Professional Documents
Culture Documents
The Heat Exchanger Based Domestic Solar Water Heater
The Heat Exchanger Based Domestic Solar Water Heater
Abstract - Solar energy has experienced phenomenal by solar concentrated power (CSP) and also by large-scale
growth in recent years due to both technological PV systems that feed into electricity grids. The costs of
improvements resulting in cost reductions and government solar energy technologies have dropped substantially over
policies supportive of renewable energy development and the last 30 years.
utilization. This study analyzes the technical, economic and For example, the cost of high power band solar
policy aspects of solar energy development and deployment. modules has decreased from about Rs.17,28,000/kW in
While the cost of solar energy has declined rapidly in the 1982 to about Rs.2,56,000/kW in 2006; the installed cost of
recent past, it still remains much higher than the cost of a PV system declined from Rs.10,24,000/kW in 1992 to
conventional energy technologies. Like other renewable around Rs.38,4000/kW in 2008 (IEA-PVPS, 2007;
energy technologies, solar energy benefits from fiscal and Solarbuzz, 2006, Lazard 2009). The rapid expansion of the
regulatory incentives and mandates, including tax credits solar energy market can be attributed to a number of
and exemptions, feed in-tariff, preferential interest rates, supportive policy instruments, the increased volatility of
renewable portfolio standards and voluntary green power fossil fuel prices and the environmental externalities of
programs in many countries. Potential expansion of carbon fossil fuels, particularly greenhouse gas (GHG) emissions.
credit markets also would provide additional incentives to Theoretically, solar energy has resource potential that far
solar energy deployment; however, the scale of incentives exceeds the entire global energy demand (Kurokawa et al.
provided by the existing carbon market instruments, such as 2007; EPIA, 2007). Despite this technical potential and the
the Clean Development Mechanism of the Kyoto Protocol, recent growth of the market, the contribution of solar energy
is limited. Despite the huge technical potential, development to the global energy supply mix is still negligible (IEA,
and large-scale, market-driven deployment of solar energy 2009). This study attempts to address why the role of solar
technologies world-wide still has to overcome a number of energy in meeting the global energy supply mix continues to
technical and financial barriers. Unless these barriers are be so a small. What are the key barriers that prevented
overcome, maintaining and increasing electricity supplies large-scale deployment of solar energy in the national
from solar energy will require continuation of potentially energy systems? What types of policy instruments have
costly policy supports. been introduced to boost the solar energy markets? Have
these policies produced desired results? If not, what type of
Keywords: solar energy; renewable energy economics and new policy instruments would be needed? A number of
policies; climate change studies, including Arvizu et al. (2011), have addressed
various issues related to solar energy. This study presents a
INTRODUCTION
synthesis review of existing literature as well as presents
economic analysis to examine competitiveness solar energy
Solar energy has experienced an impressive technological with fossil energy counterparts. Our study shows that
despite a large drop in capital costs and an increase in fossil
shift. While early solar technologies consisted of small-scale
fuel prices, solar energy technologies are not yet
photovoltaic (PV) cells, recent technologies are represented
competitive with conventional technologies for electricity
5
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
production. The economic competitiveness of these sun or the heat that sunlight generates (Bradford, 2006).
technologies does not improve much even when the Solar energy technologies can be classified along the
environmental externalities of fossil fuels are taken into following continuum:
consideration. Besides the economic disadvantage, solar
energy technologies face a number of technological, [1] Passive And Active
financial and institutional barriers that further constrain their [2] Thermal And Photovoltaic
large-scale deployment. Policy instruments introduced to [3] Concentrating And Non-Concentrating.
address these barriers include feed in tariffs (FIT), tax
credits, capital subsidies and grants, renewable energy Passive solar energy technology merely collects the energy
portfolio standards (RPS) with specified standards for solar without converting the heat or light into other forms. It
energy, public investments and other financial incentives. includes, for example, maximizing the use of day light or
While FIT played an instrumental role in 3 heat through building design (Bradford, 2006; Chiras,
Germany and Spain, a mix of policy portfolios that includes 2002). In contrast, active solar energy technology refers to
federal tax credits, subsidies and rebates, RPS, net metering the harnessing of solar energy to store it or convert it for
and renewable energy certificates (REC) facilitated solar other applications and can be broadly classified into two
energy market growth in the United States. Although the groups: (i) 4 photovoltaic (PV)
clean development mechanism (CDM) of the Kyoto
[II] SOLAR THERMAL.
Protocol has helped the implementation of some solar
energy projects, its role in promoting solar energy is very The PV technology converts radiant energy contained in
small as compared to that for other renewable energy light quanta into electrical energy when light falls upon a
technologies because of cost competitiveness. Existing semiconductor material, causing electron excitation and
studies we reviewed indicate that the share of solar energy strongly enhancing conductivity (Sorensen, 2000). Two
in global energy supply mix could exceed 10% by 2050. types of PV technology are currently available in the
This would still be a small share of total energy supply and market:
a small share of renewable supply if the carbon intensity of
the global energy system were reduced by something on the CRYSTALLINE SILICON-BASED PV CELLS
order of 75%, as many have argued is necessary to stem the
threat of global warming. The paper is organized as follows. [A] Thin film technologies made out of a range of different
Section 2 presents the current status of solar energy semi-conductor materials, including amorphous silicon,
technologies, resource potential and market development. cadmium-telluride and copper indium gallium diselenide
This is followed by economic analysis of solar energy
[1] Solar thermal technology uses solar heat, which can be
technologies, including sensitivities on capital cost
used directly for either thermal or heating application or
reductions and environmental benefits in Section 3. Section
electricity generation. Accordingly, it can be divided into
4 identifies the technical, economic, and institutional
two categories:
barriers to the development and utilization of solar energy
technologies, followed by a review of existing fiscal and [I] Solar thermal nonelectric
regulatory policy approaches to increase solar energy
development in Sections 5 and 6, including potential Solar thermal electric.
impacts of greenhouse gas mitigation policies on the The former includes applications as agricultural drying,
deployment of solar energy technologies. Finally, key solar water heaters, solar air heaters, solar cooling systems
conclusions are drawn in Section 7. and solar cookers2 (e.g. Weiss et al., 2007); the latter refers
to use of solar heat to produce steam for electricity
generation, also known as concentrated solar power (CSP).
CURRENT STATUS OF SOLAR ENERGY
Four types of CSP technologies are currently available in
TECHNOLOGIES AND MARKETS
the market: Parabolic Trough, Fresnel Mirror, Power Tower
Technologies and resources Solar energy refers to sources and Solar Dish Collector (Muller-Steinhagen and Trieb,
of energy that can be directly attributed to the light of the 2004; Taggart 2008a and b; Wolff et al., 2008). Solar energy
technologies have a long history. Between 1860 and the
6
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
First World War, a range of technologies were developed to in 2010. The remainder of the market almost entirely
generate steam, by capturing the sun‟s heat, to run engines consists of thin film technologies that use cells made by
and irrigation pumps (Smith, 1995). Solar PV cells were directly depositing a photovoltaic layer on a supporting
invented at Bell Labs in the United States in 1954, and they substrate.
have been used in space satellites for electricity generation
since the late 1950s (Hoogwijk, 2004). As illustrated in Figure 2b, a handful of countries dominate
The years immediately following the oil-shock in the the market for PV. However, a number of countries are
seventies saw much interest in the development and experiencing a significant market growth. Notably, Czech
commercialization of solar energy technologies. However, Republic had installed nearly 2 GW of solar PV by
this incipient solar energy industry of the 1970s and early December 2010 (REN21, 2011), up from almost zero in
80s collapsed due to the sharp decline in oil prices and a 2008. India had a cumulative installed PV capacity of 102
lack of sustained policy support (Bradford, 2006). Solar MW (EPIA, 2011) and China had a cumulative capacity of
energy markets have regained momentum since early 2000, 893 MW at the end of 2010. Two types of PV systems exist
exhibiting phenomenal growth recently. The total installed in the markets: grid connected or centralized systems and
capacity of solar based electricity generation capacity has off-grid or decentralized systems. The recent trend is strong
increased to more than 40 GW by the end of 2010 from growth in centralized PV development with installations
almost negligible capacity in the early nineties (REN21, that are over 200 kW, operating as centralized power plants.
2011). The leading markets for these applications include
Solar energy represents our largest source of renewable Germany, Italy, Spain and the United States. After
energy supply. Effective solar irradiance reaching the exhibiting poor growth for a number of years, annual
earth‟s surface ranges from about 0.06kW/m2 at the highest installations in the Spanish market have grown from about
latitudes to 0.25kW/m2 at low latitudes. Figure 1 compares 4.8 MW in 2000 to approximately 950 MW at the end of
the technically feasible potential of different renewable 2007 (PVRES 2007) before dropping to 17 MW in 2009 and
energy options using the present conversion efficiencies of bouncing back to around 370 MW in 2010 (EPIA, 2011).
available technologies. Even when evaluated on a regional The off-grid
basis, the technical potential of solar energy in most regions Concentrated Solar Power (CSP) The CSP market first
of the world is many times greater than current total primary emerged in the early 1980s but lost pace in the absence of
energy consumption in those regions (de Vries et al. 2007). government support in the United States. However, a recent
Current market status The installation of solar energy strong revival of this market is evident with 14.5 GW in
technologies has grown exponentially at the global level various stages of development across 20 countries and 740
over the last decade. For example, as illustrated in Figure MW of added CSP capacity between 2007 and 2010 While
2.A, global installed capacity PV (both grid and off-grid) many regions of the world, for instance, Southwestern
increased from 1.4 GW in 2000 to approximately 40 GW in United States, Spain, Algeria, Morocco, South Africa,
2010 with an average annual growth rate of around 49% Israel, India and China, provide suitable conditions for the
(REN21, 2011). deployment of CSP, market activity is mainly concentrated
in Southwestern United States and Spain, both of which are
Similarly, the installed capacity of CSP more than doubled supported with favorable policies, investment tax credits
over the last decade to reach 1,095MW by the end of 2010. and feed-in tariffs (Wolff et al. 2008). Currently, several
Non-electric solar thermal technology increased almost 5 projects around the world are either under construction, in
times from 40 GWth in 2000 to 185 GWth in 2010 .The the planning stages, or undergoing feasibility studies6 and
impetus behind the recent growth of solar technologies is the market is expected to keep growing at a significant pace
attributed to sustained policy support in countries such as (REN21, 2011).
Germany, Italy United States, Japan and China.
Solar PV By December 2010, global installed capacity for Solar thermal for heating and cooling The total area of
PV had reached around 40 GW4 of which 85% grid installed solar collectors (i.e., non-electric solar thermal)
connected and remaining 15% off-grid (REN21, 2010). This amounted to 185 GWth by early 2010 (REN21, 2011). Of
market is currently dominated by crystalline silicon-based which China, Germany, Turkey and India accounted for
PV cells, which accounted for more than 80% of the market 80.3%, 3.1%, 1.8% and 1.1% respectively. The remaining
7
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
13.7% was accounted for other 40 plus countries including policies), the deployment of solar energy in 2050 would
the USA, Mexico, India, Brazil, Thailand, South Korea, vary from 1 to 12 EJ/yr.
Israel, Cyprus, Ethiopia, Kenya, South Africa, Tunisia, and
Zimbabwe. Three types of solar collectors (i.e., unglazed, In the most ambitious scenario for climate change
glazed flat-plate and evacuated tube) are found in the mitigation, where CO2 concentrations remain below 440
market. By the end of 2009, of the total installed capacity of ppm by 2100, the contribution of solar energy to primary
172.4 GWth, 32% was glazed flat-plate collectors; 56% was energy supply could reach 39 EJ/yr by 2050.
evacuated tube collectors; 11% was unglazed collectors; and EPIA/Greenpeace (2011) produces the most ambitious
the remaining 1% was glazed and unglazed air collectors projections of future PV installation. IEA (2008) projects
(Weiss et al., 2011).. that CSP capacity could reach 380 GW to 630 GW,
depending on global targets for GHG mitigation14.In the
Therefore, we have taken the maximum and minimum case of solar thermal energy, the global market could
values of overnight construction costs for each technology expand by tenfold to approximately 60 million tons of oil
considered here from the existing studies to reflect the equivalent (Mtoe) by 2030 (IEA World Energy Outlook
variations in overnight construction costs, along with the 2006). A more optimistic scenario from the European
corresponding O&M and fuel costs, and applied a uniform Renewable Energy Council (2004) projects that solar
10% discount rate and 2.5% fuel price and O&M costs thermal will grow to over 60 Mtoe by 2020, and that the
escalation rate to cost data from all the studies. Since our market will continue to expand to 244 Mtoe by 2030 and to
focus is on economic analysis, taxes, subsidies or any types 480 Mtoe, or approximately 4% of total global energy
of capacity credits are excluded. Please see Table 2 for key demand, by 2040.It would be also relevant to envisage the
data used in the economic analysis. contribution of solar energy to the global energy supply
mix. According to EREC (2004), renewable energy is
The difference between the minimum and maximum values expected to supply nearly 50% of total global energy
for the levelized costs of solar energy technologies (and also demand by 2040. Solar energy alone is projected to meet
other energy technologies) are wide due mainly to large approximately 11% of total final energy consumption, with
variations in overnight construction costs and to different PV supplying 6%, solar heating and cooling supplying 4%
capacity factors. For example, the overnight construction and CSP supplying 1% of the total. Shell (2008) shows that
costs of grid connected solar PV system vary from if actions begin to address the challenges posed by energy
US$2,878/kW to US$7,381/kW (NEA/IEA, 2010). security and environmental pollution, sources of energy
Similarly, the overnight construction costs of CSP vary other than fossil fuels account for over 60% of global
from US$4,347/kW (NEA/IEA, 2010) to US$5,800/kW electricity consumption, of which one third comes from
(Lazard, 2009). The capacity utilization factor of simple solar energy. In terms of global primary energy mix, solar
cycle gas turbine varies from 10% (Lazard, 2009) to 85% energy could occupy up to 11% by 2050. Notwithstanding
(NEA/IEA, 2010). Furthermore, very different economic these optimistic projections, the existing literature identifies
lives are assumed for hydro, coal and nuclear plants. a range of barriers that constrains the deployment of solar
energy technologies for electricity generation and thermal
It is also interesting to observe the contributions of various purposes. These barriers can be classified as technical,
cost components (e.g., capital, O&M and fuel costs) to economic, and institutional and are presented Technical
estimated future growth of solar energy and barriers to barriers vary across the type of technology. For example, in
realizing growth Advocates of solar energy claim that it will the case of PV, the main technical barriers include low
play a crucial role in meeting future energy demand through conversion efficiencies of PV modules15; performance
clean energy resources. Existing projections of long-term limitations of system components such as batteries and
growth (e.g., until 2050) of solar energy vary widely based inverters; and inadequate supply of raw materials such as
on a large number of assumptions. For example, Arvizu et silicon. In the case of stand-alone PV systems, storage is an
al. (2011) argue that expansion of solar energy depends on important concern, as is the shorter battery life compared to
global climate change mitigation scenarios. In the baseline that of the module. Furthermore, safe disposal of batteries
scenario (i.e., in the absence of climate change mitigation becomes difficult in the absence of a structured
disposal/recycling process. With regard to solar thermal
8
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
applications, there are two main technical barriers. They are other instruments 16 . In fact, the strong growth in solar
limits to the heat carrying capacity of the heat transfer fluids energy markets, notably those for gridconnected solar PV
and thermal losses from storage systems (Herrmann et al. and solar thermal water heating, has been driven by the
2004; IEA 2006a). In addition, as seen in Table 3, there are sustained implementation of policy instruments in Europe,
constraints with regard to system design and integration as the United States and some developing countries to induce
well as operating experience for system optimization. For or require increased use of solar power. This section briefly
example, lack of integration with typical building materials, presents key characteristics of policy instruments that
designs, codes and standards make widespread application support solar energy for both electric and direct heating
of solar space and water heating applications difficult. In the applications. A large number of policy instruments have
case of CSP, technologies such as the molten salt-in-tube been implemented to increase power supplies from solar PV
receiver technology and the volumetric air receiver and CSP. The key instruments we highlight here include
technology, both with energy storage systems, need more feed-in-tariffs, investment tax credits, direct subsidies,
experience to be put forward for large-scale application favorable financing, mandatory access and purchase,
(Becker et al., 2000). Moreover, solar energy still has to renewable energy portfolio standards and public investment.
operate and compete on the terms of an energy Three rationales are commonly offered for utilizing these
infrastructure designed around conventional energy policies. One is to encourage the use of low-carbon
technologies . technology in the absence of a more comprehensive policy
for greenhouse gas mitigation, like a carbon tax. The
The economic barriers mainly pertain to initial system costs. disadvantage of this approach for greenhouse gas mitigation
Cost comparisons for solar energy technologies by suppliers is that it does not create incentives for cost-effective
and users are made against established conventional mitigation choices.
technologies with accumulated industry experience,
economies of scale and uncounted externality costs. Solar Investment tax credits Different types of investment tax
energy technologies thus face an “uneven playing field,” credits have been implemented in several jurisdictions
even as its energy security, social, environmental and health around the world to support solar energy. In the United
benefits are not internalized in cost calculations (Jacobson States, for example, the federal government provides an
& Johnson, 2000). Financing is another critical barrier. energy investment tax credit for solar energy investments by
Financial institutions consider solar energy technologies to businesses equal to 30% of expenditures on equipment to
have unusually high risks while assessing their generate electricity, to heat or cool and on hybrid solar
creditworthiness. This is because solar energy projects have lighting systems.
a shorter history, lengthy payback
However, these potential constraints can become binding Besides the investment tax credit, the US federal
only when other policies in place induce or require use of government provides and accelerated cost-recovery system
solar energy in order to overcome its higher cost. Even if through depreciation deductions: solar energy technologies
interconnection were to be simplified, grid based electricity are classified as five-year property. In addition, the federal
suppliers would still have to address challenges of Economic Stimulus Act of 2008, enacted in February 2008,
integrating significant quantities of episodic, non- and the American Recovery and Reinvestment Act of 2009,
dispatchable solar power into the grid (or the high cost of enacted in February 200919, provide a 50% bonus
current storage options). depreciation to solar energy technologies implemented
[5] Potential policy instruments to increase solar energy between 2008 and September 2010 and 100% bonus
development As illustrated earlier, by and large solar energy depreciation to solar energy technologies placed in service
technologies are not yet cost-competitive with conventional after September 2010. Residential tax payers may claim a
energy commodities at either the wholesale or retail levels. credit of 30% on qualified expenditures on solar energy
Therefore, any significant deployment of solar energy under equipment (e.g., labor costs for onsite preparation, assembly
current technological and energy price conditions 24 will or original system installation). If the federal tax credit
not occur without major policy incentives. A large number exceeds tax liability, the excess amount may be carried
of governments have decided to increase solar energy forward to the succeeding taxable year until 2016. The 30%
development, using a range of fiscal, regulatory, market and federal tax credits have provided significant leverage to
9
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
solar energy development in the United Sates, where state in India by 2012 has 90% of the system cost covered by the
governments have further supplemented federal tax government subsidy. In the case of below poverty line
incentives with their own programs. For example, the one (BPL) families, 100% of the system cost will be
megawatt CSP project (Sugarno project) installed by underwritten by the state governments (MNRE, 2006). The
Arizona Public Service (APS) in 2006, and the 64 MW rebate program for solar PV in California under the
Nevada Solar One parabolic trough CSP installed in California Solar Initiative (CSI) is another example of a
Boulder City, Nevada in 2007 have largely benefited from subsidy scheme for solar energy. The goal of the $3.3
the federal tax credit scheme (Canada et al., 2005). billion CSI program is to support the development of 3,000
In Bangladesh, the primary driver of the PV market is MW of PV in California by 2017 using rebates, also known
microcredit finance that led to the substantial growth of as Expected Performance-Based Buy-Down (EPBB) based
privately owned Solar Home Systems (SHS) (IDCOL on performance-based incentives (PBI).
2008). Investment tax credits schemes are criticized for their
impacts on government revenues. For example, the Public investment One of the main drivers of solar energy
investment tax credits in the United States would cost development in developing countries continues to be direct
approximately US $907 million over 10 years (Renewable public investment. Many developing countries host a
Energy World, July 31, 2008). The tax rebate system in number of government and/or donor-funded projects to
New Jersey would cost $500 million annually to reach the support solar energy under their rural electrification
goal; to avoid such high costs, the State Government programs. The rapid development of the PV industry and
decided that only systems 10 kW and smaller would qualify market in China is mainly due to government support,
for rebates, and systems larger than 10 kW would have to implemented through a number of rural electrification
compete in a tradable solar renewable energy credit (SREC) programs. National and local levels programs for rural
market (Winka, 2006). electrification were the major driving force for solar PV
market expansion in China in the late 1990s and early
Subsidies Direct subsidies (versus tax credits) are a primary 2000s. The major programs supporting PV programs are
instrument to support solar energy development in most Brightness Program Pilot Project, Township Electrification
countries. The subsidy could be investment grants or Programs, and China Renewable 31 Energy Development
capacity payments, soft loans (e.g., interest subsidies), or Project. The Brightness Program Pilot Project, launched in
output or production based payments. The Spanish 2000, plans to provide electricity to 23 million people in
government launched a program to provide grants of remote areas by 2010, using 2,300 MW of wind, solar PV,
between €240.40/m2 and €310.35/m2 in 2000 to solar wind/PV hybrid and wind/PV/diesel hybrid systems. Inner
thermal technologies. In India, capital subsidies initially Mongolia, Gansu and Tibet were selected as pilot provinces,
used, were funded either through donor or government and a RMB 40 million grant was allocated for the project
funds. Solar hot water systems, solar cooking systems and (Ma, 2004). The Township Electrification Programs,
concentrating solar cookers receive capital subsidies of, launched in 2002, installed 268 small hydro stations and 721
respectively, Rs. 1,500, Rs.1,250 and Rs.2000 per square PV, or PV/wind hybrid systems by 2005 (PMO, 2008). The
meter. The primary reliance on capital subsidies was overall investment was RMB 2.7 billion, and 15.3 MWp of
criticized because it incentivized capacity and not PV systems were installed during the life of the program.
necessarily production (Sharma, 2007). In response to these The China Renewable Energy Development Project
changes, government policy for PV in India has recently (REDP), also launched in 2002 and supported by a GEF
been revised. Currently, a production based subsidy offered grant, provided a direct subsidy of US$1.5 per Wp to PV
by the government has been supplemented by a combined companies to help them market, sell and maintain 10 MWp
feed-in-tariff of about Rs. 15/kWh for solar PV and solar of PV systems in Qinghai, Gansu, Inner Mongolia,
thermal projects commissioned after March 31st, 2011, for Xinjiang, Tibet and Sichuan. Developing countries initiated
up to 25 years (CERC, 2010). programs with the help of bilateral and multilateral donor
agencies are mainly facilitating solar energy development in
Remote village electrification programs receive even higher developing countries.
levels of subsidies. One such program that aims to establish Net metering Net metering is the system where
a single light solar PV system in all non-electrified villages households and commercial establishments are allowed to
10
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
sell excess electricity they generate from their solar systems Implementation challenges Sensitivity to policy costs is
to the grid. It has been implemented in Australia, Canada, more significant in developing country markets such as
United States and some European countries including India, China, Brazil, Philippines and Bangladesh than in
Denmark, Italy and Spain. In the US, for example, most net more developed economies. Thus, a common approach
metering programs are limited to renewable energy facilities toward renewable energy technologies, seen in developing
up to 10 kW. In California it could reach up to 1 MW. In countries, is to “rationalize development and deployment
Canada, it goes up to 100 kW in Prince Edward Island and strategy” (MNRE 2006) of renewable energy technologies.
500 kW in Ontario. For instance, India planned in its eleventh Five-Year plan
Most programs only require purchases up to the (2007-2012) to install 15,000 MW of grid-connected
customer’s total annual consumption, and no payment is renewable energy and it was widely believed that this
offered for any electricity generated above this amount. market expansion would be driven by wind, micro-hydro
They receive the retail tariff for their output. and biomass, as the plan recognized that solar PV would be
Other government regulatory provisions In many countries, an option only if the prices come down to levels comparable
governments have introduced laws mandating transmission to micro-hydro. More recently, the National Solar Mission
companies and electricity utilities to provide transmission or promoting solar power in India has been launched. The first
purchase electricity generated from renewable energy phase (2009-2013) targets increases in the utility grid power
technologies, including solar. In January 2006, China, for from solar sources, including CSP, by over a 1 GW
example, issued the Renewable Energy Law, mandating (ESMAP, 2011a). By 2022, 20 GW of solar capacity is to be
utility companies to purchase “in full amounts” renewable added in India. The approach to the renewable energy mix
energy generated electricity within their domains at a price in China, Philippines and Bangladesh represents similar
that includes production cost plus a reasonable profit. The priorities of rationalizing the policy costs.
extra cost incurred by the utility will be shared throughout
the overall power grid (GOC, 2005). Similarly, in Germany, In Brazil, as in other developing countries, the minimal
all renewable energy generators are guaranteed to have policy cost is ensured via technology-specific and reserve
priority access to the grid. Electric utilities are mandated to energy auctions (ESMAP, 2011b) as the cheapest renewable
purchase 100% of a grid connected PV system output, energy projects are implemented first. Solar PV is
regardless of whether the system is customer-sited or not. recognized as serving a niche market that is very important
Government regulations mandating installation of solar in developing countries – electrification of rural and peri-
thermal systems is the main policy driver for the urban areas that do not yet have access to the electric grid.
development of solar thermal applications in many countries There are vigorous efforts to expand the market for Solar
(e.g., Spain, Israel). The growing role of private finance has Home Systems (SHS) as a means toward rural
reduced the role of fiscal policy drivers in the overall electrification. However, rural and peri-urban areas are
financing mix for solar power, and capital subsidies have characterized by low income households that may not be
been ratcheted down substantially, except in exceptional able to afford solar energy technologies unless they are
cases such as „remote villages and hamlets‟. India now substantially subsidized. Until now, the approach is to
relies on a mix of mechanisms including various tax and provide subsidies either via government funds or through
generation-based incentives, renewable purchase international donors. However, a subsidy is a short-term
obligations, capital subsidies and accelerated depreciation. support, not a long-term solution. CSP and solar water
Yet, the accumulation of incentive programs and the failure heating are comparatively cheaper than solar PVs. These
to coordinate them is thought to hinder the development of could be cost competitive with conventional fuels if existing
renewable energy resources in India as it results in subsidies to the latter are reduced or removed. However,
unnecessary delays and conflicts (ESMAP, 2011a). In the fossil fuel subsidies are politically sensitive in many
Philippines, the portfolio of policy instruments includes countries and their removal might take time. Thus far, CSP
duty-free importation of equipment, tax credits on domestic has not found much success in a developing country
capital equipment and services, special realty tax rates, context. Unlike Solar PV, CSP is limited to utility scale
income tax holidays, net operating loss carry-over, applications and as such is often out of consideration in the
accelerated depreciation and exemption from the universal traditional utility generation market due to current prices.
charge and wheeling charges (WWF, 2008) Thus, developing country governments have adopted a
11
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
cautious policy approach to this market, focusing more on projects that are already less attractive compared to their
pilot scale projects, as with grid-connected solar PV. competitors.
Through its National Solar Mission, India is the first
developing country to take a step towards the installation of CONCLUSIONS
CSP capacity. Unlike in electric applications, solar heating
applications enjoy limited policy support as instruments like Physically, solar energy constitutes the most abundant
FITs and RPS are not applicable for heating applications. renewable energy resource available and, in most regions of
Moreover, it is more difficult to measure and verify solar the world, its theoretical potential is far in excess of the
water heating performance, and so performance-based current total primary energy supply in those regions. Solar
incentives are harder to enact. energy technologies could help address energy access to
rural and remote communities, help improve long-term
Solar energy development under policies for climate change energy security and help greenhouse gas mitigation. The
mitigation Greenhouse gas mitigation policies and activities market for technologies to harness solar energy has seen
help support renewable energy development, including solar dramatic expansion over the past decade – in particular the
energy. Various incentives and mandates designed to trigger expansion of the market for grid-connected distributed PV
GHG mitigation have helped promote solar energy in systems and solar hot water systems have been remarkable.
industrialized countries. In the case of developing countries, Notably, centralized utility scale PV applications have
the Clean Development Mechanism (CDM) under the Kyoto grown strongly in the recent years; off-grid applications are
Protocol has been the main vehicle to promote solar energy now dominant only in developing markets. Moreover, the
under the climate change regime. The CDM allows market for larger solar thermal technologies that first
industrialized countries to purchase GHG reductions emerged in the early 1980s is now gathering momentum
achieved from projects in developing countries, where with a number of new installations as well as projects in the
reducing GHG emissions is normally cheaper than in planning stages. While the costs of solar energy
industrialized countries. As of July 2011, there are 6,416 technologies have exhibited rapid declines in the recent past
projects already registered or in the process of registration and the potential for significant declines in the near future,
under the CDM. Of these, 109 projects are solar energy the minimum values of levelized cost of any solar
projects with annual emission reduction of 3,570,000 tons of technologies, including tower type CSP, which is currently
CO2. Out of these 109 projects, 89 are located in China, the least costly solar technology, would be higher than the
South Korea and India. However, the solar energy projects maximum values of levelized costs of conventional
account for a very small fraction (< 1%) of total emission technologies for power generation (e.g., nuclear, coal IGCC,
reductions from the total CDM projects already registered or coal supercritical, hydro, gas CC) even if capital costs of
placed in registration process (UNEP Risoe, 2011). solar energy technologies were reduced by 25%. Currently,
this is the primary barrier to the large-scale deployment of
One reason for the small share of solar energy projects in solar energy technologies. Moreover, the scaling-up of solar
the global CDM market is cost. As noted, solar energy energy technologies is also constrained by financial,
technologies remain costly, and at present they are not technical and institutional barriers. Various fiscal and
economically competitive with other CDM candidates such regulatory instruments have been used to increase output of
as wind power, small hydro, landfill gas, and biomass solar energy. These instruments include tax incentives,
cogeneration. The high upfront capital investment cannot be preferential interest rates, direct incentives, loan programs,
recovered even if the revenue generated from sales of construction mandates, renewable portfolio standards,
emission mitigation at standard (non-subsidized) rates is voluntary green power programs, net metering,
included along with revenue from electricity sales. In interconnection standards and demonstration projects.
addition, solar energy projects to date come in smaller sizes However, the level of incentives provided through
than other CDM options; transaction costs incurred in these instruments has not been enough to substantially
various steps during the CDM process (e.g., validation and increase the penetration of solar energy in the global energy
registration of projects and monitoring, verification and supply mix. Moreover, these policy instruments can create
certification of emission reductions) do not vary that much market inefficiencies in addition to the direct costs of
with project size and are often prohibitive for solar energy requiring more- costly electricity supplies to be used. While
12
Impact Factor Value 3.441 e-ISSN: 2456-3463
International Journal of Innovations in Engineering and Science, Vol. 2, No.10, 2017
www.ijies.net
REFERENCES
13