photovoltaics: “renewable” concepts for off-grid...

EXX India 24112015 FINAL.pptx 1 Business Confidential I © 2015 by EXXERGY GmbH

Photovoltaics: “Renewable” concepts

for off-grid electric power supply in India

German Export Initiative ConferenceDe-centralized power and heat supply utilizing renewable energies

Bengaluru, 24 November 2015

Supported by: Unterstützt durch:


• How does the financing of a PV-park normally work ?

• Change in paradigm: Perception is reality ? - OR - Where does the lab-to-fab gap originate ?

• Quality related issues and possible sources for default

• Quality-audit and -assurance processes as preliminaries for insurability and bankability

• Pathways from the current mode of operation towards operational excellence and bankability

• EXXERGY

• Back up: Hybrid systems

Story line


A PV-park investment should be profitable –

practically this is not always a given

PV-park is an investment

Example:

• Total investment approx.

100 million EUR

• Lifespan of PV-park = 20 years

Investment needs financing and profit

• 100 million EUR need to be available in cash or

bank loan or both

• Profit should be 5% p.a. for 100 million EUR over

period of 20 years (+ initial year)

In ‘000 EUR Year 0 Year 1 Year 2 Year 20 Assumptions

Investment 100.000 Size (MWp) 89

Income from feed-in tarif, PPA 4.830 11.570 11.547 11.138 Irradiation (kWh / kWp) 1.000

Costs of PV-park PPA (EUR / MWh) 130

Running costs of PV-park 1.106 2.678 2.712 3.461 Leverage 79%

EBITDA 3.724 8.892 8.835 7.677 Project IRR 5%

Bank interest (3,6%) 1.185 2.844 2.729 0

Depreciation of PV-park (5% p.a.) 2.083 5.000 5.000 2.917

EBT 456 1.048 1.106 4.760


Preliminaries

• Most important components such as PV-panels and -inverters have a performance

guarantee of 20 years (modules) or 10 years (inverters)

• This means, that over the lifespan of 20 / 10 years

• The components are required to be fully functioning

• The components may have a planned – but limited - rate of degradation according to

specification

• Ideally, this should result in a positive cash-flow over 20 years because the PV-park is

earning money according to the planned performance

• The planned performance and therefore, the resulting positive cash-flow may need to be

assured by an insurance or stringent quality assurance measures so that the bank is certain

that interest to the bank loan will be paid back

=> if not, no loan may be handed out

How does financing a PV-park

normally work ?


Re-insurer

Insurance broker /

Fronting agent

Specialized

product tester

Auditors

Time

Place

Region

Corporate coverage

Project coverage

Performance coverage

Project owner /

Operator

Project developer /

EPC

Manufacturer

PWI

Insurer

Financing Bank

Lots of businesses participate in realizing a

PV project


Re-insurer

Insurance broker /

Fronting agent

Specialized

product tester

Auditors

Time

Place

Region

Corporate coverage

Project coverage

Performance coverage

Project owner /

Operator

Manufacturer

PWI

Insurer

Financing Bank

Possible perception of four exemplary

stakeholders…

Project developer /

EPC


?

Possible perception of PV park investors

• PV is a blue chip investment delivering

“automatic”, reliable, long term returns

• Quality meets industrial standards

Possible self-perception of (some)

manufacturers:

• Price matters, and so does size

• The quality level that the customer accepts is

sufficient

• Certificates and warranties are essentially a

marketing tool

Possible perception of banks

• Typical non-recourse financing structure is

non-investment grade

• Risk exposure is mitigated by

• warranties

• contingency reserve requirement

• leverage limits

Possible perception of insurance companies

• Cover may be avoided, e. g.

• Exclusion clauses (e. g. conforming

components)

• Delayed start of coverage

• Risk mitigation by principle of large policy

numbers vs. quality control

…may suggest the need for a change in

paradigm: Perception is reality ?

Any

missing

links ?

Low risk exposure ?Low risk exposure ?


Performance gap

• Lab performance outpaces fab performance development

• Quality levels deteriorating

• Instable production processes

• Poor process control (e. g. 4PP statistically irrelevant)

Factory realities (examples)

• Non-complying materials

• Lack of manufacturing complying with SOP (“shortcuts”)

• QC intervention procedures not consistently established

• Up to 70% rework

Financials / markets / human resources

• High leverage => low investment

• Focus of investment in hardware

• Little maintenance

• Geographic diversification => New target customers less experienced

• High personnel fluctuation (particularly blue collar) => Implications on quality & attitude

Perception is reality ? Some thoughts on

where the lab-to-fab gap might originate

-10%

0%

10%

20%

30%

40%

gap%

Wp

lab

fab


Off-grid and mini-grid: When integrating PV-systems, good quality control along the lifetime is essential

Type of mistake Description Yield reduction

Planning mistake Important design criteria are disregarded or have

not been appreciated

Up to 40%

Component mistakes /

problems

Components don‘t meet name plate functionality Up to 60%

Mounting errors and

mistakes

Quality issues during mounting and construction Up to 20%

Lack of monitoring Inoperative situation or performance issues are

not detected at all or detected too late

Up to 70%

Sources: Analysis Fraunhofer Institute, Voigt & Collegen, TÜV Rheinland

• 30% of inspected operating PV power plants

show serious defects requiring immediate

corrective action

• Most prevalent causes for defects are

related to production of components and

installation

• Module defects up from 25% (previous

investigation) to 43% !Extent of performance assessments:

More than 1,5 GWp inspected

Sources of malperformance

43%

21% 18%

7%

7%

4%

Connection-

distribution boxesCabling

Modules

Mounting

structures

Inverters

Transformer

stations


Possible quality defects of a PV-system –

What needs to be looked at …

Possible defects

• Shadowing

• Angle of installation

• Soiling, dirt

• Corrosion

• Delamination

• Cell breakage

• Non complying components

• B-Class modules

• C-Class modules

• Browning

• Cabling

• PID

• …

Cell breakage

Non complying components

12

o Module sind in der Aufständerungsvariante „Aerorack EW-B“ nicht mit der

Unterkonstruktion sicher geerdet. Module liegen nur lose auf und sind nur gegen Diebstahl und „Auswurf“ durch Wind/Schneelasten gesichert.

o Ca. 50-60% der begutachteten Module zeigen an den Busbars erste weiße Farbveränderungen, was auf eine beginnende De-Lamination oder auskristallisiertes nicht aktiviertes Flussmittel schließen lässt.

Delamination

PID

Corrosion


Browning and delamination effects due to inferior non-specified material and sloppy lamination

Source: TÜV Rheinland


Delamination due to non-standard

processing shortcuts



Delamination

12

o Module sind in der Aufständerungsvariante „Aerorack EW-B“ nicht mit der

Unterkonstruktion sicher geerdet. Module liegen nur lose auf und sind nur gegen Diebstahl und „Auswurf“ durch Wind/Schneelasten gesichert.

o Ca. 50-60% der begutachteten Module zeigen an den Busbars erste weiße Farbveränderungen, was auf eine beginnende De-Lamination oder auskristallisiertes nicht aktiviertes Flussmittel schließen lässt.

Source: EXXERGY DD


Corrosion due to excessive use of flux

during soldering



Corrosion

Source: EXXERGY DD


Repaired pre-cracked cells being used in

final module (snail trails)



Angle of installation

14

o Sehr starke Verschmutzung der Module auf Halle 1 durch aufsteigenden Dreck aus der Müllsortieranlage in der Haupthalle

Source: EXXERGY DD


Cabling

Source: EXXERGY DD


Dirt accumulation due to lack of maintenance



Dirt – non-cleaning effect

15

Aufgrund der geringen Dachneigung wird der Schmutz auch bei Starkregen nicht vollständig abgewaschen. Es ist im weiteren Betrieb von sich weiter aufbauenden Schmutzrand im unteren Modulbereich auszugehen, der zu Abschattungen, Moosbildung und damit zu Leistungsmindernung oder regelmäßigem Reinigungsaufwand führt.

Source: EXXERGY DD


Non complying modules and components

17

o Es sind unterschiedliche Modultypen mit verschiedenen Herstellern Hanwah/Scatec

(OEM) verbaut. Keine Datenblätter Scatec in der Dokumentation vorhanden.

o Module mit 2 und 3 busbars wurden in der selben Anlage (hier Ahlen 2) durchmischt verbaut

2 Busbar Modul

2 Busbar Modul

3 Busbar Modul 3 Busbar Modul

3 Busbar Modul

2 Busbar Modul

3 busbar panel 3 busbar panel

2 busbar panel2 busbar panel

16

o Es wurde ein Stecker mit Silikonresten im Kontaktbereich aufgrund von unsauberer Produktionsbedingungen gefunden.

o Die Steckerkombination MC4 zu Linyang (Hanwah) oder anderen Herstellern wird zwar üblicherweise in solchen Systemen eingesetzt, ist von Multikontakt aber nicht freigegeben!

Linyang MC4

Source: EXXERGY DD


B-class module B

Source: EXXERGY DD


Cell Breakage / C-class module

Source: EXXERGY DD


PID-Test (85°C/85%RH)

Source: EXXERGY DD

0 1

2 3


Construction design and maintenance –

What needs to be looked at …

300 MWp PV power plant in Qinghai province (China)


Before purchasing PV-components, amanufacturer audit is vital to prevent possible quality issues

Top level competence team

has designed audit to further

a very high standard of quality

(also applicable for

insurability and bankability)

Mandatory elements of

manufacturer audit

1. Production audit

2. PV-park performance

3. Product quality

4. Review of structure,

processes and services

5. Review of financials,

securities

Manufacturer

audit

Production

supervision

Construction

supervision

PV-park

Start-up audit

PV-park

Production

supervision

Installer

certification

program

Random installation

checks

Residential / commercial Utility scale


Additionally, two main issues are important

concerning India

Climate according to the Köppen-Geiger

classification scheme

Sources: The Telegraph 10.03.2009

1) The diverse climate conditions 2) Dust / sand storms in arid regions

Climate data

• Cfa up to +50 °C / 100% humidity

in June - August

• BWk between -25°C and +35°C, very dry

Topics of sand storms

• Clear definition and statistical data ?

• Frequency ?

• Intensity ?

• Dust / sand specification and quantity moved

• >>15% performance lossSources: Weatherbase, TÜV Rheinland

Source: UN OCHA Regional Office for Asia-Pacific


1) Different harsh climate zones -

Origin of performance losses in PV-systems

Temperature Dust / sand

Relative humidity /

salt

Type of radiation /

DNI

Wind/ wind gusts

Losses

Performance losses (reversible / partially reversible)

Sand disposal

Hot spots

Short term temperature, humidity and wind

effects

Degradation (aging) (non reversible):

complex phenomena,variable between different module technologies

Light induced degradation (LID)

Temp induced degradation (TID)

Potential induced degradation (PID)

Staebler-Wronski effect:

amorphous silicon cells

Damage

Main PV-system

components

• PV-module

(wafer, cells, back

sheet, …)

• Inverter

• Cabling

• Mounting devices


1) The general hot and harsh climate -

The current standards are technically insufficient

Standard insufficiencies

• Characterization with focus on

different climate (IEC 61853 energy

matrix)

• Unrealistic Nominal Operating Cell

Temperature (NOCT) at 800 W/m² /

20° C

• Temperature range of tests -40° C to

+85°

• Module temperature for stress test

75° C

• Max irradiance for tests 1000 W/m²

• Insufficient UV test

• No sand abrasion test

• Max. temp. determination

parameters

Normalized temperatures [°C]

BacksheetJunction

boxTerminal Diode

1000 W/m²/

40 °C79,3 72,1 70,2 79,6

1100 W/m²/

50 °C102,6 86,6 82,2 92,9



2) Example desert storms –

Possible destruction from dust / desert storms

Possible defects Possible effect

• Coverage of PV-systems by dust / sand Significant

performance loss

• Deformation or destruction of parts or whole Complete destruction

PV-system

• Sand blowing of glass panels => abrasion High performance loss, destruction of modules

• Corrosion of mounting structure Partial / complete destruction

• Back-sheet delamination Significant performance loss

• Corrosion of plastics Significant performance loss,

(junction box, connecting cables, safety hazards

EVA, backsheet, …) (e. g. destruction of electric insulation)

• …


2) Desert storms or just simple deposition –

soiling causes significant performance losses

Scenarios

• Daily cleaning of one

system, no cleaning of

the other

• Section 1: both

systems cleaned

• Section 2,3,4: one

system not cleaned

• From „D“ on rainfall

and no manual

cleaning

Cleaning

period [d]

Power

degradation [%]

0 0

2-5 5

13 10

18 15

25 20

35 25

45 30



What are the unsolved challenges concerning

PV-systems in India ?

• Is there a general awareness for quality, processes, and audits ensuring that PV-systems

in India are built to high quality standards ?

• If yes, are these processes sufficient ?

=> SOLUTION: Audit and project supervision meeting state-of-the-art standards

• How to define suitable products for India’s climate zones ?

• Is there a suitable standard for each component for each extreme climate zone ?

• How to define and measure the standards ?

=> SOLUTION: Proposal for test standards and product development

• Can the performance of PV-systems be insured in India ?

=> SOLUTION: Modification of current solutions to suit market and insurance needs


Photovoltaics: Considerations, requirements, and

applications for off-grid energy supply

=> Conclusions

• Photovoltaic is a viable technology and can deliver reliable returns and is competitive versus

diesel power generators in many regions

• Hybrid electricity systems combine advantages compared to pure diesel power generators

because they are cleaner, more flexible, more cost efficient, less depending on diesel and its

cost and logistics

• Reliable investment returns for PV-systems can be realized by diligence and quality

assurance during the entire lifecycle (planning, construction, and operation and

maintenance)

• There are special quality requirements for India:

• Current certification standards are not suitable for product qualification for extreme climates

• Current quality assurance standards and compliance practice are generally largely

insufficient

• Soiling can have a huge impact on system performance

=> Cleaning intervals and technology must be identified for the site

• Sandstorm testing is only a small part of the qualification and must be adapted for the target

region


• EXXERGY

Agenda


EXXERGY covers business fields

with competence

Corporate

Strategy

Markets

Finance

Human

Resources

Technology

Processes

Regional focus:

• China

(Shanghai, Hong Kong)

• Europe (Frankfurt, Munich)

• North America

(New York, San Francisco)

• South America (São Paulo)

• Upcoming: Middle East

Sales and marketing

Organizational development

Mergers and acquisitions

Market analysisConcept development

New markets and market entryProduct development

Business planning

Tailor-made financing structures

Fund raising

Performance warranty Insurance

Leadership and HR -development

Management assessment

Recruitment

Technology transfer

Innovation control

Process optimization

Comprehensive manufacturer audits


• Well established consulting company

• Consultancy competencies: Technology, market intelligence, management, strategies

• Focus on: Companies in the energy and glass industries

Renewable energy and energy efficiency

• Thorough understanding of the industry, it’s cycles, business rules,

trends (political, technological, demand, supply, …)

• Listening to and understanding our customers; tailor made approach and solutions

• Qualified and comprehensive solutions from one single source

for all relevant strategic and operational areas

• Years of operational industry experience, extensive expertise and

thorough understanding of critical business processes

• Experts in working out sustainable strategies

• Wide network of experienced consultants (app. 60) and specialized cooperating companies

• Alliance of competences ensures flexibility

Who is EXXERGY ?


• Focus on the renewable energy market

• Well connected in the industry and clear understanding of the industry

• Holistic business approach, no stand alone solutions

• Customer focused, tailor-made solutions, flexibility

• Working in a network structure of experts

• All consultants with long standing operative experience and international back-ground

• Present in all major markets (Asia, EU, USA)

What we do different from

competing consultancies


Technical auditor

• Due to harsh climate, development of new and

appropriate product and production standards

• Auditor is / could be the, or one of the leading

forces to develop and supervise those

standards

Idea: Technical auditor and EXXERGY ?

EXXERGY

• With the performance warranty product,

EXXERGY conceptualized and realized in

practice a holistic, measurable approach

towards total quality assurance from modules

to PV-parks along the entire value chain

• Broader business and problem solving

approach leading to longer consultancy

value chains

Business idea

• Integrating new standards in India in the

“broader” framework of “PWI” quality process

• Adapting PWI from “Focus on financing” to

“Focus on “fit for climate PV value chain””

Ultimate goal auditor / EXXERGY

• More and broader consultancy work

• Better visibility of Auditor and EXXERGY

in India

• Establishing benchmark for all


• Unbiased consulting

• Experience, know-how and track record for QA from PWI-project

• Through FLYTEX / Koch Membranen activity

• Experience, know-how and track record from environmental conditions simulation for

special materials (composites)

• Experience in design and construction of textile architectures in regions with harsh

climates (e. g. Burj al Arab in Dubai)

• High level contacts to major module manufacturers

• India local content policy:

• If required: EXXERGY can support establishing manufacturing and EPC operations

• If not: EXXERGY can help winning and developing top Chinese module manufacturer

to produce modules according to standards suiting the climates fitting regional

requirements (technical auditor)

• Holistic consulting approach: Leveled approach concerning all aspects of business

(Quality-technical-production related topics, human resource, strategy, sales, distribution, …)

• Experience and know-how from the performance warranty insurance product development

process

• Different market player communication

(more / other topics and different style of communication)

• …

What does EXXERGY bring to the party ?


Imprint

Thomas C. Sauer, CEO

T +49 69 9510319-20

[email protected]

EXXERGY GmbH

Am Wasserbogen 28

D 82166 Gräfelfing

T +49 89 57954530

F +49 89 57954531

Office Frankfurt

Dillenburger Str. 23

D 60439 Frankfurt

T +49 69 - 9510319-0

F +49 69 - 9510319-10

Internet

www.exxergy.com

EXXERGY Inc.

98 Pipers Hill Road

Wilton, CT 06897, USA

T +1 203 665 0390

Office Shanghai

8/F Shanghai Yueda 889

1111 Changshou Road

Jing'An District

Shanghai, 200042

PR China

mailto:[email protected]

http://www.exxergy.com/


• Back up: Hybrid systems

Agenda


Story line

• Definition off-grid, mini-grid, main-grid

• Diesel power generators as the main source of energy in off-grid and mini-grid systems

• PV-systems as a viable alternative to diesel power generators in a hybrid energy system

• Quality related issues and possible sources for default in PV-systems

• Special circumstances concerning India due to harsh climate

• Quality assurance for PV-systems as a very important topic

• EXXERGY

• Back up: Quality issues


Definition of

off-grid, mini-grid, and main grid

Off-grid: Several kW only; 1 energy source 1 user;

i.e. single home or single purpose

Home, Mongolia Pumping station, Nigeria Radio tower supply, Austria Hospital and schools, Cambodia

Mini-grid: Several kW up to several MW; several energy sources and users;

i.e. electrification of remote areas and islands

Main grid: GWs; multiple energy sources and users;

i.e. national grid of Germany

Sources: IBC Solar, ZVEI


Today, off-grids and mini-grids mainly use

diesel power generators as a source of energy

Advantages

• Supply on demand with high turn-down capability

(but min. approx. 25%)

• In the past, cheap power source

• Commonly known technology

Disadvantages

• Increasing cost of oil

• Either direct cost (oil importers) or

• Revenue gap (oil exporters)

• Logistics / transport of diesel and its cost

• Requires high utilization rate

• Response time to major load jumps

• Pollution (noise, air, spilling of diesel)

• High maintenance requirement

• Many old and inefficient generators operating

• …

Diesel power generator in IndiaSource: Noida, Uttarpradesh - ZVEI


Compared to diesel power generators,

PV-systems are increasingly competitive

Sources: EIA, DOE NREL Solar Technologies Market Report Jan 2010, BSW, ECB, EXXERGY own estimates and calculations

Assumptions:

Genset efficiency 3.5 kWh/l (net electricity production) @ 1 USD/l; Capex and maintenance cost for Diesel not included (incumbent system)

PV power cost based on 1500 kWh/kWp at EU market system price (EPC cost base), 30% equity, 3.6% interest rate, 20 years period, 5% IRR

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Diesel power generation (USD/kWh) Solar power generation (USD/kWh)

$/kWh

Diesel power generation

Solar power generation

Ele

ctr

icity

genera

tion c

ost


PV-systems offer attractive, long term

paybacks …

Sources: SMA, German Development Agency, GlobalPetrolPrices.com (30-10-2015), EIA, EXXERGY own calculations

Effective cost at point of consumption on an all-in cost basis

Assumptions: 1 MWp PV plant; 100% of PV power utilization, Capex 2,000 USD/kWp; Opex = 2% of Capex; PV financing with 30% equity, 7% interest rate

Genset efficiency 3.5 kWh/l (net electricity production); Capex and maintenance cost for Diesel not included (incumbent system)

Saudi Yemen India

Arabia USA worldwide average

0

5

10

15

20

25

0 0,5 1 1,5 2 2,5

Pa

yb

ack t

ime

(ye

ars

)

Diesel cost (USD/l)

900 kWh/kWp 1500 kWh/kWp 2100 kWh/kWp


Adopting renewables for power supply requires

careful design to follow actual demand

Challenges

• Renewable energy generators are

typically not available 24/7

(exceptions: hydro, biomass)

• In a “renewable only” scheme, system

voltage may fluctuate already under

normal operating conditions

clouds, high wind speeds, high wind

fluctuations

• Existing standards may be insufficient

and / or incompatible to meet the

requirements for potential future

upgrades (increasing demand or grid

mergers)

• Turn-down capability may be limited

resulting in system voltage and/or in

frequency fluctuations

=> Possible damage to point-of-use

devices

Solutions

• For continuous electricity supply,

renewable electricity generation needs

to be complemented

=> Hybrid system to support stable

frequency and system voltage

• Battery systems

• Co-generator of heat and power

• Diesel generators

• Fly wheels

• Robust and intelligent design with a

suitable working interaction is key for

hybrid systems

• Off-grid and mini-grid systems can

merge to a local grid with increasing

interconnection

=> uniform standards are a pre-

requisite

• Solid planning and framework at the

outset are essential pre-requisites for

stable power supply


Changing from diesel genset to hybrid electricity

supply is a viable solution

Renewable energy source

(solar, wind)

Diesel

power generator

Power

storage system

(batteries, flywheels …)

System control

Diesel generator only Hybrid electricity system

Advantages: Cleaner, more flexible, more cost efficient, easier logistics,

less depending on diesel and its cost

Focus

photovoltaics: “renewable” concepts for off-grid...

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