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The solar power policies and markets of Asia and Europe

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Abstract

This article examines and compares the design and roll-out of solar policies of three major markets in Asia and Europe in 2012. The photovoltaic (“PV”) and concentrated solar power (“CSP”) policies of India, Thailand, Malaysia, in Asia and Germany, Italy and Spain in Europe are analysed on the basis of policy documents publicly available on web portals of the relevant government authorities in the respective countries in addition to independent reports and studies. The aim here is to measure and compare the form and quantum of state support extended to the solar power generation sector in these six fairly comparable countries in Asia and Europe, provide an overview of the design and deployment of solar power policies and estimate the costs of carbon mitigation through solar power in the six countries. The countries were chosen on the basis of available information and data in English from primary sources such as government policy documents, announcements and reports, and the scale of solar power policies and their relative maturity.

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Notes

  1. The federal policy is called the Jawaharlal Nehru National Solar Mission (“JNNSM”). Many individual states have their own solar policies; analysis includes batches 1 and 2 from Phase 1 of JNNSM. Ministry of New and Renewable Energy, Government of India (2010a).

  2. Solar PV technology generates electric power by converting solar radiation directly into electricity whereas solar CSP technology first converts solar energy into heat energy and then into electrical energy

  3. Actual deployment of solar projects is much higher.

  4. Rangsan Sarochawikasit, Department of Alternative Energy Development and Efficiency, Ministry of Energy, Thailand (2009).

  5. Energy Policy and Planning Office, Ministry of Energy, Thailand (2010) Summary of Thailand power development plan. http://www.egat.co.th/en/images/stories/pdf/PDP2010-Rev3-Eng.pdf

  6. KeTTHA Malaysia, Electricity Supply Industry of Malaysia. http://www.kettha.gov.my/en/content/electricity-supply-industry

  7. Peter China Fah Kui, Minister for Energy, Green Technology and Water (2012) The future of energy in Malaysia. http://www.kettha.gov.my/en/content/future-energy-malaysia; author estimate based on extrapolating expected growth rate until 2020.

  8. Feed-in-Tariff refers to a guaranteed, fixed off-take tariff for renewable power for a pre-specified duration; typically higher than the prevailing grid tariffs in a given tariff environment.

  9. Tariff Adder refers to the additional incentive over and above the prevailing grid tariff (the base tariff) provided to incentivize private investment in costlier renewable power. While the adder is fixed, the total tariff (adder + base) paid to the power generators can be variable depending upon the volatility of the base price.

  10. Tongsopit and Greacen (2012) Thailand's renewable energy policy: FiTs and opportunities for international support. http://pdf.wri.org/wri_fair_fit_workshop_presentation_thailand_tongsopit_greacen.pdf and http://www.palangthai.org/docs/ThailandFiTtongsopit&greacen.pdf

  11. Over-subscription is the excess demand for FiTs by project developers over the proposed capacity by the solar policy. For example, if proposals for 100 MW are received for allocation of FiTs for 25 MW, the over-subscription is 4×.

  12. Energy Alternatives India (2010) NVVN Gets 418 request for 1740 MW for PV alone. http://www.eai.in/blog/2010/09/nvvn-gets-418-requests-for-1740-mw-for-pv-alone.html and Energy Alternatives India (2011) JNNSM Batch 2 Results. http://www.eai.in/club/users/BADRI/blogs/12954

  13. Twarath Sutabutr, Department of Alternative Energy Development, Ministry of Energy Thailand (2010) Solar Energy Development: Thailand Case. http://www.scribd.com/doc/35456398/Solar-Energy-Development-Thailand-Case and Greacen (2011) Clarifying the Thai solar FiT situation. http://www.palangthai.org/docs/ClarifyingTheThaiSolarFeedinTariff4Feb2011.pdf and Chandler & Thong-Ek Law Offices (2011).

  14. Sustainable Energy Development Authority Malaysia (2011) Outcome of the FiT: An Update by SEDA Malaysia. http://seda.gov.my/go-home.php?omaneg=00010100000001010101000100001000000000000000000000&y=45&s=1251

  15. Board of Investment, Thailand, Average of utility costs for large general consumers. http://www.boi.go.th/index.php?page=utility_costs&language=en; THB–USD exchange rate of 0.03201

  16. Given that different categories of projects in two batches were auctioned at different tariffs, the weighted average tariff has been used. (Ministry of New and Renewable Energy, Government of India 2011a)

  17. INR–USD exchange rate of 0.01874.

  18. Central Electricity Regulatory Commission (2012) Average of tariffs in Table 1, OTC prices in September 2012. http://www.cercind.gov.in/2012/market_monitoring/weeklySeptember2012.pdf

  19. KeTTHA Malaysia (2012) Electricity Tariffs, Average of Peak and Off-peak Tariff E3s, Special Industrial Tariff., http://www.kettha.gov.my/en/content/electricity-tariff; An RM–USD Exchange rate of 0.3259 was used. (Sustainable Energy Development Authority, Ministry of Energy, Green Technology and Water, Government of Malaysia 2011)

  20. The present value of the financial burden is estimated by calculating the excess tariff paid for solar power over and above the prevailing wholesale tariffs, over the duration of the PPA and using a nominal discount rate of 5%. For example, the weighted average FiT for India is about INR 7.06 greater than the prevailing tariffs in the spot markets. This is used along with assumptions about total energy generated over 25 years to estimate the present value of the financial burden.

  21. CUF is expressed as a percentage and refers to the actual power plant output as a fraction of the maximum theoretical output.

  22. For a detailed discussion on the time value of carbon, see Kenneth Richards (1997).

  23. The 17 % CUF is based on an average of observed CUF values on a sample of solar PV demonstration plants in India; CUFs for CSP are expected to be much higher, although the observed average CUFs for PV are considered for the sake of conservatism. (Ministry of New and Renewable Energy, Government of India 2011b)

  24. List of grid emission factors, Institute for Global Environment Strategies. http://enviroscope.iges.or.jp/modules/envirolib/view.php?docid=2136; Average Build Margin Emission Factor values considered for the analysis.

  25. Private communication author had with three project development companies which have been allotted capacity in both phases under JNNSM in India.

  26. To discourage indiscriminate bidding by developers, JNNSM requires bidders to deposit “bid bonds” for every paisa bid lower than the approved tariff, the quantum of which increases with the discount to the approved tariff. For example, for a bid that is up to 10 % lower than the approved tariff, the bidder is required to deposit a bid bond of INR 10,000 (USD 190) for every paisa lower. For a bid that is 10–15 % lower than the approved tariff, the bidder is required to deposit a bid bond of INR 20,000 (USD 375) per paisa discount and so on (Central Electricity Regulatory Commission, Government of India 2010).

  27. The Energy Ministry said it had to reject 1,492 of the total 3,306 applications submitted in Q3 of 2011. ICIS (2011), Spain curbs solar electricity subsidies as Q3 tender adds, http://www.icis.com/heren/articles/2011/11/11/9507740/spain-curbs-solar-electricity-subsidies-as-q3-tender-adds-120mw.html

  28. Installations between 10 and 1,000 KW are only subsidised for 90 % of the energy fed into the grid.

  29. For rooftop installations of 10–40 KW only.

  30. Industry retails prices are significantly lower.

  31. FiT of 0.031 cents/KWh for standard self-consumption plants of more than 5 MW

  32. FiT of 0.288 Cent/KWh for PV plants using innovative technology of 1–20 KW

  33. The Spanish FiT is limited in how many hours per year it will be paid under the Spanish law “Royal Decreto 14/2010.”

  34. The high debt level of Spanish energy utilities was also caused by expanses not related to renewable energies.

  35. The 10 % CUF is an estimate based on the average irradiation in central and southern Europe per year.

  36. Based on REC data at http://www.recgroup.com/de/warum-solarenergie/basic-solar-math/

References

Indian federal solar policy

Thailand Policy

European Policy

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Authors and Affiliations

  1. Energy Studies Institute, NUS, Singapore, Singapore

    Shiva Susarla

  2. Good Energies Chair for Management of Renewable Energies (IWÖ-HSG), University of St. Gallen, Tigerbergstrasse 2, St. Gallen, CH-9000, Switzerland

    Elmar Friedrich

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  1. Shiva Susarla
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Correspondence to Shiva Susarla.

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Susarla, S., Friedrich, E. The solar power policies and markets of Asia and Europe. Asia Eur J 11, 339–354 (2013). https://doi.org/10.1007/s10308-013-0353-7

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