Harnessing Solar energy, Options for India

Average cost of electricity (ACOE) is the cost incurred by a customer (generally a commercial or
industrial establishment) in purchasing or producing every unit of electricity consumed. With a grid
rate of `5.5 per unit and a diesel rate of roughly `15 per unit, this cost depends heavily on the extent
of time grid power is available: the lower the availability, the greater the consumption of diesel and,
consequently, the greater the ACOE.
For a project to make commercial sense, it may be noted that the LCOE of solar-PV-generated power
must be less than the ACOE incurred. The parameters considered in evaluating LCOE and IRR for
RTPV and the corresponding value in the base case have been listed in Table 21. Feed-in-tariff in the
table has been assumed to be equal to nominal generation-based tariff offered to utility-scale
establishments.
Table 21: Important Parameters and Base Values: Some Assumptions
Parameters
Base value
Capital cost without battery (`/W p ) 180
Capital cost with battery (`/W p ) 270*
Operation and maintenance (O&M) cost (1%) (`/W) 1.8
O&M escalation rate (%) 5
Capacity utilisation factor (%) 21
Lifetime (years) 25
Feed-in-tariff (`/kWh) 17.9
Efficiency (without battery) (%)** 80
Efficiency (with battery) (%)** 70
Discount rate (%) 10
Notes: * The MNRE’s normative cost for such a system is `300. However, it is felt that the given number is
closer to the real price of such a system.
**This is conversion efficiency excluding the efficiency of the solar panel.
Figure 12 shows the bearing of various components on the life cycle costs (measured in terms of
LCOE) and IRR of a typical solar PV system with battery storage.
Solar Photovoltaic Applications CSTEP | Page 81