Successful efforts to meet local content requirements could, in the longer-term, see India emerge as a manufacturing hub for solar block components.

By Jerri-Lynn Scofield

India’s CSP developers currently have no choice but to source components for both the solar field and thermal storage systems from abroad, given that European, Israeli, and US companies are the sole suppliers of the necessary technology.

Phase 1 of the Jawaharlal Nehru National Solar Mission (JNNSM) imposes a 30% local content requirement on successful project bidders.  Seven developers in January entered into purchase power agreements to supply 470 MW of CSP-generated power, via to-be-constructed plants, three for 100 MWs, three 50 MWs, and one 20 MW.

“Personally I look at the solar mission as supplying more than clean power,” says Satyendra Kumar, Chief Technology Officer for Lanco Solar Private Limited, a successful phase 1 bidder. “This mission should provide an opportunity to create local wealth, local jobs, and to create local knowledge, as that is necessary for reducing the costs further.”

Indian engineering companies have a great deal of experience in supplying power block components, such as steam turbines, for traditional power plants.  Yet currently, even steam turbines for CSP plants must be sourced from abroad. No Indian producer yet has a track record in manufacturing the appropriate variable speed turbines in sizes required for the phase 1 projects.   Local manufacturing might be appropriate for such turbines in the 10 MW range, but not for the 50 or 100 MW sizes required.

“The Indian turbine manufacturers are capable of supplying these turbines with a bit of modification, but for the first projects, the developers just want to get it right,” and thus will turn to foreign manufacturers, says Lanco’s Kumar.

Among Indian companies, Bharat Heavy Electricals Ltd (BHEL) is best poised to supply these components in the longer term.  BHEL has however entered into a technical tie up agreement with Abengoa and it’s uncertain how this will affect its ability to supply turbines to Indian CSP developers.  Triveni Engineering is another potential domestic turbine supplier.

“Given the short time frame for implementation, their emphasis will probably be on getting their projects up and running rather than on indigenisation,” says D.V. Satya Kumar, Managing Director, Shri Shakti Alternative Energy Ltd.   Nonetheless, he noted that most developers are confident of achieving the necessary local content, and Gopal Lal Somani, President, ERA Energy Ltd, observes that some developers are targeting 50% local content to be price competitive.  

Different companies will approach the local content requirement differently. “Basically, you’re looking at structures whatever they are – in the power block and in the solar field,” says Lanco’s Kumar.  Possible opportunities include insulating the solar field, supplying steel (for both plant and the solar steam generator), assembling imported mirrors, sourcing and constructing critical piping, and supplying valves and thermal storage tanks. 

Two way street

In the longer term, India has much to offer to CSP technology companies. “We’re trying to convince foreign manufacturers to bring their technology manufacturing here to India,” says Lanco’s Kumar.  Indian manufacturing offers a significant cost advantage, and the country has the technological expertise to staff these facilities.  

In addition, India has the potential to capture huge market from Middle East and North African countries, since India has a stable political system, good infrastructure facilities, ports, and technical manpower, says Ramana Reddy, Senior Project Manager-Energy  for KfW, New Delhi.

Further successful indigenisation requires policy changes, at both the state and national level.  Policy shifts such as easing FDI restrictions on manufacturing, plus targeted tax breaks, could help remedy India’s current lack of capacity to manufacture CSP components, noted Bajrang Lal  Agrawal, Chairman and Managing Director of Godawari Power and Ispat Limited, at a recent conference in New Delhi hosted by CSP Today. 

Moreover, the government of India should initiate a coordinated national programme for self-sufficiency in CSP materials and components, proposed Dhruv Batra, CEO of Cargo Power & Infrastructure, in a presentation at the same conference .  Securing sufficient supplies will be necessary to ensuring sustained growth of the industry. India’s Ministry of New and Renewable Energy (MNRE) should also undertake a focused programme of R&D into CSP technologies, so that the technology can better compete, on cost and efficiency terms, he said.   

Batra further called for better scientific assessment of solar resources throughout India, so developers may optimise investments in solar energy technology. The MNRE, he suggested, should accordingly create and make available in the public domain, a web-based interactive digital resource map. Agrawal also highlighted the problem of  lack of solar data.

India’s ability to capture global CSP market share could also be enhanced by appropriate government policies, including helping foreign governments to frame solar or renewable energy policies including feed-in-tariffs, purchase power agreements, strong payment mechanisms, and other incentives for setting up solar plants. “These policy steps could help India become a truly global leader in the solar industry,” suggests Reddy. 

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