contain short and vaguely worded guarantees.

According to Ukar, regular monitoring of performance and operational data would improve predictive maintenance and increase system availability. For instance, while cleaning PV modules twice a month during the monsoon season may not be necessary, this process must be performed more frequently during dry periods.

Although India is a profitable market for large PV investment projects, the environmental conditions expose the plants to a number of risks.
Picture Courtesy: PI Berlin


“The Indian market is a double-edged sword,” states Ukar “although India has excellent levels of solar radiation, investments can be put at risk by climatic factors, inappropriate component selection and poor handling and installation quality. In order to obtain the highest possible rates of return from PV projects, steps need to be taken to ensure that high-quality components and the proper assurance processes are put in place.”

The study concluded that affordable practical steps could be taken to mitigate these risks in spite of the current price pressures.