How Bundling Scheme is Going to Impact Solar Companies in India

28 February 2020

10 min read | By admin

The Bundling Scheme is a plan to sell renewable energy (RE) and thermal power in a bundle so that end users can get uninterrupted supply of power. Bundling solar power was first introduced by the government in the first phase of Jawaharlal Nehru National Solar Mission (JNNSM), in the year 2010.

What is bundled solar energy?

Bundled solar energy means combining solar power with the power from the government’s unallocated quota, generated at National Thermal Power Corporation (NTPC) coal-based stations, which was comparatively cheaper. Solar power would be purchased by NTPC Vidyut Vyapar Nigam Limited from developers, which would then be combined with cheaper coal-based power. The price of this was set by the Central Electricity Regulatory Commission (CERC) and then sold at the reduced price to distribution companies. Reduction in the price of solar directly results in cheaper power, reducing the impact on them. At the same time this will also benefit the developers, since they would receive higher tariffs.

How does it work?

In the first phase, the cost of bundled solar power was successfully lessened to INR 5/kWh. The ratio of coal to solar power was kept at 4:1. A total capacity of 718 MW was commissioned under Phase 1. However, bundling faced a hurdle due to India’s coal production being extremely slow and unallocated coal not being available in abundance. Selecting solar power projects under various central schemes was proposed in the second phase. This is where the Viability Gap Funding Scheme was introduced, which is being implemented through the Solar Energy Corporation of India (SECI). This scheme specifically aimed to solve interruption in power supply and low capacity utilisation of solar power plants and make them appealing for state-owned power DISCOMS.

In this scheme, at least 51% of the annual energy supplied has to be Renewable Energy. The balance would then be drawn from thermal power sources.The generator, which will have the option of selecting the type of RE and mix and decide upon the usage of Energy Storage System (ESS). The tariffs for RE will be quoted by bidders as a composite single tariff for bundled energy. The scheme is the need of the hour for state-owned DISCOMS because they are drowning in debt. They are delaying payments to renewable energy companies. MNRE has said that the scheme will enable them to purchase power at competitive rates to meet their deficits.

What is the grid-tied solar system?

The impact of the bundling scheme cannot be viewed alone but in conjunction with other schemes. The bundling scheme was introduced to facilitate grid-connected solar power generation. A grid-tied solar electrical system is a network of power lines connecting users of electrical energy and producers of electrical energy. The home solar panel system is linked to the local power utility company’s electrical grid. Grid-connected projects could be ground-mounted PV or rooftop PV.

India aims to increase solar usage up to 100 GW by 2022. It is essential to take important steps to achieve this. There is a huge need to convert solar and bundle into usable electricity through panels. The infrastructure requirements for solar parks and the transmission of this power into the national grid must be met.

Manufacturing of solar panel systems is also extremely poor in India. In 2018, the government made a significant policy to impose the Safeguard Duty of 25% on Solar Imports for two years, after which it would be phased down. This was meant to encourage Indian companies of solar energy involved in manufacturing. But it was not as effective as hoped. Imports did drop due to slower capacity building in India, but not because of a rise in domestic sales. Indigenously made solar panels and cells constitute just 15% of Indian solar projects. A manufacturing solar company in Delhi, or elsewhere faces stiff competition from Chinese and Malaysian manufacturers despite the safeguard duty. Therefore, even though bundling has attempted to push the usage of solar while diminishing the need for expensive thermal, the Indian solar companies still have to bear the brunt of expensive machinery.

Solar partnering by DISCOMS is a part of solar push by the government. Rooftop owners are licensed, and developers are chosen through a competitive bidding process that is done by DISCOMS. For usage of their rooftop, solar panel system owners are given a monthly rent or credit on their electricity bill. A three-way agreement between DISCOMS, rooftop owners and solar developers are made for a period of 20-25 years. The developers would own and operate the solar panel system while roof owners will to host the solar panels. The DISCOM agrees to buy the power at a fixed rate. All owners have to do is to calculate the estimate of the power generated using a solar rooftop calculator.

The solar partnering model is good for consumers who want roofless solar or have to subscribe for a monthly fee. They get part of their electricity at the predetermined solar tariff. The government has also announced a capital subsidy on rooftop solar installations. This means that the solar system for home price would be considerably reduced. This is already applicable for many solar home systems in Haryana.

Conclusion

A policy where users can feed the electricity back into the grid will make solar penetrate at the grassroots levels. It would also be a positive move for the solar companies listed in India. Greater accessibility of solar would mean an increase in demand. Bundling would solve the issues of irregularity, since solar is not always reliable, and yet solar companies will be making a profit from this hybrid scheme since the push for solar has only just begun and will continue to grow.

Off-Grid vs On-Grid Solar Power System

24 June 2019

10 min read | By HomeScape Team

With the increasing cost of electricity and power, a number of businesses and homeowners are shifting to the solar power system. Solar Power is the key for clean energy; everyday sun gives far more energy than we need to power everything on earth and it won’t run out anytime soon. A solar power system converts sunlight to electricity with the use of solar panels placed either on the rooftop or flat surface. Are you also planning to get a solar power system installed on your roof? To get it installed, we need to understand the key differences between on-grid and off-grid solar power system for home.

On-grid Solar Power System

On-grid Solar/Grid-Tied Solar Power Systems generate power using solar energy from sunlight and feed it directly to the house and grid. On-grid solar systems generate energy only when there the electricity grid is working and is directly connected to the grid. These systems send excess power generated by the solar power system to the electricity grid with the help of net metering and consumers get compensated for the extra power generated. In the case when there is not enough sunlight to meet your household needs, the system runs on the power supplied by the grid. These are the most cost-effective and simplest systems to install. Such systems will pay for themselves by offsetting the bills in 4-6 years. The biggest disadvantage of an on-grid system is that it does not provide power when there is no supply from the grid (no electricity). On-grid solar systems generally need solar panels along with a mounting system, solar cables and MC4 connectors, grid-tied solar inverter and monitor, AC and DC safety isolator switches, and grounding earth cables and clamps.

Advantages of going with Grid-Tied Solar Power System:

The on-grid solar power system will reduce the electricity bills and would also help in payback with respect to the extra units fed to the grid with the help of net metering (depends on State Solar Policies)
On-Grid Solar Power system fully utilizes the solar in first priority and the remaining power is taken from the grid
The lifespan of an on-grid solar power system is of 25 Years. You can use it for a long period without any damage and without changing the equipment.
This system will reduce the carbon footprint, thus help our environment grow pollution-free.
There is no need for expensive batteries to store the electricity.
The on-grid solar power system has a payback period of around 5 years. After that, you get free power for more than 20 years.

Grid-tied Solar Power System comes with few limitations which could hamper the generation:

After the sun sets, a grid-tied system is unable to generate energy as it directly connected to the grid and has no backup.
In an area where the electricity cut off is frequent, a grid-tied system is not successful as it’s not able to generate the optimum amount of energy.
In the case of grid failure, your system is shut down and any energy generated is wasted.

Off-Grid Solar Power System

Off-Grid Solar Power Systems do not need to be connected to mains power. An off-grid system is not connected to the electricity grid and therefore requires battery storage to provide electricity on days when the solar panels generate less electricity than is required, e.g. at night time or on cloudy days. The idea is that at times when the system provides more electricity than required the surplus can be used to recharge the batteries. However, the cost of the battery makes an off-grid power system much costlier than the grid-tied system, so its recommended in the remote areas far from the electricity grid or an area which has frequent electricity cut-off. As there is no connection with the electricity grid, the excess power generated is fed back to the battery bank. Once the battery back up consumes units to its full capacity, it stops receiving units from the solar power system. So, if you’re still contemplating whether or not you should buy an off-grid solar system, take the following benefits and limitation into consideration:

Access to Electricity No Matter What

Some areas are prone to blackouts, while others don’t have access to electricity at all.. Since you aren’t connected to the grid, you can have peace of mind knowing everything will operate as intended.

Your home becomes energy sufficient

Back in the day, when we did not have access to the grid, there was no option to generate and save energy. With the off-grid system, we can have electricity 24/7, with the help of battery back up. Having sufficient energy to your home adds a layer of security. Moreover, you will never be affected by power failures because you have a standalone source at home. However, having battery back up will add cost to the solar power system by 40% which will increase the payback period. Also, batteries need to be replaced in around 5 years, adding a recurring cost to the system.

What should I choose?

Choosing between an on-grid and an off-grid solar system fundamentally comes down to whether or not you have access to the grid. If you don’t have access to the grid or there is continuous electricity cut off in your area, Off-Grid System is the only and best option for you. However, if you have access to electricity Grid, installing an on-grid system is preferred. This is because of the net metering system with grid-tied which offers more efficiency and unlimited storage of energy through the grid. You get benefitted from DISCOMs through net-metering which brings down the PAYBACK period and this makes your investment a smart investment. You can see Net-Metering for more information.