How much beneficial are tracker-equipped solar PV projects?

Analyst Note | 12 July 2012

How beneficial are solar PV
projects equipped with tracking
equipped over conventional
solar PV projects?

CONTENTS
Introduction
Additional Revenue Generation
Case Study: 5 MW solar PV project by Reliance
Industries
Surplus Power Generation
Carbon Revenue
Additional Capital Cost
Conclusion
- Payback period

Are the additional capital

expenditure, operation and
maintenance costs related to
tracking equipment justified by the
increased power generation?

Solar power project developers in

India face these questions as they
grapple with issues like falling
feed-in tariffs and credit supply
crunch from the lenders.
This analyst note attempts to
analyze the additional benefits of
projects equipped with single-axis
trackers and compares them to
the added investment.

INTRODUCTION

METHODOLOGY

With increasing competition and significant fall in feed-in tariffs of

solar PV projects, developers under constant pressure to secure
investment for their projects and, eventually, earn substantial
profits from the power projects. Due to the evolution in the solar
PV technology the solar tracking equipment have emerged as a
viable option to increase power generation at combatively low
capital investment while earning significantly more revenue than
projects without any tracking equipment (conventional solar PV
projects).

For comparison between conventional and single-axis tracker

equipped PV projects, parameters determined by the CERC and the
expected operational parameters assessed by the seven
subsidiaries of Lanco Infratech Limited for their respective power
plants have been utilized. The actual on-field operational
parameters and final output may vary from the values determined
in this note. Additionally, sector experts expect the actual benefits
about 30% lower than benefits expected under ideal operating
conditions.

At the end May 2012, India had an installed solar PV power

generation capacity of over 970 MW and almost none of these
projects use any tracking equipment.

The operational parameters for these seven projects have been

accessed through publicly available documents furnished by these
companies.

According to the draft regulations released by the Central

Electricity Regulatory Commission (CERC) for determination of
preferential tariffs for renewable energy technologies till
FY2016-17, the plant load factor (PLF) of conventional solar PV
technology has been taken as 19%.

Comparison of capital cost, operation and maintenance cost is

based on the parameters announced by CERC, for conventional
project, and the higher limit of average industry parameters for
single-axis tracker equipped projects.
A solar PV project using single-axis tracking
equipment similar to that being used in Lanco
Infratechs projects could earn 34.3 percent
additional revenue compared to a project using
conventional solar PV technology over 25 years
through the sale of electricity

The PLF of a project equipped with single-axis tracking equipment,

one of the simplest tracking technologies available, is around
23-25%. Seven project using this technology have been set up
subsidiaries of Lanco Infratech Limited. This note will compare the
benefits and added costs between a conventional solar PV project
and a project equipped with single-axis tracking technology, similar
to the one used in the projects by Lanco Infratechs subsidiaries.

Solar PV projects by Lanco Infratech subsidiaries allocated under JNNSM Phase I (Batch I)
Tariff Bids (Rs/kWh)

Claimed Annual
Generation (MWh)

Plant Load Factor (%)

Finehope Allied Energy

11.65

11,803

26.95

Saidham Overseas

11.75

11,797

26.93

Vasvi Solar Power

11.65

11,788

26.91

Khaya Solar Projects

11.50

11,790

26.92

Electromech Maritech

11.60

10,346

23.62

DDE Renewable Energy

11.55

10,239

23.58

Newton Solar

11.70

10,395

23.78

Developer

Source: Climate Connect TERMINAL

Climate Connect Limited, 2012

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How much beneficial are tracker-equipped solar PV projects?

ANALYSIS

Comparison of Performance of Six Solar PV Projects

Assessed by Ministry of New & Renewable Energy

A 5 MW conventional solar PV project with an assumed average

PLF of 19% would generate 8.32 million kWh every year. Over a
period of 25 years such a project is likely to generate about 194.66
million kWh or 7.78 million kWh every year on average (assuming
degradation in power generated at 0.7% for the first year and 0.5%
from second year onwards).
The average preferential tariff of the seven projects owned by
Lancos subsidiaries is Rs 11.63 per kWh. A PV project based on
conventional solar PV technology would thus generate revenue of
Rs 226.4 crore over 25 years or Rs 9.05 crore every year on average
through sales of electricity only.

The Ministry of New & Renewable Energy had assessed the

operation of six solar PV projects. These six projects are
among the very first solar PV projects to be commissioned in
India. These projects are owned by Moser Baer, West Bengal
Green Energy Development Corporation, Azure Power,
Maharashtra Power Generation Corporation, Sri Power and
Reliance Industries. Some of these projects were later
included in the Phase I Jawaharlal Nehru National Solar
Mission through the migration policy.

Based on the data available for these seven projects, a 5 MW solar

PV project based on single-axis tracking equipment similar to the
one being used in these projects will have an average PLF of
25.52%. Such a project is likely to generate over 216.4 million kWh
over a period of 25 years or over 10.4 million kWh every year on
average.
A PV project based on single-axis tracking equipment similar to the
one being used in these seven projects would thus generate
revenue of over Rs 304 crore over 25 years or Rs 12.16 crore every
year on average through sales of electricity only. Thus a trackingbased project would generate 21.74 million kWh additional
electricity over 25 years and earn 34.2% more revenue than a
conventional PV project.

Reliance Industries Limited has installed a 5 MW solar PV

project at Khimsar, Rajasthan. The project is one-of-a-kind in
India as it uses five different solar PV technologies. The
project uses fixed structure modules, dual-axis tracking
modules, single-axis tracking modules and concentrated solar
PV modules. The project uses mono-crystalline, multicrystalline and thin-film solar modules.
According to the data released by MNRE, the RIL project
generated over 7.47 million kWh between July 2010 and June
2011. The data released also states that the annual average
PLF of the project during this period was 18.08% which was
18.1% to 34.6% higher than the average PLF of three other
projects for which data was available. The highest PLF in any
month for the project by RIL was 23.63% which was highest
among six projects.

Policy & Options for Sale of Surplus Power

A project using tracking equipment would be able to generate more

power compared to a project based on conventional PV technology
and can thus sell any surplus power through other schemes.

A number of states in their solar power policies have specified that

the entities which will procure power from the solar PV projects
shall purchase electricity up to a set maximum limit. Thus solar PV
projects which generate more electricity than the stipulated limit
shall have surplus electricity.

A project with PLF of 25.52% (average PLF of the seven projects

owned by Lanco Infratechs subsidiaries) would be able to generate
over 2.82 million kWh every year more than a project with PLF of
19%.

The recent reverse-auction of 25 MW solar PV project in Orissa had

such a clause. The project was aimed at fulfillment of the solar
Renewable Purchase Obligation (RPO) and according to the
regulations, the Orissa distribution company had to purchase a set
maximum power generated from the project which was calculated
at a PLF of 19%.

A project developer would have several options to use or sell this

additional power. The developer may utilize this surplus power for
captive use, sell power to a third-party consumer/distribution
company/power exchange and earn Renewable Energy Certificates
(RECs) as well.

The power generation capacity of projects equipped with singleaxis tracking technology is about a third more than the
conventional solar PV projects. While the capital cost of projects
with tracking systems is comparatively higher than the
conventional solar PV projects, the power output is substantially
higher.
Climate Connect Limited, 2012

The project developer would be able to sell surplus power at Rs 3.6

per kWh (average power trading price in CY2011 at Indian Energy
Exchange).

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How much beneficial are tracker-equipped solar PV projects?

Can surplus power be sold in the open market?

The average capital cost of conventional solar PV projects is Rs 10

crore (US$ 1.83 million) per MW. Due to the simple technical and
mechanical requirement for single-axis tracking projects, the
additional capital cost is Rs 1.38 crore (US$ 0.25 million) per MW.
Since a single motor can control the movement of several hundred
modules, the operation and maintenance (O&M) cost of tracking
equipment is only 10 percent of the total O&M cost of the entire
project.

If the project developers are able to sell the surplus power through
third-party or power exchange route, they would be able to
generate significant additional revenue. Sale of power in the open
market also opens up the possibility to avail benefits under the
Renewable Energy Certificate (REC) scheme. However, no clear
regulatory guidelines for such power sale arrangement is currently
in place.

Cost comparison (in Rs crore) of conventional & single-axis tracking

project and share of cost of tracking equipment in entire project cost

According to the Renewable Energy Certificate (REC) Regulations,

any power generation capacity committed to a power purchase
agreement at preferential tariff is not be eligible under the REC
scheme. Some captive power projects from Uttar Pradesh
registered under the REC scheme are facing similar regulatory
issues. A final decision on this issue would possibly remove some
regulatory hurdles for solar power projects looking to take
advantage of multiple revenue sources.

Parameter

Capital Cost
O&M Cost (25
Years)

Expected revenue generation from sale of surplus power and sale of

solar renewable energy certificates (RECs) between FY2013 & FY2017
Power Sale Revenue

Rs 9.87 crore/year

Rs 32 crore/year

Carbon Revenue

These seven projects owned by Lanco Infratech subsidiaries are

currently at the validation stage of the Clean Development
Mechanism (CDM). If these projects are registered by 31 December
2012, the CERs generated would be eligible for trading in the EU
ETS. These projects may also be eligible to sell carbon offset
instruments in the Australian carbon market from July 2015.

10

11.38

13.8

5.80

6.38

10%

Increased power generation

Surplus power generated may be used bring in additional
revenues
Increased investor confidence
Increased power generation per unit area of land, less land area
is thus required compared to a conventional project of equal
capacity

A solar PV project with single-axis tracking and having an average

PLF of 25.5 percent would be able to generate about 10,052 CERs,
based on the Indias emissions intensity for FY2011-12. At a CER
price of 4 per tonne, the project can earn over Rs 27 lakh (US
$50,270) every year. If the project developers are able to sell the
CERs in the Australian market they could earn even higher
revenues as the Australian emissions trading scheme, to launch in
2015, will have a floor price of A$15 to A$17.05 per tonne till June
2018.

Comparison in net profit (in Rs crore) from 1 MW conventional PV and

tracker-equipped PV project over 25 years through sale of electricity*
Conventional PV

Tracker-equipped PV#

Total Cost

15.80

17. 76

Revenue

45.28

60.82

Profit

29.48

43.06

Parameter

Additional Capital Cost

Tracker-equipped projects earn 46% more revenue than conventional PV

projects

The additional capital cost of single-axis tracking equipment

represents only about 12 percent the total capital cost of the
entire power plant. A solar panel array comprising of several
modules is connected with a single driving mechanism which is
controlled by a single AC motor of considerably low rating. This
enables the motion of up to 250 kW of solar modules at the same
time and using a single motor.

*Electricity sale assumed at Rs 11.63/kWh

# Rs 41.87 crore/year additional revenue from sale of power & RECs between FY2013 and
FY2017

Comparison of payback periods for various PLF, loan interest rates

Interest
Rate

The rotational motion of the AC motor is converted into very slow

linear motion by the driving mechanism which includes the screw
jack.
Climate Connect Limited, 2012

Increased Cost
of Tracker

Clearly, the advantages of having tracking equipment in a solar

power project overwhelmingly mitigate the additional capital and
O&M costs. The Indian solar sector has ballooned from about 20
MW to almost 1,000 MW within a couple of years. The number of
companies looking to enter the solar power sector have also
increased tremendously resulting in steep fall in the feed-in tariffs.
Project developers should take advantage of the rapid evolution in
the solar power generation technology as it has technical and
commercial advantages, some of which are listed below:

Additional power every year = 2.82 million kWh

@ Rs 11.35/kWh

Single-axis
Tracking
Project

CONCLUSION

REC Sale Revenue

@ Rs 3.5/kWh

Conventional
Project

PLF 19%

PLF 23.5%

PLF 25.5%

5%

4.15 years

3 years

2 years

13%

7.5 years

4.5 years

3.5 years

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How much beneficial are tracker-equipped solar PV projects?

References:
Draft CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012. Central Electricity
Regulatory Commission. 11 November 2011, New Delhi
Achievement till 31 May 2012, Ministry of New & Renewable Energy, Government of India, last accessed on 04 July 2012
www.mnre.gov.in/mission-and-vision-2/achievements
Database of Indian solar power projects, Climate Connect TERMINAL, Climate Connect Limited, last accessed on 04 July 2012 http://
www.climate-connect.com
Reliance Industries Limited 2011, An overview & performance analysis of 5 MWp solar PV plant at Khimsar, Rajasthan, Powerpoint
presentation.
Utility Scale Solar Power Plants A guide for developers and investors, International Finance Corporation
Shingleton, J., 2008. One-Axis Trackers Improved Reliability, Durability, Performance, and Cost Reduction. National Renewable
Energy Laboratory (NREL). New York, February 2008
Disclaimer
Climate Connect Ltd has taken due care and caution in compilation and reporting of data as has been obtained from various sources including which it considers reliable
and first hand. However, Climate Connect Ltd does not guarantee the accuracy, adequacy or completeness of any information and it not responsible for errors or omissions
or for the results obtained from the use of such information and especially states that it has no financial liability whatsoever to the users of this report. This research and
information does not constitute recommendation or advice for trading or investment purposes and therefore Climate Connect Ltd will not be liable for any loss accrued as a
result of a trading/investment activity that is undertaken on the basis of information contained in this report. Climate Connect Ltd does not consider itself to undertake
Regulated Activities as defined in Section 22 of the Financial Services and Markets Act 2000 and it is not registered with the Financial Services Authority of the UK.

Climate Connect TERMINAL

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Featuring extensive information of over 300 solar projects

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