By Jason Deign in Barcelona

Together they have 37% of the world’s population, 12% of its gross domestic product and 8.5% of its landmass. There is no denying that China and India jointly represent a massive market opportunity. What is in it for the CSP industry, though?

To find out, this month CSP Today invited readers to a webinar featuring Ralf Wiesenberg, chief executive of Sun to Market Solutions, a Spanish developer with operations in India, and Dr Jorge Servert del Rio, Spanish chair of the China-Spain Renewable Energy Promotion Centre.

The short answer is: not as much as you might think. Both countries have massive market potential but also pose significant challenges to foreign CSP developers. 

Take India, for instance. On the surface, this has all the makings of a CSP developer’s paradise. Energy demand is growing and in many areas the default fuel option is diesel, says Wiesenberg. 

At the same time, large parts of the country have high solar resource and the policy framework, enshrined in the Jawaharlal Nehru National Solar Mission, aims to make India a global leader in solar energy. 

In addition to the National Solar Mission, the states of Gujurat, Karnataka and Rajasthan are keen to promote solar developments through regional support mechanisms, and across India there is no need for developers to carry out environmental impact studies for projects. 

But there are problems, too. Grid access and land availability can tricky in some of the best Direct Normal Irradiance (DNI) areas, for example. And, says Wiesenberg: “One of the things we’ve seen in India is that aerosols have an important impact that cannot be ignored.”

In fact, gauging the true level of solar resource is problematic across the country, owing to a dearth of reliable DNI data. 

Low returns

That perhaps would not be an issue if project developers could build a margin of error into their profit calculations, but the returns from power purchase agreements (PPAs) seen so far are so low that it is difficult to get projects off the ground under any circumstances. 

“Several projects have already been awarded with PPAs of €0.16 to €0.17 per kilowatt, which has presented cost difficulties,” says Wiesenberg. 

Funding is further complicated by the fact that local banks have little experience of solar energy and foreign backers are aware that a PPA from a cash-strapped electricity board in India might not represent the kind of cast-iron income guarantee that it does in other parts of the world. 

Add to this the fact that 30% of each CSP project must be sourced locally, and chronic water scarcity across most of India means developers in practice could be restricted to dry-cooling plant designs, and the prospects for solar thermal development seem fraught to say the least.

“India has potential but there are areas that need improving,” Wiesenberg concludes. 

“Building plants with such low tariffs is a challenge for attracting foreign EPC firms, and if the foreigners to not enter the market there will be no transparency and no chance to promote local construction. The opportunities are frankly limited.”

Are they any better on the other side of the Himalayas, though? Land availability, for one thing, is not a problem in China. However, until recently solar thermal appears to have been low on the Chinese administration’s agenda. 

Energy projections

In recent energy portfolio projections up to 2045, by the Chinese Academy of Engineering, CSP does not even appear, Servert points out. And so far the only confirmed feed-in tariff for solar, of 1 yuan (about €0.12) per kilowatt-hour, just applies to photovoltaic plants.

In addition, China “has a solar resource that isn’t the best,” says Servert, and in the highly populated east of the country “the irradiation is a complete disaster, which means you have to transport the energy.”

Furthermore in areas such as the Tibetan plateau and Mongolia, where the DNI is high enough to develop CSP, there are other problems such as lack of water and severely cold winter weather. But perhaps the biggest barrier to foreign companies operating in China is the Chinese.

First, because the country’s competitive abilities cannot be underestimated. Servert notes that China’s engineers have spent years developing CSP expertise of their own, as evidenced by the Dahan experimental plant on the outskirts of Beijing.

Right now each of the five main electrical companies in China is looking to develop CSP plants and “some are in a pretty advanced stage of permitting,” according to Servert. “In the wind industry,” he adds, “there are about 80 companies making machines of more than 2 MW. 

“You get the feeling they could replicate that with CSP.”

And the second issue with the Chinese, for CSP developers in Spain and elsewhere, is the cultural one. “You need a lot of knowledge of the market,” Servert says. If you are eyeing India or China, you have been warned. 

To respond to this article, please write to:

Jason Deign: jdeign@csptoday.com 

Or write to the editor:

Rikki Stancich: rstancich@csptoday.com