The biggest challenge that Solar Energy faces today is the alternative conventional energy sources that are cheaper in terms of consumption measures (Rupees per KWh).Electricity generated from Solar Energy is costlier compared to that produced from coal-fired power plants. Government and enterprises are working on producing cheaper solar cells to reduce cost of usage. Although the price of Solar Photovoltaic technology has decreased in the last years, it is still not a feasible solution for large scale power generation purposes. In India, the average cost of Photovoltaic modules is around Rs. 2 lc/KWh and the cost of electricity generation of electricity from Solar Photovoltaic and Solar thermal route is in the range of Rs. 12 -20 per kWh and Rs. 10 – 15 per kWh respectively. The electricity produced this way is four-five times costlier from that produced from conventional sources. Advancement in technology is required to reduce this gap.
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The manufacturing process needs to be more cost- effective since the Solar Photovoltaic conversion of electricity is a high-technology process demanding high level of skills and expertise. Companies are allocating special funds for research and development in the industry to encourage innovations to improve the process. Since the field is a relatively new one with less knowledge in the field, new companies face challenges in coping up with the existing players in the field.
India is suitably located to receive sufficient sunlight all round the year. However there are a few places which do not receive enough solar energy throughout the year, which affects the cost of production. Areas which receive huge amounts of rainfall and are clouded for most parts of the year, automatically get ruled out as prospective sites for Solar Energy generation.
Another major challenge that solar energy faces is storage of the generated power. Electricity from Photovolatic cells cannot be generated during the night and during cloudy days and hence suitable measures have to be adopted to store the energy produced during the other times of the day. Another major disadvantage is that access on a short term basis cannot be predicted. Since India is located near to the equator the incoming radiation fluctuate a little every year, it is however difficult to predict the incoming radiations on a day to day basis. Apart of this there are seasonal variations which cause the supply and demand to grow out of phase. It is thus imperative that Solar Energy cannot be relied upon as the only source of electricity for potential uses like space heating, till proper storage measures are invented. It is also difficult to store energy since it also increases the cost of production and installation. Only once this issue gets resolved can solar energy actually compete with other existent sources of energy.
ENVIRONMENTAL COSTS
Due to absence of proper government regulation ,local government and individuals are skeptical about the effect that setting up of big solar power plants will have on the individuals and environment. A large scale solar power plant typically requires approximately one square kilometer for every 20-60MW generated.
RAW MATERIAL AND WASTE PRODUCTS
Some of the materials ( like Cadmium) used for producing Solar PV cells are hazardous and other raw materials like plastics used for the packaging of the cells are non-biodegradable, thereby impacting the environment. Although some of the waste generated during the manufacturing process is recyclable (silicon), not all other materials are recyclable and disposal of the same is a challenging process.
AESTHETICS AND DESIGN
Another barrier to wider adoption of solar cell and solar module products and systems among commercial and residential consumers is aesthetics and design. Consumers have resisted solar products for aesthetic reasons. Established solar products are heavy, rigid, fragile and non-modular. Solar cell and solar module manufacturers can improve aesthetics by developing products that can be more attractively integrated into building structures, and that are lighter, flexible and modular and hence more feasible.
Growth in future and driving factors
Concentrated Solar Vs Photovoltaic Solar
Solar energy utilization technologies can be broadly classified into two categories as
Concentrated Solar Technology
Photovoltaic Solar Technology
In Concentrated Solar Technology the solar energy converts heat liquids into steam, which is then used to drive turbines to produce electricity, heating and cooling purposes, providing hot water etc. In PV Solar, solar panels are used to produce electricity. The Concentrated Solar technology provides a good alternative to PV solar, one that is less expensive and more versatile.
Benefits of concentrated solar technology are:
It uses existing resources like generators, piping and mirrors. Due to which the production costs are much lower than PV solar
In producing solar energy no hazardous materials are used. Thus it is free from production hassles that could arise due to future government laws or policies.
It can also store the heat that is generated during the day, and use it at a later time when the electricity is needed. Storing heat is much more efficient than most forms of storing electricity, and does not require expensive equipment or large tracks of land.
Due to the aforementioned benefits Concentrated Solar Technology is currently a more sought after method. But the potential for PV Solar Technology is higher and is being worked over across all countries.
Government incentives
Major percentage of the solar energy production has been backed by the government world over. Few of the government incentives in the following ways are:
FIT (mainly in europe)
Direct Subsidy on panels
Renewable Portfolio Standards (RPS, in US)
ITC (Investment tax credits, in US)
Some of the goals with respect to solar energy of different countries driven by government initiatives are:
The European Union has linked goals to get 20% of its energy from clean sources by 2012.
China’s Renewable Energy Law aims to raise the total percentage of renewable energy used in the country to 15% by 2020.
The U.S. Stimulus Bill of February of 2009 included $60 billion in loan guarantees for companies building solar and wind plants with the goal of doubling renewable energy production from 2009 to 2012.
In June of 2008, Germany approved a law cutting its solar subsidies by 10%. Further, under the law subsidies will fall another 8%-10% each year for the next three years.
The Spanish Government cut its solar subsidies by 30%.
Renewable energy demand
Shifts in renewable energy demand are a major driver for the solar market. Two major drivers of this shift are climate change and peak oil.
Climate Change – With more people than ever being aware of global warming and its potential effects, and fear of the repercussions of a carbon-based energy scheme is driving consumer demand for alternatives like solar. With increasing number of people being aware of global warming and its harmful effects, rising fear caused due to carbon based energy production, the demand for alternative energy resources are in demand. The number of awareness campaigns to promote the use of alternative resources has increased tremendously over the past few years and will continue to rise in the future. Wind and Solar energy are the first potential step taken into consideration.
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Peak Oil and Energy Independence – The ever rising oil prices and the scarcity of finding the mines and oil reserves are a growing concern. It is predicted that the oil resources will dwindle to such an extent that the growth of any country will be a standstill if measures are not taken today to curtail the dependence. Furthermore, a large part of the world oil supply can be found in politically turbulent countries; with OPEC having dominant control over world oil supply (and, therefore, prices), many countries desire energy alternatives in order to break dependence on geopolitically unstable nations.
Technology and Silicon Supply
Silicon was previously used extensively by the semiconductor industry. But, with the advent of solar power and its rapid growth the demand for them has increased exponentially, resulting in an under-supply of silicon unable to meet the current demand. Thus the higher prices in silicon mean higher production costs for solar companies – and lower margins. For a sustainable growth and control in costs of production in the future the demand-supply equilibrium must be in check.
In recent years the technical advancements in the field of solar power has been rapid and tremendous. Everyone across the value chain, manufacturers and suppliers are working towards producing more solar energy out of the existing solar equipment. Advancements have included increasing cell energy efficiency, using thinner wafers, and increasing generating power in low-light (generation of energy even on a cloudy day). The advancement in two new manufacturing processes namely string-ribbon technology and thin-film technology, designed to drastically reduce the silicon required to make PV cells, could dramatically decrease the cost of new PV cells.
The use of a new nanotechnology based approach using Tetrapod Quantum Dots (TQ-Dots) is being considered. It is an economical alternative to replace the silicon wafer based solar cells with flexible TQ-Dot solar cells and has the advantage of generating electricity from UV and infrared wavelengths allowing generation 24/7.
Government Regulation
As the solar industry continues to grow at 25% per annum, the government is faced with the challenge to regulate the industry to allow for equitable distribution of the industry benefits. The Union Ministry has set up a separate Ministry of Non-Conventional Energy Sources later renamed as Ministry of New and Renewable Energy. The government is trying hard to bring India to the number 1 level by introducing grid based incentives and providing concession at various levels of manufacturing and distribution in its recent budget 2010-11.
Effect on the Environment: There is an ongoing debate on how Concentrated Solar Plants especially inare affecting the environment. There is a concern how the use of vast amounts of public land for Solar Energy development will affect local inhabitants. Local Government and Environmental bodies have raised concern for reliable regulatory measures to be setup to understand the affect on the operations of such large plants on the environment. It is expected that the government will frame certain ‘special energy zones’, where concentrated solar plants will be setup.
Permitting: The permit fees to set up Solar Plants varies in different areas in the countries, which causes variations in the setup price causing a dilemma in the minds of prospective investors.The cost of Solar Installation in a city varies from Rs.15,000 to Rs. 50,000.Many countries that used to face such issues are now migrating to a uniform permit fees system to encourage investment in this field.
Regulating Solar Energy Providers: As part of JNNSM, government has dedicated NTPC VidyutVyapar Nigam, for the purchase of Solar Energy by independent solar plants, the prices of which are fixed by the Central Regulatory Electricity Commission for a given period of time.
The power distribution companies will purchase the power generated from these plants at the prices set by the regulator.They would also follow the below mentioned norms:
CERC has announced tariff of Rs. 18.44 per unit for solar PV power and Rs. 13.45 per unit for solar thermal power for 25 years;
Zero or concessional duty to be applied on import of some specific items;
Zero Excise duty on manufacture of many solar energy devices within the country;
NTPC VVN will purchase solar power for a period of 25 years at fixed tariff announced by CERC;
CERC will review the costs every year and fix tariff accordingly for new projects.
Union Budget 2010-11: Government has announced an allocation of $10bn for the Jawaharlal Nehru National Solar Mission. The budget also provides incentives to private solar companies by reducing customs duty on solar panel by 5% and exempting excise duty on photovoltaic panels.
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