Chapter 1: INTRODUCTION

1.1 OVERVIEW OF INDIAS POWER SECTOR

1.1.1 BACKGROUND India's power market is the fifth largest in the world. The power sector is high on India's priority as it offers tremendous potential for investing companies based on the sheer size of the market and the returns available on investment capital. The current installed capacity of power plants is 132329 MW (as on March 31, 2007).

Chat 1.1: Contribution from different sources of power generation

Source: Ministry of Power, Government of India Almost 55 per cent of this capacity is based on coal, about 10 per cent on gas, 26 per cent on hydro, approximately 5 per cent on renewable sources, about 3 per cent on nuclear and 1 per cent on diesel.

In the past five years, there has been a much greater emphasis on transmission and distribution reforms. The interregional transmission capacity has been increased to 9,500 MW. The National Grid Development Programme calls for 37,150 MW of interregional capacity by 2012.
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The government aims to provide "power to all" by 2012. To achieve that promise, it will have to add as much as 1,00,000 MW of generation capacity, cut AT&C losses substantially to below 20 per cent, rationalize tariffs and ensure that average revenue realization is greater than the cost of production. It will have to continue to push the process of reform and restructuring and ensure greater private participation, in every segment.

In the past few years, there has been considerable growth in power plants based on renewable sources of energy. The current installed capacity based on these sources is about 6,200 MW of total utility capacity. An initiative to add 50,000 MW of hydro capacity by 2017 was announced in 2003. The current installed capacity, at about 32,000 MW, utilizes just over one -fifth of 150,000 MW hydro potential.

The Plant Load Factor (PLF) of generating plants has improved consistently over the last 10 years. In 2005-06, the PLF of generating plants was almost 74 per cent, compared to 60 per cent in 1994-95. The following table shows the details of installed capacity (in MW) in India as on March 31, 2007:

Table 1.1 : Installed capacity (in MW) in India as on March 31, 2007

The share of thermal power as a proportion of total power generated has decreased from 71 per cent to 66.3 per cent in the last decade. The share of hydro has increased to 26 per cent from 25.7 per cent. The increasing price of oil, gas and coal in the international market has accentuated the significance and desirability of hydro power. An initiative to add 50,000 MW

of hydro capacity by 2017 was launched in August 2003. The intent is to increase the share of hydro power generation from 26 per cent to 40 per cent

Chart 1.2: All India generation installed capacity(MW)

Source: Ministry of Power, Government of India

of the fossil fuel supplies, there is delivery constraint with respect to gas. A number of gas plants today are running at sub-optimal plant load factor (PLF) levels due to shortages. The government has decided not to embark on new projects that rely on gas. It is feared that supply shortages can disturb the capacity addition plans, reduce PLFs, as the rising crude prices have led to firmer naphtha and natural gas prices.

Emerging environmental concerns have led to an increasing interest in renewables. As per the Central Electricity Authority (CEA) reviews the cost-effective hydro potential of India is about 84,044 MW, but it contributes just 6,000 MW at present.

State Electricity Boards (SEBs) and the new state generation utilities have an installed capacity base of 70,224 MW that accounts for a share of 57 per cent. Sector-wise, the states
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contribute the maximum generation capacity. Power producers in the central sector, like NTPC, NHPC and DVC, account for 32.2 per cent of installed generation capacity.

The contribution of the private sector was 11.3 per cent in 2005-06. Amongst the private players, Tata has the highest installed capacity, at 2,300 MW. In terms of actual generation, private contribution is 8.7 per cent. There is renewed interest in Independent Power Producers (IPPs) in the power sector. Private IPPs contributed 5,691 MW to installed generation capacity in March 2006.

Captive power plants (CPPs) also make a major contribution, which is more than one-fifth of the total installed capacity. In the last three years, captive capacity has grown at an average of 1,600 MW per year. The introduction of ABTs (Availability Based Tariffs) has changed the thinking of discoms. They have to pay huge prices as they have to source power from the grid during low frequency periods. During this time the CPP power comes in handy at a much lower tariff.

The reform process in the power sector continues. Thirteen states have unbundled SEBs into separate entities for transmission, distribution and generation. Two states have privatized distribution. Regulatory authorities have been set up in 24 states. These authorities are applying commercial principles to tariff setting, monitoring the performance of state utilities and paying attention to areas such as demand side management and grid discipline.

1.2 RENEWABLE ENERGY

1.2.1 DEFINITION OF RENEWABLE ENERGY: A renewable resource is always there and will never run out. It keeps renewing itself.

Renewable energy is energy generated from natural resourcessuch as sunlight, wind, rain, tides and geothermal heatwhich are renewable (naturally replenished). In 2006, about 18% of global final energy consumption came from renewable, with 13% coming from traditional biomass, such as wood-burning.

Hydroelectricity was the next largest renewable source, providing 3% of global energy consumption and 15% of global electricity generation.

1.2.2 RENEWABLE -WORLD WIDE (MW POWER PLANTS) Wind power is growing at the rate of 30 percent annually, with a worldwide installed capacity of 121,000 megawatts (MW) in 2008, and is widely used in European countries and the United States. The annual manufacturing output of the photovoltaics industry reached 6,900 MW in 2008, and photovoltaic (PV) power stations are popular in Germany and Spain. Solar thermal power stations operate in the USA and Spain, and the largest of these is the 354 MW SEGS power plant in the Mojave Desert. The world's largest geothermal power installation is The Geysers in California, with a rated capacity of 750 MW. Brazil has one of the largest renewable energy programs in the world, involving production of ethanol fuel from sugar cane, and ethanol now provides 18 percent of the country's automotive fuel. Ethanol fuel is also widely available in the USA.

1.2.3 FORMS OF RENEWABLE ENERGY

WATER: Energy in water (in the form of kinetic energy, temperature differences or salinity gradients) can be harnessed and used. Since water is about 800 times denser than air

There are many forms of water energy: Hydroelectric energy is a term usually reserved for large-scale hydroelectric dams. Micro hydro systems are hydroelectric power installations that typically produce up to 100 kW of power. They are often used in water rich areas as a Remote Area Power Supply (RAPS). There are many of these installations around the world, including several delivering around 50 kW in the Solomon Islands. Dam less hydro systems derive kinetic energy from rivers and oceans without using a dam. Ocean energy describes all the technologies to harness energy from the ocean and the sea: I. Marine current power. Similar to tidal stream power, uses the kinetic energy of marine currents II. Ocean thermal energy conversion (OTEC) uses the temperature difference between the warmer surface of the ocean and the colder lower recesses. To this end, it employs a cyclic heat engine. OTEC has not been fieldtested on a large scale. III. Tidal power captures energy from the tides. Two different principles for generating energy from the tides are used at the moment: IV. Tidal motion in the vertical direction Tides come in, raise water levels in a basin, and tides roll out. Around low tide, the water in the basin is discharged through a turbine, exploiting the stored potential energy. V. Tidal motion in the horizontal direction Using tidal stream generators, like wind turbines but then in a tidal stream. Due to the high density of water, about eighthundred times the density of air, tidal currents can have a lot of kinetic energy. Several commercial prototypes have been built, and more are in development. VI. Wave power uses the energy in waves. Wave power machines usually take the form of floating or neutrally buoyant structures which move relative to one another or to a fixed point. Wave power has now reached commercialization. Osmotic power or salinity gradient power, is the energy retrieved from the difference in the salt concentration between seawater and river water. Reverse electro dialysis (PRO) is in the research and testing phase. Vortex power is generated by placing obstacles in rivers in order to cause the formation of vortices which can then be tapped for energy. Deep lake water cooling, although not technically an energy generation method, can save a lot of energy in summer. It uses submerged pipes as a heat sink for climate control systems. Lake-bottom water is a year-round local constant of about 4 C.
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HYDRO-ELECTRICITY The major advantage of hydroelectric systems is the elimination of the cost of fuel. Other advantages include longer life than fuel-fired generation, low operating costs, and the provision of facilities for water sports. Operation of pumped-storage plants improves the daily load factor of the generation system.

Overall, hydroelectric power can be far less expensive than electricity generated from fossil fuels or nuclear energy, and areas with abundant hydroelectric power attract industry. Large hydroelectric power is considered to be a renewable energy by a large number of sources, however, many groups have lobbied for it to be excluded from renewable electricity standards, any initiative to promote the use of renewable energies, and sometimes the definition of renewable itself. Some organizations, including US federal agencies, will specifically refer to "non-hydro renewable energy". Many laws exist that specifically label "small hydro" as renewable or sustainable and large hydro as not. Furthermore, the line between what is small or large also differs by governing body.

SOLAR ENERGY

Solar energy refers to energy that is collected from sunlight. Solar energy can be applied in many ways, including to: Generate electricity using photovoltaic solar cells. Generate electricity using concentrated solar power. Generate electricity by heating trapped air which rotates turbines in a Solar updraft tower. Generate electricity in geosynchronous orbit using solar power satellites. Generate hydrogen using photo electrochemical cells. Heat and cool air through use of solar chimneys. Heat buildings, directly, through passive solar building design. Heat foodstuffs, through solar ovens. Heat water or air for domestic hot water and space heating needs using solar-thermal panels. Solar air conditioning

Solar Energy: availability & reliability Solar power, a clean renewable resource with zero emission, has got tremendous potential of energy which can be harnessed using a variety of devices. With recent developments, solar
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energy systems are easily available for industrial and domestic use with the added advantage of minimum maintenance.

Solar energy could be made financially viable with government tax incentives and rebates.

An exclusive solar generation system of capacity of 250 to KWh units per month would cost around Rs. 5 Lacs, with present pricing and taxes. Most of the developed countries are switching over to solar energy as one of the prime renewable energy source. The current architectural designs make provision for photovoltaic cells and necessary circuitry while making building plans.

WIND POWER Airflows can be used to run wind turbines. Modern wind turbines range from around 600 kW to 5 MW of rated power, although turbines with rated output of 1.53 MW have become the most common for commercial use; the power output of a turbine is a function of the cube of the wind speed, so as wind speed increases, power output increases dramatically. Areas where winds are stronger and more constant, such as offshore and high altitude sites, are preferred locations for wind farms.

Since wind speed is not constant, a wind farm's annual energy production is never as much as the sum of the generator nameplate ratings multiplied by the total hours in a year. The ratio of actual productivity in a year to this theoretical maximum is called the capacity factor. Typical capacity factors are 20-40%, with values at the upper end of the range in particularly favorable sites. For example, a 1 MW turbine with a capacity factor of 35% will only produce an average of 0.35 MW. Over a year, output would be .35x24x365 = 3,066 MWh instead of 24x365 = 8,760 MWh. Online data is available for some locations and the capacity factor can be calculated from the yearly output.

Globally, the long-term technical potential of wind energy is believed to be five times total current global energy production, or 40 times current electricity demand. This could require large amounts of land to be used for wind turbines, particularly in areas of higher wind resources. Offshore resources experience mean wind speeds of ~90% greater than that of

land, so offshore resources could contribute substantially more energy. This number could also increase with higher altitude ground-based or airborne wind turbines. Wind power is renewable and produces no greenhouse gases during operation, such as carbon dioxide and methane.

WASTE WATER Power can also be obtained from sewage water. The technique used herefore are Microbial fuel cells. Also using the same microbial fuel cells, instead of from wastewater, energy may also be obtained directly from (certain) aquatic plants.

These include reed sweet grass, cord grass, rice, tomatoes, lupines, algae

GEOTHERMAL ENERGY Geothermal energy is energy obtained by tapping the heat of the earth itself, usually from kilometres deep into the Earth's crust. It is expensive to build a power station but operating costs are low resulting in low energy costs for suitable sites. Ultimately, this energy derives from heat in the Earth's core.

Three types of power plants are used to generate power from geothermal energy: dry steam, flash, and binary. Dry steam plants take steam out of fractures in the ground and use it to directly drive a turbine that spins a generator. Flash plants take hot water, usually at temperatures over 200 C, out of the ground, and allows it to boil as it rises to the surface then separates the steam phase in steam/water separators and then runs the steam through a turbine. In binary plants, the hot water flows through heat exchangers, boiling an organic fluid that spins the turbine. The condensed steam and remaining geothermal fluid from all three types of plants are injected back into the hot rock to pick up more heat.

BIOGAS Biogas can easily be produced from current waste streams, such as paper production, sugar production, sewage, animal waste and so forth. These various waste streams have to be slurred together and allowed to naturally ferment, producing methane gas. This can be done by converting current sewage plants into biogas plants. When a biogas plant has extracted all the methane it can, the remains are sometimes more suitable as fertilizer than the original biomass.
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Alternatively biogas can be produced via advanced waste processing systems such as mechanical biological treatment. These systems recover the recyclable elements of household waste and process the biodegradable fraction in anaerobic digesters.

Renewable natural gas is a biogas which has been upgraded to a quality similar to natural gas. By upgrading the quality to that of natural gas, it becomes possible to distribute the gas to the mass market via the existing gas grid.

1.2.4 Comparisons of various energy sources

As the world's population increases and there is continued comparison to the current western European, Japanese, and North American living standards, there is likely to be demand for more electrical power. Energy sources available in the world include coal, nuclear, hydroelectric, gas, wind, solar, refuse-based, and biomass. In addition, fusion had been originally proposed as the long-term source. Every form of energy generation has advantages and disadvantages as shown in the table below.

Source

Advantages

Disadvantages

Requires pollution

expensive controls

air (e.g.

Inexpensive Easy to recover (in U.S. and Russia)

mercury, sulfur dioxide) Significant contributor to acid rain and global warming Requires transportation system extensive

Coal

Fuel is inexpensive Energy generation is the most concentrated source

Requires larger capital cost because of emergency,

Nuclear

containment, radioactive waste and storage systems

Waste is more compact than any source

Requires resolution of the long-term high level waste

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Extensive scientific basis for

the cycle

storage issue in most countries

Easy to transport as new fuel

Potential nuclear proliferation issue

No greenhouse or acid rain effects

Very limited source

since

depends on water elevation

Many

dams

available

are

Very inexpensive once dam is built

currently exist (not much of a future country])

source[depends

on

Government has invested heavily in building dams, particularly in the Western U.S.

Hydroelectric

Dam collapse usually leads to loss of life

Dams have affected fish (e.g. salmon runs)

Environmental

damage

for

areas flooded (backed up) and downstream

Very limited availability as shown by shortages during winters several years ago

Could be major contributor to global warming

Good distribution system for current use levels

Very expensive for energy generation

Gas / Oil

Easy to obtain (sometimes) Better as space heating

Large

price

swings

with

energy source

supply and demand Liquified Natural Gas storage facilities and gas transmission systems have met opposition from environmentalists.

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Wind is free if available. As it turns out, the US has many areas available.

Good source for periodic water pumping demands of farms as used earlier in 1900's

Need

3x

the

amount

of

installed generation to meet demand

Limited to windy areas. Limited to small generator size; need many towers.

Generation and maintenance costs have decreased Wind is

Wind

significantly.

Highly climate dependent wind can damage equipment during windstorms or not turn during still summer days.

proving to be a reasonable cost renewable source.

Well suited to rural areas. Examples include Mid-

May affect endangered birds, however tower design can reduce impact..

Columbia areas of Oregon and Washington, western Minnesota, Atlantic Ocean off Cape Cod.

Limited to southern areas of U.S. and other sunny areas throughout the world (demand can be highest when least available, e.g. winter solar

Sunlight available

is

free

when

heating) Does require special materials for mirrors/panels that can affect environment

Solar

Costs are dropping.

Current technology requires large amounts of land for small amounts of energy

generation

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Inefficient if small plants are used

Industry in its infancy Could create jobs because smaller plants would be used

Could

be

significant

Biomass

contributor to global warming because fuel has low heat content

Inefficient if small plants are used

Fuel can have low cost Could create jobs because smaller plants would be used

Could

be

significant

contributor to global warming because fuel has low heat content

Refuse Based Fuel

Low emissions

sulfur

dioxide

Flyash can contain metals as cadmium and lead

Contain dioxins and furans in air and ash releases

Combines

easily

with

Very costly to produce Takes more energy to produce hydrogen then energy that could be recovered.

Hydrogen

oxygen to produce water and energy

Hydrogen and tritium could be used as fuel source

Breakeven point has not been reached after ~40 years of expensive research and

Higher energy output per unit mass than fission

Fusion

Low

radiation

levels

commercially available plants not expected for at least 35 years.

associated with process than fission-based reactors

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1.2.5 India seeks 20,000 MW of solar power capacity by 2020

The Indian government is reported to have finalized the draft for the National Solar Mission, outlining ambitious long-term plans to attain an installed solar power generation capacity of 20,000 megawatts (MW) by the year 2020, which would be increased to 100,000 MW by the year 2030, and further to 200,000 MW by the year 2050. The plan also aims to reduce the cost of solar power generation to between $0.0846 and $0.1058 per kilowatt-hour (kWh) by 2017-20 in order to make solar power competitive with power generated from fossil fuels.

In order to achieve the proposed targets, the government is likely to make investments of approximately $18 billion to $22 billion over a period of 30 years.

An estimated investment of about $1.06 billion to $1.27 billion will be required during the current Eleventh Five-Year Plan period, 2007-2012, while an investment of $2.54 billion to $3.18 billion will be required during the Twelfth Five-Year Plan, 2012-2017

The Mission envisages 20,000 MW of solar power generation capacity to be installed across five application segments by 2020. These segments include 12,000 MW of power connected to the utility grid, 3,000 MW of power from 1 million captive and grid-connected rooftop solar photovoltaic (PV) installations with an average individual capacity of 3 kilowatts (kW) each, 3,000 MW of rural installations, and 2,000 MW of distributed solar PV applications such as telecom towers. In addition, about 20 million households are envisaged to have access to solar lighting, while solar heating applications would be set up over 20 million square meters of collector area by 2020.

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1.3 SOLAR ENERGY

1.3.1 Sector Overview Solar energy is today one of the hottest sectors for investors looking for opportunities in India. Billions of dollars in investments are expected to materialize over the coming months, as top Indian business groups unveil ambitious plans for a sector that is glowing red-hot. The Indian government, which unveiled its semiconductor policy last year, announced a special incentive package for potential investors in technologies that will help generate solar energy.

The government has received seven proposals adding up to investments of about $16 billion to set up manufacturing units for poly-silicon, single and multi crystalline ingots, wafers, solar cells, photo-voltaic modules, etc.

The Union Ministry of New and Renewable Energy (MNRE) is targeting an additional 14,000 MW power through renewable resources (including solar power) by the end of the Eleventh Five-Year Plan (2012).

About $150 million has been allocated for research, design and development in the energy sector in the 11th Five Year Plan, as compared to less than $20 million in the previous plan. Reliance Industries has submitted a plan to set up two manufacturing facilities for semiconductors and polysilicon, both used for making solar panels with a total investment of about $7.5 billion. The group plans to set up the poly-silicon, solar-grade wafers and solar PV modules factory (at a cost of about $2.9 billion) in Jamnagar in Gujarat, where it already has a refinery. The other plant will be a semiconductor fabrication unit with assembly, test, mark and packaging (ATMP) facility and would be built at a cost of over $4.6 billion.

Reliance Industries has ambitious plans for the sunrise sector. It is planning to set up a 10 MW solar facility in West Bengal. State-owned Bharat Heavy Electricals Ltd is also keen on a joint venture with Reliance for setting up solar fabrication units.

Half a dozen other companies, including Videocon Industries ($2 billion investment envisaged), Moser Baer PV Technologies ($1.5 billion), Titan Energy System ($1.47 billion) and KSK Energy Ventures ($800 million) have submitted proposals to the government. The

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Indian government is offering incentives, including financial subsidies and equity participation adding up to 20 per cent of capital expenditure in the first 10 years for projects in special economic zones (SEZ) and 25 per cent in non-SEZ areas. Indeed, there is an unprecedented Brush to tap solar energy as investors formulate projects to manufacture components that would help generate much-needed power for an energy starved World.

The Ministry has also given financial support to about 600 R&D projects in this sector. Other initiatives include development of solar cities and demonstration programme on MW-size Grid Solar Power Generation. The government plans to identify 60 solar cities and extend financial assistance to reduce dependence on conventional energy. According to latest data, 33 grid interactive solar PV power plants have been installed in India with financial support from the government. These plants, with a total capacity of 2.12 MW, are projected to generate about 2.55 million units of electricity annually. Other than this, 1.45 million off-thegrid solar PV systems, comprising 125-MW capacity, have been installed, leading to a prospective 150 million units per year. Another 2.15 million square metre of collector area has been installed for solar water heating applications. Even state governments are taking keen interest in the development of alternative energy sources with focus on solar power. The MNRE promoted deployment of nine solar energy plants in six states during 2007-08.

Maharashtra tops the list with three plants, with Jammu & Kashmir at two. Other states with one each include Chhattisgarh, Haryana, Orissa and West Bengal.

The Ministry has also announced a new programme designed to expand solar power generating projects up to a maximum capacity of 50 MW and various for the private sector. For example, entrepreneurs who build, own and operate solar projects will be offered financial incentives of about 30 cents for each kilowatt of solar power generated per hour. Incentives for thermal power fed to power grids would be slightly lesser. Research and development is also being encouraged to improve their performance and reduce the consumption of materials. Interest subsidy is being provided on soft loans to users and manufacturers. Concessional or nil import duty on some of the raw materials, components and products is also being offered along with excise duty exemption and 80-100 per cent accelerated depreciation in the first year.

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The growth in sustainable energy is expected to continue. To achieve the clean energy targets in its 11th Five Year Plan, the reports points out, wind will need to grow by 2.5GW in each of the next three years to meet the goal of 17.5GW by 2012. Small hydro has an additional 1.1GW to be commissioned to meet the 3.4GW target. There were no grid-connected solar projects commissioned in 2008, but a pipeline of 222MW of solar projects was announced in 2008. Biomass needs to double to reach the 3.5GW target for 2012. As of now, India generates about 500 MW of energy from solar sources.

Sustainable energy investment in India went up to $3.7billion in 2008, up 12% since 2007. It included asset finance of $3.2 billion, up by 36%. Venture capital and private equity saw an increase of 270% to $493 million. Mergers and acquisition activities totaled $585 million. Most acquisition activity was centred on biomass, small hydro and wind projects.

The countries per capita emission of Greenhouse Gases (GHG) will continue to be low until 2030-31, and it is estimated that the per capita emission in 2031 will be lower than per capita global emission of GHG in 2005. 1.3.2 Indias Emerging Solar Industry

The global solar energy industry is in the early phases of what may be a 30 to 50-year expansion. By the end of 2007, the cumulative installed capacity of solar photovoltaic (PV) systems around the world had reached more than 9,200 MW, up from 1,200 MW at the end of 2000. Installations of PV cells and modules around the world have been growing at an average annual rate of more than 35% since 1998 (Solar Generation V Report, EPIA, September, 2008).

The chart at right by the German Advisory Council on Global Change indicates the vital role that solar energy may play in our energy futures. While contributing only a fraction of the world energy needs today, by 2060 it may be the largest single contributor to global energy production. The European Photovoltaic Industry Association (EPIA) estimates that by the year 2030, PV systems could be generating approximately 2,600 TWh of electricity around the world, enough to satisfy the electricity needs of almost 14% of the worlds population. India has the opportunity to play a major role in this global energy transformation. With significant technical and production resources, India can be a major supplier of PV cells and
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modules to meet the growing world demand. With the current pace of growth, Indias solar industry could emerge as the fourth largest generator of solar energy in the world after, Germany, China, and Japan. As an increasingly significant energy consumer, solar power can play a significant role in the countrys domestic energy supply. With over 50,000 villages in India without electricity, solar power has enormous potential to meet rural electrical needs, improving the lives of millions of Indians and meeting critical agricultural, education and industrial needs.

1.3.3 Current Situation in India

India is already a major contributor to the global technology market. According to ISA/ Frost & Sullivan report, semiconductor and embedded design revenues are expected to grow from $3.2 billion in 2005 to $43 billion by 2015. The India semiconductor markis expected to grow from $2.82 billion in 2005 to $ 36.3 billion in 2015. Electronmanufacturing is estimated to reach $155 billion in 2015, creating a $15.5 billion semiconductor market opportunity. With recent government and industry action. In June of 2008, Prime Minister Dr. Manmohan Singh said, We will pool all our scientechnical and managerial talents, with financial sources, to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people.

To accomplish these goals, the India government has instituted programs on both demand and supply side for solar industry. On the supply side, last year the India cabinet approved incentives to attract foreign investment to the semiconductor sincluding manufacturers of semiconductors, displays and solar technologies. The government announced it will bear 20 per cent of capital expenditures in the firsyears if a unit is located within Special Economic Zones (SEZs), including major economic zone in Hyderabad called Fab City. The minimum investment was set at 25billion rupees (~$500 million) for semiconductor manufacturers and 10 billion rupees for other micro- and nanotechnology makers. With theses recent announcements. In August, as a follow up to its semiconductor policy (the Special Incentive Package Scheme, or SIPS), the government of India received 12 proposals amounting to a total investment of Rs. 92,915.38 crore. 10 of these proposals were for solar PV, from: KSurya (Rs. 3,211 crore), Lanco Solar (Rs. 12,938 crore), PV Technologies India (Rs. 6,000 crore), Phoenix Solar India
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(Rs.1,200 crore), Reliance Industries (Rs.11,631 crore)Signet Solar (Rs. 9,672 crore), Solar Semiconductor (Rs.11,821 crore), TF Solar Power (Rs. 2,348 crore),

In late September, there were three further announcements, concerning: Vavasi Telegence, which plans to invest Rs. 39,000 crore for a solar PV and polysilicon unit; EPV Solar, which will invest Rs. 4,000 crore for a solar PV unit.

In 2009, approximately 130MW of shipments in 2009 are projected, compared with approximately 30MW in 2008. On the demand side, India has a long term goal of generating 10% of the countrys electricity from renewable sources by 2032. In early 2008 India instituted a feed-in tarifor solar PV and/or thermal electricity generation (i.e. ~$0.30/kWhr for up to 75% of solar PV output) at the national level as a supplement to more modest local incentive programs. The feed-in tariff is subject to annual digressions and is slated to be in force for ten years. Regional caps will limit total installations in a given year, but should drive solid percentage growth in 2008,with accelerating growth through 2010.

The new incentive scheme for solar power plants in January 2008 could further enablrapid market growth in the coming years. For power producers, a generation-based subsidy is available up to Rs. 12/kWh from the Ministry of New and Renewable Energy, in addition to the price paid by a state utility for 10 years. With state utilities mandatedto buy energy from solar power plants, several state electricity regulatory boards are setting up preferential tariff structures. Among the states that already have proposalsplace are Rajasthan (Rs.15.6 per kWhr proposed), West Bengal (Rs.12.5 per kWhr proposed), Punjab (Rs. 8.93 per kWhr), with several other states exploring such a possibility. Aside from the feed-in tariffs, the Indian Renewable Energy Development Agency (IREDA) provides revolving fund to financing and leasing companies offering affordable credit for the purchase of solar PV systems in India. Additional incentives include, 80% accelerated depreciation

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Chart 1.3: Per Capita Energy Consumption

Source : Central Electricity Authority

1.3.4 Current Trends The Prime Ministers Council on Climate Change approved the National Solar Mission, which aimed at solar generation target of 20,000 Megawatt by 2020. As of now, India generates about 500 MW of energy from solar sources. The countrys per capita emission of Greenhouse Gases (GHG) will continue to be low until 2030-31, and it is estimated that the per capita emission in 2031 will be lower than per capita global emission of GHG in 2005. The government is considering a regulation to make use of renewable energy mandatory for special economic zones (SEZ) to save on traditional fuel like coal and diesel. The Ministries of Commerce & Industry and New & Renewable Energy are working on the modalities for such a regulation. A regulation needs to be put in place making it mandatory for use of renewable energy in the SEZs, which would result in saving of energy. Every SEZ developer should create a mechanism for producing 1 KW (kilo watt) of renewable energy for one hectare of development in the SEZ.

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 The Dharwad-headquartered Karnataka Vicars Grameen Bank (KVGB), which has financed over 12,000 solar light units under its area of operation, is now planning to make 80 villages solar villages. The governments of India and UK are tying up for research on solar energy which will be jointly conducted by British universities and IIT and which will be funded by the governments of both countries. Natural Energy Processing Company (NEPC) India Ltd is planning to set up a special economic zone (SEZ) at Palladam near Coimbatore with an investment of around Rs 2,000 crore (US$ 415.6 million). The company is planning to set up solar and Photo Voltaic plant in the SEZ. Tata group has invested in Swiss solar-cell maker Flisom, which is setting up a 5 megawatt (MW) plant in Duebendorf for about 25 million (US$ 36.81 million). The Centre is planning a project along with the Institutes of Information Technology (IITs) to reduce the cost of production of alternative energy to a significant level so as to promote the use of renewable energy and reduce dependency on the known energy sources.

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1.4 ADVANTAGES OF SOLAR ENERGY

No Fuel, Low running costs. Modular nature. Long-life Reliability Low maintenance. Clean Energy, Avoids Green House Gas Emissions. Adoption of Solar PV systems can drastically reduce global warming.

1.5 KEY SUCCESS FACTORS (KSF)

1.5.1 The Solar Value Chain: Key Success Factors The Solar Electricity industry displays all the hallmarks of a relatively young industry. This includes a notoriously fickle supply chain for the all-important polysilicon, a large number of different technologies and the distinct absence of companies that cover the whole value chain. As the industry becomes more mature, it will no doubt see significant consolidation and fewer technologies.

Though different segments of the value chain have different logistics (which are explored in the following pages), there are common drivers that are key to the success of individual businesses correspond to activities with very different industrial dynamics. Figure 1.1 : Key Success Factor

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Product Parameters

Technology Differentiation To avoid having to compete just on price, firms must offer a product that is technologically differentiated. Whilst there are many distinguishing features, the one number to beat is "efficiency" as measured in "$/kWp" followed closely by the module efficiency measured in "kWp/m ". This is so important because a 1% point efficiency increase in the cell, results in an additional energy yield of 6%. In addition, it brings down requirements for area and electrical components.

Technology Strategy The technologies that are installed todady, may not be the technologies of tomorrow. For instance, with the sharp drop in polysilicon prices, some of the thin-film technologies no longer look as appealing as they did a year ago. As a mitigation strategy, we would expect alternative technologies to be present in any company's product portfolio.

Product Quality and Certification The presence of module certification from independent bodies such as TV is no longer a distinguishing feature; it is in fact a quasi- license to operate.

Production Capability It is essential that production can be scaled up to significant levels. For a new technologies (e.g. a new thin-film photovoltaic material), the capability of ramping up production very quickly is crucial; otherwise, the new product will not make a difference.

Cost Structure How well a company can control costs is one of the most important factors, especially in an industry that sees an ever-growing number of new entrants. Silicon manufacturers with access to cheap energy, for instance, have a distinct competitve advantage, as 85% of the energy needed to build a module, is used in producing silicon. Other cost advantages come from economies of scale and supply contracts at low pricing level.
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Vertical Integration In order to be able to capture more value and to mitigate the inherent risks of the supply chain, it is crucial to either integrate vertically or build strong partnerships with others in the value chain.

Financial Strength Whilst this is a fairly obvious, a strong balance sheet is required not only to weather a downturn, but also to finance growth.

Branding Finally, success is determined by how well a company can communicate the value it creates for customers, its brand strength and access to distribution channels.

1.5.2 The Solar Value Chain:

Figure 1.2 : Solar Value Chain

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Value Chain Segments & Activities There are distinct segments within the whole eco-system of solar power, starting from the manufacturing of equipment and module production all the way to the installation and operation. Among them are also activities that span the whole lifecycle such as consulting and financing as well as publishining and training. The main products of the manufacturing process are polysilicon, wafers, cells, modules, mounting and tracking systems and electrical components. Services include project development, wholesale distribution, design, engineering, construction and maintenance.

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1.6 MARKET SHARE INTRODUCTION

The purpose of the Industry Statistics on this site is to provide a 'helicopter view' of where the solar PV industry stands. The statistics highlight:

the solar PV industry in the context of other global energy sources the present size of the solar industry and its historical growth the track record and projections of solar energy costs the solar industry in various countries around the world

The data is derived from Government sources and independent consultants. Where Government data is a few years old, Solarbuzz provides some insight to the latest events in order to ensure that insights are relevant to the current status of the industry. Solarbuzz provides the solar data in the context of other fuels in order for the user to determine the prospects for solar energy to become a material and mainstream source of energy.

1.6.1 Global Primary Energy Market Shares Chart 1.4 : World Energy Consumption

Global Primary Energy Consumption is currently around 9.7 million tonnes of oil equivalent (mtoe). Over the last two decades growth rates have typically been in the 1-3% per annum. The main trends have been progressively decreasing market share of oil, in favor of natural
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gas consumption. Nonetheless, oil production still holds the highest market share at around 34%.

1.6.2 Renewable Energy Market Share Renewable energy sources accounted for 13% of global energy demand in 1999. Of this 13%, nearly 80% is represented by biomass, which mainly relates to non-commercial uses in Asia. Hydropower is the second largest renewable power with a market share of 2.3%. Wind and solar energy accounts for the balance. Wind energy installation in 1999 was estimated to be 3,600MW globally (source: American Wind Energy Association) yielding a total installed capacity worldwide of 13,400MW. Of the 3,600MW installed in 1999, the largest markets are estimated as Germany (1200MW), USA (905MW) and Spain (650MW). Solar electric installations totalled 200MW in 1999, 280MW in 2000 and 340MW by 2001 and 427MW in 2002. While growing at a rapid pace, solar electric energy globally still only accounts for around 0.1% of primary energy demand. However, this means that relatively small increases in market penetration by solar energy as costs decline, lead to very rapid growth rates in this industry. In the United States, the energy mix also shows a relatively small contibution from renewable energy sources. Chart 1.5 : Renewable Energy in proportion to total Global Energy Supply: 2009

Source: Energy Information Administration

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1.7 APPLICATIONS OF SOLAR ENERGY

City Residential homes Recent years have seen rapid growth in the number of installations of PV on to buildings that are connected to the electricity grid. This area of demand has been stimulated in part by government subsidy programmes (especially Japan and Germany) and by green pricing policies of utilities or electricity service providers (e.g. in Switzerland and the USA). The central driving force though comes from the desire of individuals or companies to obtain their electricity from a clean, non-polluting, renewable source for which they are prepared to pay a small premium.

In these grid-connected systems, a PV System supplies electricity to the building and any day-time excess may be exported to the grid. Batteries are not required because the grid supplies any extra demand. However, if you want to be independent of the grid supply you will need battery storage to provide power outside daylight hours.

Solar PV modules can be retrofitted on to a pitched roof above the existing roof-tiles, or the tiles replaced by specially designed PV roof-tiles or roof-tiling systems. If you are planning to put a PV system on to a building and have it connected to the grid supply there are likely to be local regulations that need to be met, and permission required from your utility or electricity service provider. The level of credit for any exported electricity will vary depending on local schemes in place.

Industrial Applications For many years, Solar Energy has been the power supply of choice for Industrial applications, where power is required at remote locations. This means in these applications that solar power is economic, without subsidy. Most systems in individual uses require a few kilowatts of power.

The examples are powering repeater stations for microwave, TV and radio, telemetry and radio telephones. Solar energy is also frequently used on transportation signalling e.g. offshore navigation buoys, lighthouses, aircraft warning lights on pylons or structures, and increasingly in road

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traffic warning signals. Solar is used to power environmental and situation monitoring equipment and corrosion protection systems (based on impressing a current) for pipelines, well-heads, and bridges or other structures. As before, for larger electrical loads it can be cost effective to configure a hybrid power system that links the PV with a small diesel generator.

Solar's great benefit here is that it is highly reliable and requires little maintenance so it's ideal in places that are hard to get to.

Water Pumping, lighting, heating in the Developing World Apart from off-grid homes, other remote buildings such as schools, community halls, and clinics can all benefit from electrification with Solar Energy. This can power TV, video, telephony and a range of refrigeration equipment, which is available to meet World Health Organisation standards for vaccine refrigeration, for instance . Rather than base Solar power generation on individual dwellings, it is also possible to configure central village power plants that can either power homes via a local wired network, or act as a battery charging station where members of the community can bring batteries to be recharged.

PV Systems can be used to pump water in remote areas e.g. as part of a portable water supply system. Specialized solar water pumps are designed for submersible use (in a borehole) or to float on open water. Usually, the ability to store water in a tank means that battery power storage is unnecessary. Large-scale desalination plants can also be PV powered. Larger offgrid systems can be constructed to power larger and more sophisticated electrical loads by using an array of PV modules and having more battery storage capacity.

To meet the largest power requirements in an off-grid location, the PV system is sometimes best configured with a small diesel generator. This means that the PV system no longer has to be sized to cope with the worst sunlight conditions available during the year. The diesel generator can then provide the back-up power, but its use is minimised during the rest of the year by the PV system, so fuel and maintenance costs are kept low.

Solar energy can also power area lighting to enable more outdoor activities after dark or improve security, and to illuminate signs or advertising boards.

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Commercial buildings On an office building, atria can be covered with glass/glass PV modules, which can be semitransparent to provide shaded light. On a factory, large roof areas have been the best location for solar modules. If they are flat, then arrays can be mounted using techniques that do not breach the weatherproof roof membrane. Also, skylights can be covered partially with PV.

The vertical walls of office buildings provide several opportunities for PV incorporation. The first is as a "curtain wall system" that constitutes the weather barrier of the building. The second, as a "rain screen over cladding system" where there is an underlying weather barrier that provides the insulation and sealing of the building.

The third option is to create sunshades or balconies incorporating a PV System. Sunshades may have the PV System mounted externally to the building or have PV cells specially mounted between glass sheets comprising the window.

Central Power Stations Central Power applications use solar energy in the same configuration that a Utility would utilize a major power station. This is distinctly different from the other applications on this page, which are known as "distributed power" or power distributed in small aggregate amounts of power, usually close to the point of use of the electricity.

Central solar power generation plants have been installed in Italy, US and Spain, for example. However, all these plants are "pilot" in nature. Central solar plants may be attractive under certain conditions, but they do not capitalize on the competitive strengths of solar PV in terms of its flexibility of location (i.e. being located close to the customer) and its ability to be installed incrementally.

Other Recreational Applications Solar Power is frequently used in consumer product applications which require small amounts of energy (like calculators). Another frequent use is for Recreation Vehicles (RVs) and Boating to recharge the battery for recreational use activities.

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CHAPTER 2 : MAJOR PLAYERS

2.1 TATA BP solar Ltd Tata BP Solar is a Joint Venture between Tata Power Company, a pioneer in the power sector and BP Solar one of the largest Solar Companies in the world over the years; Tata BP Solar has built on this rich lineage to become one of the largest Solar Co mpanies in Asia. Tata BP Solar uses state-of-the-art technology to offer high quality, innovative solar solutions that cater to the needs of individual customers, large institutions as well as entire communities. Tata BP Solar, one of the early movers in the private sector, does not just produce solar modules, but offers complete and customized solutions. In addition to selling a solar street light module that costs $260, the company also bundles batteries, automatic electronic switching systems, the pole and even installation and other services at a cost of $540. Solar Semiconductor, which has offices in the US an India, plans to expand manufacturing capacity from 50 MW to 200 MW through a billion-dollar investment. Tata BP Solar is planning several strategic diversifications to complement and augment its current product mix, which will be in harmony with the policy of being market leaders in Solar Photovoltaic and Solar Thermal Systems through constant quality improvement, innovation and customer satisfaction.

Major Products:

Strong Financials Despite an acute, industry-wide silicon shortage, the global Solar PV Industry is poised to continue its rapid growth in years to come. Reflecting this global optimism is Tata BP Solar. Its Sales History has been dramatic from a modest Rs.16 million in 1991-92 to a phenomenal Rs.9098 million in 2007-08. Export sales have been encouraging too from Rs.1 million in 1994-95 to Rs.6415 million in 2007-08.

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2.2 Moser Baer India Limited Moser Baer is one of Indias leading technology companies. Moser Baer's flagship company, Moser Baer India Limited (MBIL) has successfully developed cutting edge technologies to become the worlds second largest manufacturer of optical storage media.Moser Baer Photo Voltaic Limited (MBPV) and PV Technologies India Limited (PVTIL) are subsidiaries of MBIL and were launched between 2005 and 2007 with the primary objective of providing reliable solar power as a competitive non-subsidized source of energy. They have leveraged their core competencies in high volume manufacturing of optical media products to create a world class photovoltaic manufacturing facility. Their strategy is to straddle multiple technology platforms and to drive scale to be able to drive down the costs of the technology and make it more affordable to consumers globally. Global presence with products sold in more than 82 countries Present across the entire value chain and investments in multiple PV technologies A combination of advanced technology & low cost manufacturing expertise, with fully automated production facilities ensures top quality products Current production capacity of 80 MW Crystalline Cells, 80 MW Crystalline Modules, and 40 MW Thin Films with expansion plans in place They also have an initial capacity of a few megawatts in Concentration PV, which is being rapidly developed for the market and has great cost reduction potential Products meet international standards including UL, IEC, ETL, CE Strong commitment to R&D and innovation It is also looking at solar power projects in Karnataka, West Bengal and Jammu and Kashmir. It is developing a one megawatt solar project in Chandrapur, Maharashtra. It has been awarded the EPC contract to this effect by Mahagenco, a Government of Maharashtra power generation company.

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2.3 XL Telecom & Energy Limited

XL Telecom & Energy Limited. The Group's principal activity is to provide telecommunication services. It's product includes CDMA mobile handsets, ethanol, swith mode power supply power plants - 100amps, solar power generating systems and sleeves. The Group operates through three segments namely CDMA Mobile phones, SMPS Systems and Ethanol. Its customers include TATA, Reliance, BSNL, MTNL, Nortel, ERRICSON and Kyocera, Axesstel. The Group's plants are located at Hyderabad and Maharashtra.

Solar-Division XL Telecom is one of the leading Indian manufacturers of Solar Photovoltaic Modules, established in 1992. XL has over 17 years experience of manufacturing its Solar Photovoltaic Modules and systems to various agencies in India and overseas. Production Capacity:

Module Production: Due to rapid growth of the Solar Industry, XL Telecom has successfully ramped up its module manufacturing capacity to enable production of crystalline modules. Present production capacity is 192 MW per annum.

Crystalline Cell Production: XL Telecom is installing state of the art Crystalline Cell Manufacturing Facility with leading Technology support from Germany. The present installed capacity of the cell plant will be 120MW per annum. Also XL Telecom is installing 40MW new line of module manufacturing facility with Technology support from Germany. With this additional facility the total module production capacity will be 232MW per annum.

This new facilities of Cell Line & Module Line will be operational by the end of Q2 of 2009 at Special Economic Zone (Fab City), Hyderabad in India.

The company is setting up a solar photovoltaic cell manufacturing plant with a capacity of 120 MW per annum. It has a three-year exclusive distribution agreement with Forta Im Ex SL, Italy to deliver a minimum of 3 MW solar modules per annum to Europe and collaborations with Alfa Laval, Axesstel, Corning and Kyocera Wireless.

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CHAPTER 3: STRATEGIC ANALYSIS

3.1 ECONOMIC FEATURES

1.3.1 Market Size and Growth Rate Renewable energy sources accounted for 13% of global energy demand in 1999. Of this 13%, nearly 80% is represented by biomass, which mainly relates to non-commercial uses in Asia. Hydropower is the second largest renewable power with a market share of 2.3%. Wind and solar energy accounts for the balance. Wind energy installation in 1999 was estimated to be 3,600MW globally (source: American Wind Energy Association) yielding a total installed capacity worldwide of 13,400MW. Of the 3,600MW installed in 1999, the largest markets are estimated as Germany (1200MW), USA (905MW) and Spain (650MW). Solar electric installations totalled 200MW in 1999, 280MW in 2000 and 340MW by 2001 and 427MW in 2002. While growing at a rapid pace, solar electric energy globally still only accounts for around 0.1% of primary energy demand. However, this means that relatively small increases in market penetration by solar energy as costs decline, lead to very rapid growth rates in this industry.

1.3.2 Vertical Integration In order to be able to capture more value and to mitigate the inherent risks of the supply chain, it is crucial to either integrate vertically or build strong partnerships with others in the value chain.

1.3.3 Production Capability It is essential that production can be scaled up to significant levels. For a new technologies (e.g. a new thin-film photovoltaic material), the capability of ramping up production very quickly is crucial; otherwise, the new product will not make a difference.

34

1.3.4 Product Innovation Technology Differentiation To avoid having to compete just on price, firms must offer a product that is technologically differentiated. Whilst there are many distinguishing features, the one number to beat is "efficiency" as measured in "$/kWp" followed closely by the module efficiency measured in "kWp/m ". This is so important because a 1% point efficiency increase in the cell, results in an additional energy yield of 6%. In addition, it brings down requirements for area and electrical components. Technology Strategy The technologies that are installed todady, may not be the technologies of tomorrow. For instance, with the sharp drop in polysilicon prices, some of the thin-film technologies no longer look as appealing as they did a year ago. As a mitigation strategy, we would expect alternative technologies to be present in any company's product portfolio.

Product Quality and Certification The presence of module certification from independent bodies such as TV is no longer a distinguishing feature; it is in fact a quasi- license to operate.

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3.2 DRIVING FORCES

1. 2. The current energy System cannot be continued any longer; The model of industrialization of northern industrialized societies cannot be translated to

others -you cannot generalize. These findings are not only proved by the inherent ecological dangers but also by the increasing deficiency in the conventional energy resources; 3. The orientation of nearly all national economies in the world on the western free-market

economic-g rowth model is mobilizing and driving economic growth. But economic growth promotes both energy efficiency and energy consumption at the same time. The energy consumption of other technologies will be reduced, but at the same time the demand for additional energy-intensive activities is growing. The global creation and development of free-market economies is not compatible with the use of limited and ecologically-damaging resources. In other words: only if we base our economies on renewable energies will there will be enough resources for the development of free-market economies while respecting the ecological limits of our civilization at the same time; 4. In an equalizing global market-economy it is not possible to introduce renewable

energies primarily for developing countries and to continue with the consumption of conventional energies by the northern industrialized countries. If we want to introduce renewable energies in the former, we have to make them a top priority in the latter, too. If we want to enjoy the advantages of industrialized societies in the future without denying them to the rest of the world, and if we also want to overcome the disadvantages without additionally burdening the rest of the world with it, then we need - above all - a new paradigm of energy supply. Therefore we have to ask ourselves today why renewable energies - despite of their obvious ecological and long-term economic advantages - have not been fully introduced yet. We have to ask where the deficiencies lie that are hindering our society from accepting renewable energies, and what mistakes have been made even by those who have engaged themselves in the cause of renewable energies without full success so far.

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In other words: how can the wrong, current paradigm be described, which is also influencing the alternative approaches? 1. The environmental crisis is a global problem. Consequently there is a necessity to find global answers, which was tried in Rio. But the method of decision-making at international level is the slowest form of all decision-making. The most powerful competitor - given enough strength - sets the pace. It is political nonsense trying to win the race against time by the slowest method because the consequence is talking globally, postponing nationally. It remains a contradiction in itself, when initiatives for the creation of a global solar energy system were only undertaken on the condition that all governments participate from the beginning. This connection has never been made with other, even less important, questions, e.g. related to the promotion of or incentives for new technologies. In the development of modern microprocessors, modern aeroplanes or high-speed trains nobody waited for international agreements. On the contrary, it was said that "we have to be faster than the others in order to have future competitive advantages". And when President Roosevelt started the Tennessee Valley Program, he did not make an energy-cost comparison beforehand. He simply thought of how to overcome the economic crisis. This argument must become the premise for renewable energies today. 2. We are living in a culture of scientific, political and economic division of labor. Science, politics and economy have become organized in a particularistic way and therefore their representatives are acting particularistic ally, too. The consequence of a society organized in such a way is that its members - the people - despite the dramatic increase in knowledge and information, are educated in such a way that they become intellectual pygmies who are only able to act and think within small areas. They do not realize anymore that possible progress in one specific field might lead to degradation of the whole.

This culture is represented - in economic terms -by neoliberal economic theory. This theory only looks at the cost-effectiveness of specific products and their market principle but completely ignores the consequences for society. The economic advantages of such a theory are being privatized, economic disadvantages socialized, i.e. a burden on society. The triumphal march of this ideology in the 1980s, which has lasted until now, is the main reason why our cognitions about the present dangers - documented by numerous conferences
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on environment and development - do not correspond at all with our political and economic behavior. This is why the 1980s was a lost decade for both environment and development; and the 1990s will become another lost decade, and even the next century will be lost, unless we respond to the interrelated problems with coherent strategies. The economic and social advantages of renewable energies are enormous: for saving the earth's atmosphere; for the health of man; for an independent and safe, long-term energy supply as well as economic development; for new jobs in industry and for preventing a the steadily increasing rate of unemployment; for recuperation of soil and water, for avoiding a global water crisis and for the economic liberation of agriculture. The fact that all these chances are being ignored because of one single factor - the current price of energy - which puts aside all the other aspects is a classic example of intellectual pygmyism. There might be an excuse if an individual producer or consumer of energy is acting in such a way. But it is absolutely incomprehensible when the same way of thinking exists even at the political level. 3. The advocates of renewable energies have too long prevented themselves from attaining

an overall perspective by thinking only of small-scale actions: asking for a little more money for research and development for pilot and demonstration projects, for a doubling or tripling of the supply of renewable energies within ten years. The megawatt-suppliers of conventional energies are facing the kilowatt-suppliers of renewable energies. That is how the biased view that renewable energy would be able to contribute only a marginal share to the supply of energy within the next decades seems to be justified. Governments, who need offers of megawatt, rely on those who make such offers. But we should remind ourselves how comprehensively the perspectives of nuclear power had been formulated in the 50s: even before the first nuclear power plant was producing electricity, an energy future had been promised, in which the total human demand for energy would be met forever and completely by nuclear power. These perspectives animated governments and finally mobilized billions for research, development and market introduction programs. On the other hand, the advocates of renewable energies were being persuaded that asking too much would be harmful to their case. But the confidence of society in renewable energies as the alternative, and the courage to really push them, can only come in the end from thinking in large quantities and major advances: in megawatt produced by renewable energies, in an steadily increasing share of the total energy production - from 10 to 20, 30, 40, 50 % within a few centuries - up to a perspective of an energy system which is solely made up of renewable
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energies. Because the potential of solar energy shows this possibility, that there is every reason to aim for such a target. 4. Even the many supporters of renewable energies must learn that these will create

completely new structures in the energy system once they have achieved a real breakthrough. Renewable energies cannot simply be transferred into the current energy system. What is called economy today has nothing to do with economy at all. There is not only the problem of social costs which do not play a role in the studies of conventional, so-called, energy economists. Therefore the premises of the present energy supply are not transferable at all to renewable energies. Let's take the example of the widely used potential studies for renewable. They are only correct when there are real limits for one form of energy due to limited resources. They are senseless in the case when there are no limits at global levels which is the case for renewable. In fact, the question about the available potential is only a simple input-output-question: the more input you give on renewable energies - in terms of research and development, investments and production - the more output you receive of renewable energies. We should concentrate more on the input than on potential studies. Or let's take another example: the cost of energy; comparisons usually take one kilowatt per hour electricity or one liter petrol as a basis. But in macro-economic terms it is much more important whether you have to import a source of energy or not. Even if wind power or biomass from domestic agricultural production would cost a few cents more, their macro-economic advantage would still be much higher as compared to the production of electricity from imported uranium, imported nuclear technology, imported or subsidized coal and imported oil. Or let's take a third example: If there are more and more PV-and solar collector-, biomass-cogeneration and Stirling-motor applications in houses for electricity, heating and cooling, then the houses will become renewable energy producers instead of consuming conventional energies from the outside. If - for instance - a solar facade is constructed, instead of a traditional building frontage, then the usual comparison between costs for 1 kWh of conventional electricity on the one hand and of solar electricity on the other will be "out of business". The only relevant comparison then is the comparison between a conventional facade (by the way: nobody asks how much energy was needed for the production of these facades) and a solar facade, which produces electricity. It becomes a question of a newbuildings and household-economy instead of a conventional energy-economy. Someone who
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only counts the costs for kilowatt-hours is not an economist, he is just a calculator of one isolated factor; for such a calculation we do not need scientific analysts, because a simple computer can do better. We ought to understand that the companies representing the current energy suppliers do not have to be the same as the companies representing a solar energy production sector in the future. The corporations of our present energy system are not public institutions whose existence is granted by a constitution. Solar energy is the road which leads us away from the energy-consuming towards the energy-producing house and by that we will automatically see a far-reaching structural change. Every structural change has winners and losers. It is not advisable to make the introduction of solar energy dependent on those who will be among the losers by such a structural change - from the oil-, coal- or countries or their contracting companies, or from those which operate large power plants. The solar future cannot be made dependent on the individual premises of one single branch of the economy. Even the current energy-supplying companies have the chance to participate in building up such a solar energy system: but rather through diversification than through structural conservatism - from the supplier or producer of oil to the producer of wind power plants, biomass-conversion plants, solar energy plants, producers of Stirling motors, solar cells or collectors. 5. There is a discussion about the number of jobs that could be created by producing

renewable energy technology. No doubt there should be more analysis. But there is no doubt about one thing: all the costs for renewable energies are costs for the technology; that means: costs for labor to produce these technologies. Introducing renewable energies means in economic terms the replacement of conventional primary energy supply and conventional waste management by technologies that convert renewable energy sources into a secondary energy. In other words: renewable energy technology production leads to much more employment in modern industrial jobs; it is the motor of new mass employment in industry and agriculture an economic basis innovation! 6. In order to promote renewable energies we need the appropriate political institutions that

are able to overcome the existing particularism. It is intolerable that there is a UN Agency for Nuclear Power but still none for Renewable Energies. This is the reason why Thailand, for example, is already planning several nuclear power plants at this moment - with the help and
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support of IAEA - but is not planning any solar power plant. As long as the jealousy of several UN institutions hinders the task which we are facing we will also fail to manage the future. 7. We need new thinking in terms of nature conservation. So far it has been of very

defensive character - in connection with preventing further measures destructive to nature, whereby those measures which had been already undertaken are accepted indirectly. The consequence is a decadent attitude of trying to prevent wind power plants for nature or scenery conservation reasons. The defence of the mini-biotop has too many minds priority over saving the global biotop. This is another example of lack of proportion - but it is primarily a mistaken philosophy, an underestimation of the real ecological dangers and a misunderstanding of the ecological circle. The 20th century became the century of the destruction of the ecosphere because of this intellectual hegemony of erroneous philosophies. We are now on the edge of a millennium of ecology. The philosophy of this new era begins with the basic assumption that renewable energies - coming from the sun - are not alternative energies; solar energy is the energy. Conventional energies were misleading alternatives. The more and the longer mankind has been following and believing in these alternatives, the more human civilization lost its ground, its basis. There is no doubt that in the future solar energy will be again the only energy used on earth. The only question is if this will happen with mankind or without mankind. 8. We need the courage for a renewal of economy and politics. Therefore, we have to develop priorities for environmental policies. We have to recognize that economics is the hard core of society, and that energy is the hard core of economy. Due to this overall importance of the energy question we have to set up an Agenda 1 within "Agenda 21" of the Earth Summit in Rio on this topic of renewable energy. Renewable energies are not an emergency exit from problems of energy supply and consumption. Renewable energies are the driving forces to renew our societies. It is not only an expert's approach; it is an approach for all human society. Solar energy is the energy of the people and we need the efforts of the people to introduce it. This is the reason why we must develop a grand strategy and a new movement a solar strategy - for renewable energy introduction.

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3.3 POLITICAL ANALYSIS

3.3.1 The National Rural Electrification Policy, 2006 The policy aims at providing access to electricity to all households in the country and a minimum lifeline level of consumption of 1 unit (KWh) per household per day. The policy also mentions that off-grid solar PV solutions may be deployed where the supply of grid electricity is infeasible. MNRE is the key Government body engaged in driving the growth of solar industry and is also responsible for the implementation of JNNSM. The other Central Government ministries involved include - Ministry of Power (including CEA) and Ministry of Communications & Information Technology. The State Electricity Boards and respective agencies for renewable energy at the state level, play a key role in implementation at a state level. IREDA is a public limited Government company established in 1987, under the administrative control of Ministry of New and Renewable Energy (MNRE), to promote, develop and extend financial assistance for renewable energy and energy efficiency/conservation projects.

3.3.2 Generation based incentive scheme

In January 2008, MNRE formed guidelines for generation based incentives for grid connected solar (both thermal and PV) plants. The scheme was extended to all existin registered companies, Central and State power generation companies and public/private sector PV power project developers. The scheme promoted grid connected power plants in excess of 1 MW of capacity at a single location. The scheme was limited to 5 MW per developer across India and a maximum of 10 MW per state. Under this scheme, MNRE offered to provide, through IREDA, a generation-based incentive of a maximum of Rs. 12 per kWh to eligible projects, which are commissioned by December 31 2009, after taking into account the power purchase rate (per kWh) provided by the State Electricity Regulatory Commission or utility for that project. Apart from the Central Government, several State Governments have also taken initiatives to promote solar energy.

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3.3.3 State level initiatives

Andhra Pradesh

The State Government of Andhra Pradesh is developing a solar farm cluster called Solar City on a 10,000 acre land at Kadiri in Anantapur district. Solar City is expected to attract investments worth Rs. 3,000 crore in the first phase. Four firms (Sunborne, Lanco Solar, AES Solar and Titan Energy) have signed a memorandum of understanding with the State to set up their units there. These companies will be the anchor units in Solar City and have a combined capacity of 2,000 MW.

Karnataka Karnataka Power Corporation Ltd., has implemented two projects each of 3MWp capacity and has awarded a third project of same capacity recently. The solar plants, located in Kolar and Chikkodi districts, have been implemented under the Arunodaya scheme for ensuring assured power supply to rural areas, especially irrigation pumpsets. These PV power plants are intended as tail end support / powering of irrigation pumps.

Gujarat

The State policy aims at promoting the generation of clean and green power in the state using solar power and wastelands, thereby engendering socio-economic transfer. Other objectives of the policy are promoting R&D and facilitating technology transfer, creating environmental awareness and favorable policies that encourage investment, promoting employment generation and skill enhancement of the local youth.

The Government incentives and schemes can be availed by any private organization, provided certain project criteria are met. The incentives would be offered to projects commissioned before March 2014. The State Government earlier fixed a target of cumulative capacity of 500 MW in the state, which was recently increased to 716 MW. At a project level, minimum capacity of the plant to avail incentives should be 5 MW for PV as well as solar thermal. It is proposed to charge 2 per cent of unit cost against wheeling of power, though the

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electricity duty is exempted. The incentive will be provided to solar power generators for a span of 25 years.

Assistance from Gujarat Energy Development Authority (GEDA) Identification of suitable locations for solar projects and preparation of land bank and the requirement of creation/ upgrading of connecting infrastructure to the project site i.e., roads etc. Facilitation in arranging Right of Way, water supply and in obtaining clearances and approvals, which are under the purview of the State Government Recommending the project (subject to qualification) to avail benefits under any policy declared, or to be declared by the Government of India Promoting research and development activities for cost effective, sustainable and environment friendly technologies, in collaboration with internationally and nationally reputed institutions Engaging the services of national/ global experts/ consultants for the research and development of solar and other renewable technologies Carrying out awareness campaigns on energy conservation and usage of renewable sources of energy at all levels i.e., village, taluk, district, etc., through schools, colleges, educational institutions, community centers and civil society organizations Along with project developers, develop appropriate manpower skills by tying up with training or educational institutions through Public Private Partnerships (PPP).

Overall, about 716 MW of capacity was allotted to 34 national and international developers. This includes 24 projects in solar PV with cumulative capacity of 365 MW and 10 projects in solar thermal with cumulative capacity of 351 MW. For solar PV, the capacity of solar PV varies from 5 MW (7 projects with 5 MW) to 40 MW (developer PLG power Ltd, Nasik).

Rajasthan

The Rajasthan State Government has announced 3 schemes to promote solar energy applications in the state. Under the Remote Electrification Scheme, domestic lighting systems are distributed to remote villages under MNREs scheme. MNRE will provide 90% of the benchmark cost (Rs 12500 per DLS) i.e. Rs. 11,250, where the Operation & Maintenance cost for 5 years is also included in the benchmark cost. The balance 10% cost is to be borne
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by the State Government (Rs 3335) and beneficiary (Rs 1500) against the total cost of Rs 16,085.

The Rajasthan Rural Electrification Program (RREP) aims at the distribution of street lighting systems, domestic lighting systems in the remote areas and ensures financial assistance from the State Government, Government of India and MNRE. RREP provides SPV pumping systems with financial support to beneficiaries under the program of MNRE, Government of India.

Subsidy support under the SPV Water Pumping Programme of MNRE, Government of India at Rs. 30 per watt of SPV module capacity, subject to a maximum of Rs. 50,000 per pumping system, is being provided by MNRE under SPV Pump Programme 2007-08.

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3.4 Porters Five Forces

Figure 3.1 : Porters Five Forces

1. Rivalry Among Competitors : No of rivals are increasing slowly. Rivals are roughly of equal size and competitive capability. Major players have powerful strategies and other rivals are scrambling to stay in the game. As the solar energy sector is one of the largest growing sectors, buyers demand is growing rapidly. So the competition among the rivals is too high to gain the buyers to increase their market share. Rivals are competition to provide customize products at lower cost.

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2. Potential New Entrants The pool of entry candidate is small because of high technological innovations are needed. Entry barriers are high because of high because of high investment and high R & D cost. Existing industrial members will strongly contest the new entrants to gain a market foothold. Because of high cost, the industrys outlook is risky and uncertain.

3. Threats of Substitute product Competitive pressure from the substitute product is high because good substitute energy sources are readily available such as thermal and other energy sources. Solar energy needs high investment where as substitutes are available at low cost. Users have low cost in switching to substitute. Instead of using solar energy, other users feel more comfort in using other energy sources.

4. Bargaining Power of Buyers Bargaining power of buyers is high because other substitute energy sources are available at low cost. There are only a few buyers- so that each ones business is important to seller. Some buyers are a threat to integrate backward into the business of seller and become an important competitor. Larger volume purchases by buyer is are important to seller.

5. Bargaining power of Supplier Bargaining power of suppliers is higher because industry members incur high cost in switching their purchase to alternative suppliers. Needed input is in short supply which gives suppliers more leverage in setting their own prices. In solar energy sector, there are only a few suppliers for a particular input. Some suppliers in this sector threaten to integrate forward into the business of industry members and they can become a powerful rivals.

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3.5 GRUP MAPPING MATRIX

Figure 3.2 : Grup Mapping Matrix

TATA BP solar Ltd

Synergy Renewable Energy (P) Ltd

Amar Urja Ltd. Auroville Energy Products

Moser Baer India Limited

Advanced Electronic Systems Rajasthan Electronics & Instruments Ltd (REIL)

XL Telecom & Energy Limited

Strategic group mapping is technique displaying the different market or competitive positions that rival firms occupy in the industry.

Here we have taken two variables product line and price to develop a strategic group map.

Through this map company comes to know about its rivals and to can know at which position it wants to reach.

Through this mapping company can identify its closest rival which is lying in that same strategic group.

Those companies which are lying in the same strategic group are the closest competitor.

In solar energy industry, synergy private ltd and the Amar Urja ltd is the closest competitor who is having large product line and low price. Tata bp solar ltd and Moser bear India ltd are also falling in the almost similar strategic group, so they are also close competitor.
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We can use more than two competitive variables for the map, several maps can be drawn to give different exposures to sarily one best map for portraying how competing firms are positioned in the market, and it is advisable to experiment with different pairs of competitive variables.

Chart 3.1 : Position of industry

Players can be categorised by the degree of vertical integration as well as diversification as follows: Diversification: Pure-play versus Conglomerate While there is a significant number of companies that focus exclusively on solar electricity or renewable energies, many newcomers are large corporations for whom solar is one market of many. Vertical Integration Most companies are partially vertically integrated in order to capture more stable value. As the whole industry develops, vertical integration becomes more feasible. However, no group covers the whole value chain today, whilst there are many highly specialised companies upstream (Q-Cells, RSI Silicon) and in the more service-oriented downstream segment.

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3.6 OT ANALYSIS

Opportunities Increasing Energy requirement Reduction of Fossil Fuels Increased awareness of green technologies amongst the public Overall cost of the energy technology decreases with large scale utilization This has also encouraged the entrepreneurs to invest in solar energy technologies.

Threats Will depend on US, Japan and Europe for efficient technology solutions Energy dependence on imports

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CHAPTER 4 4.1 CHALLENGES AND CONSTRAINTS

4.1.1 High Capital Cost The hunt for better, cheaper Solar cells is due in India. Despite the fact that the price of Solar Photovoltaic technology has been coming down over the years it still remains economically unviable for power generation purposes. The average cost of Solar PV modules was around Rs. 2 lakhs per kW. However, the estimated unit cost of generation of electricity from Solar Photovoltaic and Solar thermal route is in the range of Rs. 12 -20 per kWh and Rs. 10 - 15 per kWh respectively in India. With present level of technology, Solar electricity produced through the Photovoltaic conversion route is 4-5 times costlier than the electricity obtained from conventional fossil fuels.

4.1.2 Manufacturing Process Solar PV cell manufacturing is a technology-intensive process requiring high expertise and know-how. Besides, the technology landscape in the Solar industry PV space is changing quite rapidly with innovations and R&D. It is challenging for new entrants to replicate the success of companies having a long standing in the Solar PV market.

Raw Material and Waste Products Some of the materials (like Cadmium) used for producing Solar PV cells are hazardous and other raw materials like plastics used for the packaging of the cells are non-biodegradable, thereby impacting the environment. Although some of the wastage generated during the manufacturing process is recyclable (silicon), not all other materials are recyclable and disposal of the same is a challenging process.

4.1.3 Environmental Costs: Another concern area is installing Solar cells on the land area. The large amount of land required for utility-scale Solar power plants - approximately one square kilometer for every 20-60 MW generated - poses an additional problem in India. Instead, Solar energy in particular requires unique, massive applications in the agricultural sector, where farmers need electricity exclusively in the daytime. This could be the primary demand driver for Solar energy in India.
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In the very near future, breakthroughs in nanotechnologies promise significant increase in Solar cell efficiencies from current 15% values to over 50% levels. These would in turn reduce the cost of Solar energy production. However, capital costs have substantially declined over the past two decades, with Solar PV costs declining by a factor of two. PV is projected to continue its current rapid cost reductions for the next decades to compete with fossil fuel. However, the realization of cost reductions is naturally closely linked to market development, government policies, and support for research and development.

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4.2 CONCLUSION
Solar powered has a tremendous impact on the lives of people without electricity. In both quantitative economic terms as well as qualitative lifestyle conditions, the benefit derived from such a simple device is irrefutable. Users of the Solar systems increase productivity and income, while safety, education, health, and general quality of life all benefit. Yet wide scale deployment of solar powered has yet to take place.

To facilitate the large scale deployment of solar powering, private enterprise must be involved. For this to happen, the three parties expected to participate in this market must address the following issues:

1. Technology Manufacturers: Product costs must come down. Economies of scale in both production and logistics can effectively lower costs, but maximizing energy production and storage must be at the forefront in the minds of manufacturers. Suggestions include centralized charging stations that would maximize the use of solar panel production as well as the use of more efficient lithium-ion batteries (though limited availability of lithium-ion batteries may add an additional cost when factoring replacement). 2. NGOs and Village Leaders: Villagers must be educated on the advantages of solar Energy. All parties easily identify the initial benefits, but community development efforts should focus on the long term value. Many rural villagers, and by association, the NGOs that support them, do not have the long term vision to encourage investing in a product that will help to improve living conditions over its useful life. 3. Microfinance Institutions(MFI): MFIs will be the most likely funding source for such initiatives and should establish business units focused solely on deploying distributed renewable energy solutions on a large scale. Through further research and analysis, large scale implementation can become a realistic and profitable venture.

By overcoming the challenges of finance, culture, and technology, solar Energy systems can become a reality in much of the developing world. This will create a sustainable, environmentally friendly, and dignified way to improve the lives of millions of people and help in the efforts to alleviate poverty.
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4.3 Limitations:
There is less development of solar power industries in India. No proper data available about solar power industries. Financial analysis is not possible because unavailability of data regarding solar power industries. In India there is a less development of Solar power energy industry comparatively other countries. So there is very difficult to find the data regarding Indian solar power energy industry.

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CHAPTER 5 : BIBLIOGRAPHY

Books
Crafting and Executing Strategy By : - Arthur A Thompson Jr - A J Strickland III - John E Gamble - Arun K Jain

Websites
6. Ministry of Power (http://powerin.nic.in) 7. Ministry of Non-conventional Energy Sources (http://mnes.nic.in) 8. Indo-US Science & Technology Forum (http://www.ind-usstf.org) 9. Tata Energy Research Institute (www.teriin.org) 10. The South Asia Regional Initiative for Energy Cooperation and Development (http://www.sari-energy.org) 11. International Energy Agency (http://www.iea.org) 12. www.solarliving.org 13. http://www.ases.org/bchowe@ases.org 14. www.researchandmarkets.com 15. www.eupd-research.com 16. www.solarindiaonline.com 17. www.cygnusindia.com

Search engines 1. www.yahoo.com 2. www.whereisdoc.com 3. www.scribed.com 4. www.google.com

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