Solar Energy & Power – Page 39 – Northern Energy Solar Solutions

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Ali Imran Naqvi, Vice President, Gensol Group, on India’s safeguard duty imposition of certain imports of solar cells and modules.

The imposition of a safeguard duty on solar cells originating from China and Malaysia has, seemingly, stirred up the hornets’ nest with an unflagging clamor gaining traction against it each passing day. On the other hand, in common with any such protectionist move, reactions vary between the affected parties bemoaning loss of competitiveness, profitability and jobs and those of consumers and producers that were benefiting from the lower priced imports.

Acme, a major independent power producer (IPP), has blazed a trail of law suits against this safeguard measure in the High Court of Odisha which had stayed the implementation of this duty at least till 21 August 2018. Unfazed by the Court order, the central government seems to have made its stand clear by publishing a notification to this effect on 30 July 2018.

While this move by the government might seem to be affording relief to the local manufacturers, it still would call for an analysis of its impact on the sectoral economics. How this will impact a country like India that is focused on renewable energy as a means of decarbonising its current and future GDP growth is a moot point. Some experts maintain that it would lead to economic harm by shrinking markets and excluding efficient producers, thereby raising prices for consumers.

However, we subscribe to a different view; we are inclined to believe that the harm might not be too pronounced nor too long-lived. This is keeping in mind that solar manufacturing across the world, including India, vis-a-vis production in Chinese facilities indicates that the price advantage of Chinese solar cells emanates from cost efficiency of vertical integration, economies of scale, and negotiated discounts from vendors of intermediate inputs, as well as machinery and equipment. These are in addition to the advantages from lower Chinese labour costs and cheap trade credit availability. As a result, the temporary rise in prices caused by these duties would be nullified by systemic efficiencies in China that, by all probabilities, will get better with time. Interestingly, another factor that will drive down the prices of Chinese solar modules is a recent policy shift by the Chinese government, restricting new solar installations that require a national subsidy, a move that will lead to a drop in deployment in China this year. The impending overcapacity will further hammer down the prices of modules.

Another view is that India might benefit as these duties on Chinese and Malaysian manufacturers could make India an alternative manufacturing destination for companies. But this prognosis is a little far-fetched, as these duties will be phased out in two years. Moreover, India’s ability to capture vacated Chinese manufacturing space is a function of ease of doing business in the country, physical infrastructure necessary for manufacturing and domestic policy environment (other than the much disputed labour laws), all of which are not yet amenable for large-scale manufacturing processes and units as in China.

While this move has not gone down well with the projects developers, we are inclined to believe that it is a window of opportunity for the domestic manufacturing industry. Although India does not have much of a domestic manufacturing capacity to bolster, this two-year period can be a good catalyst for the desi (domestic) manufacturers to metamorphose into efficient production centres. This is something that should have happened through its natural course in an ecosystem of free market economy.

As far as commercial impact of the duty goes, our analysis shows that there would be a 30-35 paisa increase in tariff bids in the future solar auctions for comparable returns on equity. This should not be a problem since a provision of pass through has been clearly enshrined in the guidelines recently unveiled by the government for procurement of power through competitive bidding from solar PV projects. Pertinently, a more recent clarification issued by the government says that the term ‘Change in Law’ in Clause 5.7.2 of these Guidelines includes any “change in rates of taxes, duties and cess” which have a direct effect on the project.

Notwithstanding this, a fact which merits consideration is that distribution companies (Discoms), who are debilitated by financial weakness, were attracted to solar due to its rapidly changing economics and might now lose some interest, as tariffs change their course.

Only time will tell whether these safeguard actions will actually prove to be a window of opportunity or only a mirage for the domestic solar manufacturing in India?

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Published: 8 Aug 2018, 13:31

Launch of a completed battery energy storage system by Viridity in the US. Image: Viridity Facebook page.

Minnesota electric cooperative Connexus Energy has confirmed recent press reports that it is building 15MW / 30MWh of battery energy storage, while another not-for-profit, Vermont Electric Cooperative, will build a 1.9MW / 5.3MWh system in its service area.

Connexus is part of Great River Energy, an electric transmission and generation cooperative and the second largest utility in Minnesota. Connexus serves about 130,000 residential and commercial properties in its service area. It issued a statement yesterday stating that the “innovative” solar-plus-storage project is now under construction.

Pairing 10MW of solar across two sites with 15MW of battery storage, also split between the Ramsey and Athens Township solar farm sites, the cooperative wants to use the combination to help manage peak demand. A subsidiary of major developer NextEra Energy will build, own and operate the lithium-ion battery storage systems, which Connexus said will be “fully integrated” with the solar PV. ENGIE North America will be responsible for the solar portions of the projects.

“Energy prices differ throughout the day. Most solar energy is produced when there is lower demand and the price is lower. Our plan is to discharge the stored solar energy during peak hours when energy costs are the highest. We refer to this as time-shifting solar energy to a time of day when it has more value,” Greg Ridderbusch, Connexus CEO said.

Ridderbusch said that the utility had listened to its members, who want more renewable energy on their network, Ridderbusch said, but did not want to pay more for their electricity.

A 2017 study found Minnesota could use energy storage and solar as part of a “least-cost path forward” in direct competition with gas turbines. ‘Modernising Minnesota’s Grid: An economic analysis of energy storage opportunities’, was produced by University of Minnesota’s Energy Transition Lab with Strategen Consulting and Vibrant Clean Energy.

Vermont. Image: Wikimedia user Chensiyuan.

Among the key findings of that report were:

Under an optimal set of future energy resource investments and operating practices, the least-cost solutions included energy storage.
Energy storage can be a cost-effective means to help Minnesota meet its state greenhouse gas (GHG) reduction goals.
The deployment of storage in Minnesota was projected to increase the use of low-cost renewable energy generation dispatched in MISO and to reduce the need for expensive transmission investments.
Historically, utilities have used gas combustion turbines to meet peak demand. As storage becomes more cost-effective, it will compete with and displace new gas combustion peaking plants (peakers).
Compared to a simple-cycle gas-fired peaking plant, storage was more cost-effective at meeting Minnesota’s capacity needs beyond 2022.
Additionally, the Investment Tax Credit (ITC) which discounts storage purchases when made with solar, already makes solar-plus-storage more cost-effective than a peaking plant as well as having an environmental benefit in reducing GHGs.

The study pointed out that Minnesota is a clean energy leader among US states, having gone from 7{0b7da518931e2dc7f5435818fa9adcc81ac764ac1dff918ce2cdfc05099e9974} renewables in the state energy mix to more than 21{0b7da518931e2dc7f5435818fa9adcc81ac764ac1dff918ce2cdfc05099e9974} over the past decade, yet the development and deployment of energy storage has lagged, the report said.

Connexus VP for power supply Brian Burandt said the latest solar-plus-storage projects had taken several years from conception to the start of construction, including site selection and permitting. A Request for Proposals was run by the National Renewables Cooperative Organisation.

Vermont Electric Cooperative goes for 5.3MWh lithium battery system

Bernie Sanders’ state, Vermont, will also be getting grid-scale storage in a project announced in the past few days. Vermont Electric Cooperative will increase flexibility on its electricity networks by using a 1.9MW / 5.3MWh lithium battery system to charge during off-peak times and then discharge into the grid during peaks.

VEC will be working with storage developer Viridity Energy, which has been owned by geothermal power and renewables developer Ormat Technologies since early 2017, while Northern Power Systems, best known as a wind turbine supplier but now also integrator and supplier of energy storage, will also work on the project, as will industrial electric equipment supplier WEG Electric Corp.

It marks WEG’s first major foray into the US lithium-ion battery storage space. Turnkey storage system supplier Northern Power Systems’ wind turbine business has actually been owned by WEG since 2016, with Northern Power president Ciel Caldwell stating that his company was excited to expand on the pair’s “long history” as technology partners.

“We developed our capability to provide full turnkey megawatt energy storage systems that can incorporate different qualified battery suppliers while leveraging robust controls designed into our proprietary power converter,” Northern Power’s Caldwell said.

The project will be delivered “without requiring any significant upfront capital costs” by VEC, the cooperative’s interim chief executive Vickie Brown said. This is due to the creation of an Energy Storage Service Agreement (ESSA) with Viridity, which will own and operate the battery system under Viridity’s Battery Storage as a Service (BSaaS) business model.

It will be constructed adjacent to a substation in Hinesburg, Vermont. Supplying energy at peak times to the grid, it will also help control voltage and frequency of the local grid but matching supply with consumption patterns. The project should be completed by summer 2019, with a 45-day public consultation period now open.

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