Spanish solar energy heavyweight Abengoa recently won a commitment of $1.45 billion from the United States’ Department of energy to construct what will be the world’s largest solar plant, a 280 MW behemoth in Arizona state. The company is now turning its attention to India where the government’s recent push to promote solar energy has caught its attention. A generous subsidy system for solar power has taken Spain to the forefront of the industry over the last few years. In 2008, Spain accounted for half the world’s new solar-power installations in terms of wattage. Santiago Serge, CEO of Abengoa Solar spoke to Pallavi Aiyar in Madrid about what takeaways the Spanish success story in solar energy has for India. Edited excerpts:
The story of solar energy in Spain has really shown how key sorting out financing is for the promotion of renewable energy. What lessons can India take from the Spanish experience when it comes to financing solar?
For renewables the first thing is to create the infrastructure, so financing is obviously crucial and for this it is key that you have a stable regulation by which you (the renewable company) and your banks can be sure that you will actually be able to collect your revenue 20 years down the road. You therefore need stable regulations, like for instance, a feed-in tariff. And you must ensure that your clients, the utility that is purchasing your power, will be a credible and bankable uptaker. In some countries this can be a challenge because in some cases the utilities might not have a good financial situation.
What are Abengoa’s India plans?
Abengoa Solar has been in India on the ground for the last three years or so. We have an office in Mumbai and are working on upcoming greenfield projects in India. These will mostly be located around Rajasthan and Gujarat.
What would you like to see in terms of regulations in India that would give you more confidence to invest?
What we would like to see is a stable regulation published and approved, with a feed-in tariff that we can rely on, not only today but also a few years down the road. So we need to know if we start to develop a project today what will be the feed-in tariff several years later both from a developer’s point of view and from a technology or manufacturing point of view. To make large investments in areas like manufacturing we need to have a clearer, transparent, idea of regulations both at the national and regional levels.
Are you optimistic from the signs in India at the moment?
Very optimistic. India has come a long way in renewables. It has a ministry dedicated to renewables, which is key. Several regional governments are pushing very hard and the regulatory framework is also beginning to emerge. In India you need renewables not only as a way of fighting climate change but also because you simply need more power than you have available at the moment. At the same time, much regulation is still in draft form and needs to be approved. But I am optimistic.
Abengoa has considerable expertise in concentrated solar power (csp) plants. But in India we are more familiar with photovoltaic plants (pvp). Can you tell us about the difference in these technologies?
Photovoltaics are panels where you use the light coming from the sun to generate electricity. The advantages are that they can be placed anywhere easily, on the roof of the house or in a small village or also in larger plants connected to the grid. It is modular. CSP is about using the heat, not the light, of the sun by concentrating it to generate steam at a very high temperature and this steam then powers a turbine; the same turbine that would power a fossil fuel plant. Instead of burning oil or gas to generate the steam we use the sun. The advantages are that you can have very large plants using turbines which is a standard technology in the power sector. The plants are large enough for a grid or utility to be able to manage them. And these power plants are less intermittent than PVP or wind because you can store the energy. You can also use solar energy in combination with natural gas, so that if you suddenly have clouds over the plant you can switch to natural gas until the sun is out again. But this is for large plants, so to power a village or a house, PVP is the answer.
In a hot country like India the attraction of solar energy is obvious. Yet, it remains one of the most expensive sources of energy, far more so than wind. Will solar be able to compete with wind and other energy sources on cost in the future?
The costs in the solar sector are being reduced very quickly specially in PVP. In the mid-term we will be able to offer costs initially that are competitive with the retail energy price and later with the wholesale energy price. This should happen between 2020 and 2030. The technology is young and we are still in the learning curve and costs will continue reducing as the technology improves and the size of the market grows as well.