Diesel price hikes making solar power more attractive

Rising petroleum prices are expected to benefit renewable energy solution providers as commercial establishments that use diesel generator sets for their captive requirements may find solar power attractive.

The city gas distribution (CGD) players too expect commercial establishments to switch from diesel to piped natural gas in the areas where power supply is unreliable.

Several commercial establishments are now switching to solar solutions for their captive power needs as cost of solar modules is falling and the installation cost can be recovered within five years, industry officials said.

According to Megawatt Solutions CEO Siddharth Malik, “Every square meter of concentrated solar thermal collector can replace up to 200 litres of diesel annually.” Megawatt Solutions, in partnership with the renewable energy ministry, has a 0.5 mw project in Gurgaon, which provides a hybrid solution by integrating solar-thermal with fossil fuel. “The discounted payback time of a hybrid system can be about 2-3 years and is getting shorter with further diesel price hike,” said Malik.

“Rise in diesel price coupled with power shortage will result in financial burden for companies operating in competitive market. It makes sense for companies to switch to solar power that is the best alternative available today,” said rooftop solutions provider Solid Solar’s director Shubhra Mohanka.

Solar power solution providers are not only targeting the industries but also the agriculture sector. With decreasing costs of solar power installations coupled with expensive diesel, the former will make inroads into farms. “Pay back period for solar pump is anywhere between 3-7 years depending on the capacity and its usage. With diesel price expected to go up further, pay back period for investments in solar pump will also come down for farmers,” said Karan Dangayach, business development head of Ahmedabad-based Shashwat Green Fuels and Technologies. He added that the company would launch aggressive campaign in rural India as diesel price goes up month on month. Solar power solution providers are also upbeat on account of 30% subsidy offered by the renewable energy ministry to the farmers opting for solar pumps.

Meanwhile, city gas players say they are compelled to revise their tariffs due to rising gas prices. They are waiting for further hike in diesel prices. “Diesel price hike will not have any material impact on CGD as they do not have access to cheaper natural gas. Natural gas price increases in spot market in tandem with the crude price,” said an official with the government of Gujarat that controls India’s largest liquefied natural gas importer from spot market, Gujarat State Petroleum Corporation (GSPC). A top official of Gujarat-based CGD player said, “Compressed natural gas won’t have any advantage as it will also continue to rise. However, we are expecting commercial establishments to convert to natural gas from diesel generator sets gradually in urban areas.” “CGD largely depends on imported gas and this make competition with diesel quite tight.

CGD operators will try and make profit by focusing more on industrial and commercial consumers. CNG will be a viable option in next 2-3 years when it has a wide network,” said Deepak Mahurkar, director, oil & gas industry, PwC. Sensing better prospects in commercial and industrial segments, Delhi based Indraprastha Gas Limited is expanding in select pockets of Delhi-NCR that houses micro, small and medium enterprises.

Source: Economic Times

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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