Sunpower is for free
FOR ONCE, Indians can look forward to the sun doing the out-of-character job of cooling them. A new device -- a "suncap fan" that brings visions of a whirligig attached to a dunce"s cap -- that might soon hit the country"s overheated cricket stands will be powered by solar photovoltaic (spv) cells. Other proposed spv cell-powered devices in line include car ventilators and water pumps. These gizmos will work most efficiently on searing summer days, when power cuts routinely bring crippling brownouts.
The potential Indian market for spv systems and devices is immense but demand isn"t, largely because of the public"s lack of exposure to unfamiliar technology. The Rs 165-crore ($55 million) investment plan of the ministry of nonconventional energy sources (MNES) to create a demand was made possible by a $42 million World Bank-Global Environment Facility loan exclusively for developing this market (See table).
"This is the first time the World Bank is financing the market development of a range of consumer durables. To accommodate small users, the bank has relaxed procurement guidelines," says C Parasuraman, the World Bank"s designated consultant to the Indian Renewable Energy Development Agency (IREDA), the MNES wing that disburses funds for the market development programme.
The minimum loan amount has been lowered to $10,000, in anticipation that 80-90 per cent of the new products would be in this range. The IREDA will operate a revolving fund, which will establish a system of product supply, delivery, after sales and financing to support marketing spv products on a purely commercial basis.
"These systems are only for those who can buy them," says IREDA managing director V Bakthavatsalam. "Experience has shown that only privately owned systems will last, because when people invest their own money in spv systems, they pay attention to its maintenance."
The present plan, launched in January, marks a shift in the MNES policy of subsidising spv systems like solar lanterns and solar water pumping systems. Although the spv industry attained a turnover of Rs 55 crore in 1992-93, the government has been the largest single buyer of spv systems, installing 70 per cent of these devices through subsidised promotional and demonstration programmes.
An important aspect of the marketing strategy will be to instill confidence about the quality of spv devices in people who set little store by any domestic system that doesn"t plug into a national power grid. "We have to build up an image to market spvs, which is a volume-based product. The objective is repeat purchase by the users," says Tara Sinha of Tara Sinha McCann Ericcson Pvt Ltd, (TSME), advertising and marketing consultants assisting Admar Services Ltd. The advertising and marketing programme will target the large and technologically more amenable urban markets first, then move to small urban and economically better off rural areas, and in the final stages move to the poorer, unelectrified rural areas.
The Indian photovoltaic industry today has the capacity to produce 6.5 megawatt peak output of electricity (mwp) of modules -- smallest environmentally protected assemblies of interconnected solar cells -- annually, with 3.2 mwp of solar cells being imported. Demand from MNES programmes together with orders from the department of telecommunications were estimated at 6.0 mwp in 1993-94. The market development programme will finance spv systems and devices equivalent to 2.5 mw capacity over a period of 5 years. These systems will primarily be for low load operations such as lighting and home appliances like radios and TVs.
"A mass market for spv systems is still a myth," says Soumitro Ghosh, director research of Admar. "Spv systems, like other nonconventional energy systems, have been caught in the vicious circle of high cost and low demand. The technology has so far depended on MNES subsidies for promotion, and as the manufacturing capacity is low, the unit cost has been high."
Take the example of the water pump for irrigation: a solar pump of just 500 watts capacity costs Rs 35,000, whereas the commonly used electric or diesel pump with a 3.75 kw (5 horse power) capacity costs between Rs 10,000 and Rs 15,000. A spv pump would cost over Rs 2.5 lakh. To compete with low-cost conventional grid systems, the MNES will have to extend subsidy upto 70 per cent.
In a report on the market development of spv systems, the World Bank notes that the cost remains high due to low-capacity utilisation in module manufacture and due to the low volumes of production. The demand for spv systems can be increased and prices made affordable by providing finance to consumers who are dissuaded by the high initial prices.
The spv industry in India is still in its relative infancy and manufacturers are unsure of the new direction the industry is taking. Says P V Sonti, managing director, Sairam Solar Systems Ltd, "A lot depends on the state of fiscal incentives and concessions (such as low rates of interest on loans) given by the government. High custom duties continue to be a deterrent to cost reduction of spv systems." Although duties on wafers and other raw materials were reduced to 40 per cent in April 1993, the industry still considers them too high.
Poor financing
Besides IREDA, no financial institution provides loans or credit to manufacturers and users of spv systems. But even IREDA criteria are reported to be discouragingly tough: application procedures are cumbersome and require strict guarantees and securities.
This could be crippling, in both manufacturing and marketing terms, since, in any case, the poor field functioning of some of the MNES" earlier systems in rural areas and the problems of installing them in difficult terrain has given them an unreliability certificate they could without. Project officials who inspected these systems found fixtures and components missing, batteries relocated to operate television sets and solar panels adapted as window shades.
Reliability has to be at the heart of the programme. Deplorably, says C S Sthalekar, national sales and marketing manager, OSRAM India Ltd, "Little attention is paid to the quality of low value electronic components of spv units. So while the module itself may be functional, the system fails."
Faced with such technological mortality, the one recourse left to ensure public acceptance is to name the product seductively: which is why Admar suggests that the spv scheme be called Suryashakti. Sunpower, after all, is for free.