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Green Business Ideas – Applying Solar OPEX model on Green Buildings will make Grid parity easy.

09 Mar

The Economy is on a slowdown due to negative growth in all sectors in India. Some of it can be attributed to the Global mayhem. To be honest, it could be seen as  a good news. Especially for the Environment and advocates for Sustainable living. World over, humans follow one simple rule. When the going is good, why bother to stop and listen to saner voices ? However, post the Stern Review & SREX report, thing seem to be going towards a better direction. The road to Rio+20 may turn out to be a happy one, should this downtrend in economy continue till the Rio summit, as more and more Economists would advocate to overhaul the present Crony Capitalist model and turn it into Eco-Capitalism and the benefits of Green Business would come to fore. Although the RET (renewable energy technology) industry would wish me luck, most trade guru’s would laugh at my opinion. It would be challenging to prevent a roll back on gains made till date, at Rio+20. As because this is precisely the argument which would come forth -‘The World economy can not afford to go Green’, would be their argument laughing at any new idea brought forth. But they were also laughing at various other predictions of world-class economists and other saner voices before the Lehman Brother episode. It is the most foolish presumption and many, far more intelligent than me, would also agree.

The World Economy needs a review. A fresh approach, when unprecedented Climate change threatens all; institutions like CAN-International, Green Peace, WRI  and all others must grow and spread their influence of good-sense across Nations.  In the UNFCCC‘s Durban summit their stellar performance was evident in getting something out of nothing at all.

America has come up with a new way of conducting Business – ” Benefit Corporation“; I loved the word and the meaning therein – A company for profit of self through Sustainable practices benefiting the environment and  thus the community as a result. And Europe; when unprecedented economic hardships threaten the fabric of society they have come of with wonderful thoughts like  OPEX -Solar. With German and French companies leading the way. Their presence in India will be felt soon.

In my avatar as a Energy Efficient Building consultant, popularly known as Green Building consultant, (and fashioning my firm as a “benefit corporation” henceforth) crossing that last hurdle of having Renewable Energy or Green Power installed, which is not Solar Thermal but Solar PV always proves to be a challenge. While exploring potential in other RE formats, other than wind, has not truly taken off yet.  This led me towards a Green Business Idea. Solar PV in OPEX RE format in all  Certified Green Buildings projects .

India practices two certification programs. One is GRIHA, born out of the NAPCC’s  Mission on Sustainable Habitat and guided by the international think tank TERI. The Eight stated missions of NAPCC is the best hope of India standing tall in the Climate change negotiations at UNFCCC. GRIHA takes into account the Union governments commitment to sustainable habitat across all sections of society both Urban and Rural.

The other is by the business people for the people. CII’s  indigenous version of USGBC’s LEED. Guided by IGBC from its headquarters in Hyderabad, India’s first LEED Platinum Certified building, various certification programs have been dished out.

Both rating system have many common goals but with divergent approach. Let us first identify the common ground each rating possesses with regards to RET   ( renewable energy technology ).

Under Green Rating for Integrated Habitat Assessment one requires -

Commitment: Meet energy requirements for a minimum of 10% of the internal lighting load (for general lighting) or its equivalent from renewable energy sources (solar, wind, biomass, fuel cells, etc). Use renewable energy sources in buildings to reduce the use of conventional/fossil-fuel based energy resources.

Commitment: Ensure that a minimum 50% of the annual energy requirement for heating water (for applications such as hot water for all needs, like for canteen, washing, and bath rooms/toilets, except for space heating) is supplied from renewable energy source.

Under Indian Green Building Council we have many subdivisions, but energy from RET is more or less common, let’s briefly look at the various certification programs and what they say on RET under LEED.

LEED India NC Rating :

7.5%  RE onsite Assess the project for renewable energy potential including solar, wind, geothermal, biomass, hydro, and bio-gas strategies. When applying these strategies, take advantage of net metering with the local utility.

Green Power Demonstrate that the company has installed green power equivalent to 50% of the total energy requirement of the building, anywhere in the country. This investment should come because of the rated building and should be 50 % of the building consumption.

LEED India CS Rating:

1 -35% RE onsite Engage in at least a 2-year renewable energy contract to provide at least 35% of the core & shell building’s electricity from renewable sources, as defined by the Center for Resource Solutions’ Green-e Energy product certification requirements. Supply a net fraction of the building’s total energy use (as expressed as a fraction of annual energy cost) through the use of on-site renewable energy systems. Use on-site renewable energy systems to offset at least 1% of the building energy costs. Substantiate the project’s compliance on this aspect by expressing the cost of energy produced through renewable sources as a percentage of the building’s total energy cost, annually.

Green Power Demonstrate that the company has installed green power equivalent to 50%of the total energy requirement of the building, anywhere in the country. This investment should come because of the rated building and should be 50 % of the building consumption.Estimate the energy needs of the building on annual basis. Install green power plants in the country, which meets the 100% of the total energy requirement of the building. Green power is derived from solar, wind, geothermal, biomass, or low-impact hydro sources.

Green Homes Rating:

On site RE Install renewable energy systems for at least 5% of the total connected load of the building.

Green Township Rating:

On Site RE Install renewable energy systems to generate power through solar, wind, bio-mass, bio-gas, biodiesel or any other forms of renewable energy so that their installed capacity is at least 20% of the annual energy consumption in areas under the developer’s scope.

Green Power Demonstrate the project has invested in off-site green power for at least 50 % of the total annual consumption in areas under developer’s scope. Estimate the energy needs of the project on annual basis. Install off-site green power plants which meet at least 25 % of the total energy requirement of the project. Green power can be derived from solar, wind, geothermal, biomass, or low impact hydro sources.

Green SEZ Rating :

On Site RE Install renewable energy systems to generate power through solar, wind, bio-mass/ bio-gas, or any other forms of renewable energy for at least 5% of the annual consumption (in  developer’s/ co-developer’s scope).

 Green Power Demonstrate the project has invested in off-site green power for at least 25% of the annual energy consumption in developer’s scope for at least 2 years. Estimate the energy needs of the building on annual basis. Install green power plants offsite which meet the 25 % of the total energy requirement of the building. Green power can be derived from solar, wind, geothermal, biomass, small hydro power plants, etc.,

Green Co Rating :

 On Site RE both Electrical & Thermal To develop concrete action plan for increasing the share of renewable energy generation / utilization of the company. Install on-site renewable energy systems to generate electrical energy through solar, wind, biomass, bio-gas, bio-diesel, or any other forms of renewable energy and / or generation of thermal energy (expressed as an equivalent of electrical energy) to cater to the total energy requirement of the company. Availability of renewable energy resources is to be assessed and feasibility studies conducted before deciding on on-site installations. Green power can be sourced from solar, wind, bio-mass, bio-gas, bio-diesel or small hydro sources or any other accepted sources of renewable energy.

As one can see, the potential of bringing in RET was enshrined, it was only the crazy economics we all follow that makes RE unaffordable. Frankly I could never understand this business of applying RoI selectively. I have argued this in my earlier post in detail, so I will concentrate more on the Green Business Idea here.

English: PS20 and PS10 in Andalusia, Spain

In OPEX -SPV or operational expense on solar photo voltaic; the RESCO (renewable energy service company) is contemplating  to sell the power generated, directly to the client instead of routing it though the established Energy distribution companies as was mooted in the NVVM Scheme . Although the generation through SPV is still costly, the RESCO are looking at covering part of their expense via the REC Schemeand raise money through standard market driven investments. Hoping to breakeven through economy of scale. A bold move which needs to be lauded, yet treated with caution.

Lets now examine the advantages and pitfalls the model has.

OPEX Solar would create the economy of scale which any venture requires. This  I recommend, should happen by attempting to pick up the lowest hanging fruit. That is by becoming the Utility provider to the Green Buildings which are already registered in India. As shown above almost all the certification types require RE or Green Power. As the commitment is already made to build green and with the criteria already in place, the RESCO’s  effort remains only to do the math and give a viable PPA model.

As the rating covers almost all sectors the foot-print is huge. However, in each of the ratings there would be possibilities and problems unique to it.

Let us start with Green Homes -

Residences are the lowest hanging fruit. Already a firm  “Mera Gao Power” providing roof-top model at a very economical rate to rural India which the large power utilities find unfeasible. {Large Hydro dams and Thermal Power  plants are set up displacing 100’s of villages; that they find the very same villages resettled ( if at all ) beside it, to be too remote to be provided power with, is perhaps a unique Indian policy many of us with low intelligence find hard to understand.} However what has been the curse now can be a boon to the villages and RESCO’s especially the ones which can provide power in OPEX model. Simply because the Carbon Credit it would generate over and above the REC would not only make this system of business viable, it will create a resurgent India. Perhaps this can be done in other countries too.

Now what if this is brought into the residential blocks within town & cities?Many face power-outages during summer. It would work perfectly against the diesel abatement policy India has in place.  But if roof-top Solar is provided in OPEX model, the problem could be administrative. How would the RESCO collect the tariff, should a housing society not pay its utility bill on time, or a member fails to pay his/her utility bill ? Would the RESCO have the authority and immunity from harm / legal persecution the Municipal authorities have, to initiate disciplinary action? The same problem could be from commercial centres too.

Further, large housing societies need high amount of power, however the present solar PV modules have low plant efficiency thus require large amount of space and are heavy too. Therefore the required amount of power may not get generated via-roof top and off-site green power may be needed.

In this the problem is open access to the grid, which the state owned power utility companies find difficult both in business model and technically to provide. In some states like Gujrat it has been allowed, others are to follow soon.

The problem of electrical transmission over long distance is the “drop” it faces, ie., some power is lost in transit, due to simple laws of physics. Whereas this loss can be calculated and that much extra power fed at the supply end to compensate it in case of traditional power supply, for Solar PV it becomes a problem because currently the technology is dependent on Sunshine and therefore erratic to precisely pin down how much power would be generated per minute. This creates problem for evacuation and  steady stream of transmission. Perhaps when grid parity does take place, the investors could use the model devised by Gemasolar in Spain to store the extra  power and compensate the loss in transmission. Or other innovations would make this possible.

The other problem is should a RESCO sell a PPA model to a client which is off-site and wheels the power to the client, during planned load-shedding by the Municipal authority / State power company; the transmission would not happen. Banking that power is a economic solution but not technically sound because the client had agreed to the PPA ( power purchase agreement ) precisely to avoid power outages and avail the benefits of Diesel abatement.

Another issue is the time frame. Not many would like to sign a PPA of 25 years for roof-top models or even offsite because all business policies are dynamic in nature. Requirements change over time. Planing for 10 years can be done with reasonable permutation combinations, but not having flexibility for 25 years would be a non-starter for some sectors. Next, vintage of technology. No one would like especially when the investment is not theirs to be stuck with an asset which does not perform optimally with time. When I wrote another article on Solar PV, as how to make cheap solar power, I was just learning about OPEX solar, but some of the ideas given there could come to the rescue for OPEX solar.

Overall OPEX Solar model is here to stay and I already have plans to propagate it as much as possible to make this World a better place to live in.

Note: Courtesy to the owners of the images posted in this blog.

 

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2 responses to “Green Business Ideas – Applying Solar OPEX model on Green Buildings will make Grid parity easy.

  1. Megan

    March 18, 2012 at 4:48 AM

    This helps illuminate a concern that myself and some of my colleagues have sought remedies for. I thank you for addressing it with such authority.

     

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