International Journal of Low-Carbon Technologies Advance Access originally published online on March 13, 2009
International Journal of Low-Carbon Technologies 2009 4(1):42-51; doi:10.1093/ijlct/ctp004
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
Evaluation of carbon credits earned by energy security in India
Center for Energy Studies, Indian Institute of Technology Delhi, Haus Khas, New Delhi 11 00 16, India
* Corresponding author: gntiwari{at}ces.iitd.ernet.in
| Abstract |
|---|
|
|
|---|
This paper presents an analysis of carbon credit earned by each district for supplying minimum subsistence electricity to each family (energy security) in India. The minimum subsistence electricity has been defined as electricity required for running one fan and one light. Average insolation per annum available for 10 h a day (when insolation is >150 W/m2) is the basis for numerical computation. Number of Stand alone Photo Voltaic (SAPV) panels with battery backup has been optimized. On the basis of annual performance and carbon credit earned, the life cycle cost analysis of SAPV panels have been performed. The computation of the carbon credit earned by SAPV panels as per the norms of the Kyoto Protocol under climate condition of the corresponding district has also been carried out. Estimation of carbon credits, which will accrue to the nation, has also been done. Return on the investment analysis on the basis of the life cycle cost analysis has also been carried out. It is found that the cost of power generated (
0.102/kWh,
0.0916 and
0.0847 for life cycle of 30, 40 and 50 years respectively), carbon credit earned and return on capital by the SAPV system for Indian climatic condition will be cheaper than the cost of power generated by conventional systems.
Keywords: carbon credits, return on capital, solar energy
Received April 22, 2008; Revised January 14, 2009; Accepted January 21, 2009
| 1. METHODOLOGY |
|---|
|
|
|---|
Energy consumption of a country is one of the indicators of socio-economic development. Per capita electricity consumption of India is one of the lowest in the world (Table 1). The per capita energy consumption in India is about 30%, 22% and 3.18% of that in China, Brazil and USA, respectively. With development, it is likely to increase. For achieving the per capita energy consumption equal to that of Brazil (which is still a developing country like India), our energy production and consumption must be quadrupled. For achieving the European average (about 6500 KWh/capita), we must increase our energy production and consumption by 15.5 times. At present, annual economic growth rate of India is 8–10%, per annum. To sustain this growth rate, it desperately need additional secured and reliable energy sources. India depends on oil and gas imports, which account for over 65% of its consumption, especially in the face of rising prices. Coal, which currently accounts for over 60% of its electricity production, is the major source of emission of green house gases and that of acid rains. India will become third biggest polluter in the world after USA and China if it keeps depending on Coal as the main source of electricity in the years to come. In the business-as-usual scenario, India will exhaust its oil reserves in 22 years, its gas reserves in 30 years and its coal reserves in 80 years. More alarming, the coal reserves might disappear in less than 40 years if India continues to grow at 8% a year [1]. The present energy scenario in India is alarming. There are serious shortcomings in access to electricity to rural and urban people in meeting their demand in the peak hour at reliability of power supply.
|
Table 2 gives the percentage of population having no access to electricity in different countries. More than 50% of India's population does not have access to electricity. If the population which at present does not have access to electricity starts consuming electricity at present national average (421 KWh per annum), the electricity production will have to be more than doubled. Table 3 shows the population of each state in India based on 2001 census. Table 4 shows the average insolation more than threshold level, available round the year from 8 am to 5 pm. Taking the average size of the family to be four, number of families residing in each state and each district of Uttar Pradesh has also been computed and are given in Tables 3 and 5.
|
|
|
| 2. PROBLEM IDENTIFICATION |
|---|
|
|
|---|
Estimation of carbon credits likely to be earned by SAPV system will help in estimating the cost of production of electricity by the systems. It will also help estimating the return on capital of such systems. Carbon credits earned is directly deductible from the cost of electricity produced.
In this paper, an attempt has been made:
- To determine the carbon (CO2) credit earned by SAPV systems in the each districts of India;
- To determine the estimated costs of electricity produced by taking into account the variation of solar intensity across the country, improvement in life cycle and capital cost of the SAPV system;
- To determine the return on capital estimations performed assuming the economic life of the SAPV system to be 30, 40 and 50 years.
| 3. STANDALONE PHOTOVOLTAIC SYSTEMS |
|---|
|
|
|---|
Solar photovoltaic (PV) systems are one of the most promising future sources of energy. A group of solar cells connected in series, packed with ethyl vinyl acetate (transparent adhesive) and insulated from back side is known as a PV module. The top surface of the cells is coated with an antireflective transparent coating. PV modules connected in series, parallel or combination of both is known as PV array.
In India, the cost of electricity generated by Solar PV cells comes to
0.24/KWh, globally the capital cost of installing a Solar PV system comes to
4500–6500/kW [2]. Prakash et al. [3] have estimated that the capital cost of installing a Solar PV system is
6336.2/kWp. Both the capital cost and the cost of electricity generated are likely to go down substantially taken into account
- economy of scale
- advancement in technology and
- Carbon credits earned by such PV plants (as per Kyoto Protocol).
| 4. CARBON CREDITS |
|---|
|
|
|---|
Carbon Credit Trading (Emission Trading) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. Carbon credits are a tradable permit scheme. A credit gives the owner the right to emit one ton of carbon dioxide. International treaties such as the Kyoto Protocol set quotas on the amount of greenhouse gases countries can produce. Countries, in turn, set quotas on the emissions of businesses. Businesses that are over their quotas must buy carbon credits for their excess emissions, while businesses that are below their quotas can sell their remaining credits. By allowing credits to be bought and sold, a business for which reducing its emissions would be expensive or prohibitive can pay another business to make the reduction for it. This minimizes the quota's impact on the business, while still reaching the quota. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. There are currently two exchanges for carbon credits: (i) the Chicago Climate Exchange and (ii) the European Climate Exchange. In the year 2005, 375 million tons of carbon dioxide equivalents (tCO2e) were transacted at a value of
3.31 billion with an average price of
10.56 per ton. In the first three months of 2006, the average reported price of carbon dioxide equivalent was
16.72 per ton. European and Japanese Companies were the major buyers and China was the major seller of the carbon credits in 2005–06. Demand of carbon credits continued to soar in 2006–07, resulting in an increase in the treaded rate of carbon credits. The present market rate is fluctuating at
20–22 in the European Climate Exchange (www.europeanclimateexchange.com) [4]. | 5. ASSUMPTIONS |
|---|
|
|
|---|
For the present study under Indian condition, the following assumptions have been made:
- Each family will require a fan for an average 18 h a day and tube light for 6 h a day.
- Average annual growth rate of population in India is 2% per annum.
- The efficiency of the PV cells is considered 12, 10 and 8%.
- Insolation of a district has been calculated by mapping insolation of the similarly located places, as shown in Figure 1, page 13 of ref. [10].
- Tube light and fan used by the families will be compact fluorescent lamp (CFL) of 20 and 60 W rating, respectively.
- There are on an average 300 clear days in a year.
|
| 6. NUMERICAL COMPUTATIONS |
|---|
|
|
|---|
6.1 Population requiring additional resources
As mentioned in Table 2, about 579.1 million population of the country do not have access to electricity, which comes to about 56.5% of the population, as per 2001 census. Apart from the population which has no access to electricity at all, there is a sizable part of the population which is not being provided with sufficient electricity to keep the fan and light on for 18 and 6 h a day, respectively. Assuming that such population to be 25%, the total population which will require additional resources in order to have one light and fan connection will be about 80%.
Present population is given by the equation [6],
|
| (1a) |
The population in India in the current year will be as
|
| (1b) |
Since 80% of population needs energy security, the population which will require additional resources in order to have one light and fan connection will be
|
|
If there are four members in a family, then total number of family which required energy security will be as follows:
|
| (2a) |
Substituting P2001 = 1 026 428 658 [7] in Equation (2a), we obtain:
|
| (2b) |
6.2 Electricity requirement per family
If 20 W fluorescent tube light load is used for 6 h a day, then
|
| (3a) |
If 60 W fan load is used for 18 h a day, then
|
| (3b) |
|
| (4a) |
|
| (4b) |
6.3 Optimization of SAPV panels per family
One PV panel is having surface area of 0.6 m2. The efficiency of the panel (
) varies from 12% to 8% depending on the make and ground conditions like dust, cleanliness of the PV surface and so on.
Power produced by SAPV panel (Pw) having an area A for h sun shine hours is given as:
|
| (5a) |
For
= 12%, Iw = 600 W/m2 and h = 10 h, the energy produced per day by one PV module is
|
| (5b) |
Thus, the total number of SAPV module required for meeting the energy requirement can be obtained by dividing Equation (4a) by Equation (5b) as
|
| (5c) |
Efficiency of typical inverter can be taken as 95.2% as suggested by Chail et al. [13].
Taking the value of
inverter = 0.952, Equation (5a) gives
|
|
Substituting the value in Equation (5c), we obtain
|
|
The number obtained from the above equation can be different for different values of efficiency (
), insolation (Iw) and sun shine hours (h) as mentioned by Equation (5a).
It has been noticed that the Solar Panels do not maintain constant efficiency through out their life span. The efficiency of the SAPV module depends on the dust content of the atmosphere, wind speed, maintenance (cleanliness) of the PV surface and so on. Over a period of time, the efficiency of the SAPV module decreases because of settlement of dust and aging of the PV cells. This effect has been considered by varying the overall efficiency of PV module from 12 to 4%. The results have been reported in Table 6 and shown in Figure 2.
|
6.4 Power produced by SAPV panels given to a family
Power produced per panel is given by Equation (4a), which varies from place to place as Iw varies from place to place (Table 4). Number of families residing in each district has been calculated by dividing the population of the district by 4 (Tables 3 and 5).
If N is the total number of families residing in a district, then the total power produced in a district (ED) will be given as
|
| (6) |
The value of ED for each district of the country has been computed, and the results have been given in Table 5.
|
|
Power produced by SAPV modules in a state (ES) is given by
|
| (7) |
The value of ES for each state has been computed and is given in Table 3.
The power produced by SAPV modules installed through out India (EC) is given by
|
| (8a) |
According to Table 7
|
| (8b) |
|
As given in Equations (2), 92% of the population will require additional source of electricity to meet the minimum electricity needs. Assuming that this additional electricity requirement is met by SAPV panels, then
|
| (9a) |
Average cost of electricity in India is about Rs 5.5/kWh, which is equivalent to
0.09/kWh. (Taking 1
= Rs 62.11; 11/3/2008.)
Hence, in terms of money, the total power produced by SAPV panels is equivalent to
|
| (9b) |
6.5 Carbon credits earned by SAPV system
The reduction of carbon dioxide by Solar Photovoltaic Power Plants installed all over the world has been compiled by Denis Lenordic. Data for CO2 emission reduction by the top 200 Solar Photovoltaic Power Plants are available at http://www.pvresources.com/en/top50pv.php [9]. The data available include power produced per annum in MWh, annual carbon emission reduction. Average annual carbon emission reduction per MWh of electricity produced, for the top 100 solar voltaic power plants, data of electricity produced in MWh and emission reduction per annum for which are available, comes to 0.932 tons of carbon dioxide emission reduction per MWh of electricity produced..
Taking this average (0.932 tons of carbon dioxide emission reduction per MWh for the SAPV plant installed in India)
|
| (10a) |
If carbon dioxide emission reduction is at present being traded at
20/tons,
|
| (10b) |
Here, 1
= Rs. 62.11 (Reserve Bank of India reference rate as on 11 March 2008).
Effect of the decrease in the efficiency of the PV module over a period of time has also been considered. As mentioned in Section 6.3, the efficiency of the PV module decreases with time, the power produced by the SAPV system also decreases. It has a direct bearing on the carbon credits earned, as the Carbon Credits earned by SAPV plant is directly proportional to the electrical power produced. Effect of efficiency on carbon credits earned by all the SAPV system to be installed for providing minimum subsistence energy to each and every family in the country has been computed using Equations (9a), (10a) and (10b) and is given in Table 6.
6.6 Return on capital cost
The cost break-up of the SAPV system for one family has been given in Table 7. The costs of the components have been taken as quoted by local supplier, namely M/S Advanced Electronic System, Okhala Phase I, New Delhi 110020, Tiwari (2003) [11]. The return on capital cost for different years has been calculated as follows:
(i) Assuming life of the system = 30 years
If P = present capital cost =
724.52 (Table 7), Pu = unit capital cost = capital cost of 1 KWp, which is given as (Equation 4)
|
|
The average Pu for the whole country can be computed using Equation (2) and Table 4 and Equation (8b) as
|
| (11) |
|
|
50
If the batteries used in the power backup system have average life of 5 years and have salvage value of
8.05, then
|
|
|
| (12a) |
Substituting n = 30 (for life cycle = 30yrs) in Equation (12a)
|
|
By substituting appropriate values, one obtain
|
| (12b) |
The annualized cost (R) can be calculated as follows [6]:
|
| (13) |
From Equation (12b), the annualized cost is given by
|
|
With the numerical values of various parameters from Equations (9b), (10b) and (12b), the return on capital can be calculated as
|
| (14) |
|
| (15) |
It is clear from the above calculation that the return on capital cost decreases from 5.75%/annum to 5.61% which is marginal while annualized cost decreases from
58.65 to
52.56 with increase of life of SAPV system by 20 years.
The effect of the decrease in the efficiency of the PV module over a period of time on return on capital has also been considered. Since the power produced by the SAPV system and carbon credits earned decreases, the return on capital also decreases (Table 6).
|
| (16a) |
Total electricity produced by these SAPV panels = 102.287 x 106 MWh/annum =
9057.77 million/annum.
|
| (16b) |
| 7. SAPV PANELS VERSUS CONVENTIONAL POWER |
|---|
|
|
|---|
At present, capital cost for installation, erection and commissioning a thermal power plant comes to roughly
8.86 x 105/MW [8]. In addition to this, the power produced in the Thermal Power plant needs to be transported and distributed to make it available to the end user. The transportation and distribution of power is done through a distribution network. The conventional Power Plants (like Thermal Power Plants) generally produce electricity with a very high voltage (11 KV or higher) so as to reduce the transmission losses. The cost of laying transmission lines depends on the voltage as well as the distance to which power is to be transported. The present rate of laying high-voltage transmission lines are of the order of
0.161 million/km. The high-voltage electricity is first transported to the area of consumption, and then it is converted into medium voltage 6.6 KV to 440 V electricity by step-down transformers. This is then fed into the local distribution network. The electricity supplied to end users in India is of 220 V, 50 Hz rating. Damodar Valley Corporation has estimated that out of total cost of setting up transmission and distribution network, transmission network accounts for 87% and distribution network for 13% of the total capital cost [12]. The capital cost of laying transmission and distribution network across the country or cost of upgrading the existing transmission/distribution network so as to enable it to carry additional load and that of laying it at places where there is no transmission/distribution network so as to make electricity available in each village will be phenomenal. The Rural Electrification Corporation Ltd., a government of India enterprise solely responsible for electrifying Indian Villages, has claimed to have electrified 356 412 villages by the end of F.Y. 2006–07 [8]. Cost of electrifying 356 412 villages over a period of 38 years comes to
5.521 x 1011. The present cost of electrifying 356 412 villages will be much higher than
5.521 x 1011. There are 602 Districts in India (2005 statistics) and as per 2001 census there are approximately 639 000 villages. Thus, only 55.7% of the villages are electrified by the end of F.Y.2006–07. It can therefore safely be assumed that cost of electrifying (laying transmission and distribution network) balance 44.3% villages will at least be equal to
5.521 x 1011.
Generally, modern Thermal Power Plant has Plant Load Factor (PLF) of 85% (Source NTPC report). A Thermal power plant of 1 MW will produce power which is given as
|
|
Cost of a 1-MW Thermal Power Plant =
0.89 million.
Hence, cost of a thermal power Plant producing one million units (kWh) per annum is 0.89/0.74 =
1.2 million.
Thus, cost of installing a thermal power plant producing 102.287 x 109 kWh/annum, i.e. 10228.7 million units/annum, will be
|
| (17) |
In addition to capital cost, the conventional power plants (e.g. Thermal power plants) incur running cost to produce electricity that comes to roughly
0.03/kWh, the cost of transmission comes to
5.64 x 10–3 /kWh [8]. Figure 1 and Table 8 gives the details of various cost of supplying electricity to the end user.
|
| 8. CONCLUSIONS |
|---|
|
|
|---|
On the basis of present studies, the following conclusions have been drawn:
- Annualized cost decreases from
58.65 to
52.56 with increase of life of SAPV system by 20 years.
- There is marginal effect of life of SAPV system on return on capital.
- The Government of India can earned total carbon credit of amount
1910 million/annum on the basis of energy security.
- The cost of installation of SAPV (Equation 16a) is much less than cost of installation of thermal power plant of same capacity to achieve the target of energy security in India (Equation 17).
- Carbon Credit earned as well as the power produced from SAPV systems decreases over time with decrease in efficiency. It is clear from Figure 2 that Return on Capital falls much more rapidly with decrease in efficiency than fall in power produced.
| REFERENCES |
|---|
|
|
|---|
- Kalshian R. Energy versus emissions: the big challenge of the new millennium. By Info Change News & Features. (2006) www.infochangeindia.org/agenda5_01.jsp.
- Anon. Photovoltaic system economics. Economics and environmental impacts. (2003) http:/www.pvresources.com/en/economics.php.
- Prakash O, Chel A, Tiwari GN. Performance evaluation and economic analysis of PV integrated mud house for composite climate. (2007) 3rd International Conference on Solar Radiation and Day Lighting (SOLARIS 2007): New Delhi, India.
- Anon. European Climate Exchange. (2007) a. www.europeanclimateexchange.com.
- Anon. International Energy Agency. (2002) http://www.iea.org.
- Tiwari G.N. Solar Energy (2002) New York: CRC Press.
- Anon. International Energy Agency. (2005) http://www.iea.org/Textbase/stats/index.asp.
- Anon. Final report. (2008) http://www.cercind.gov.in/11012008/Final-Annual-Report.pdf.
- Denis Lenardic available at web site of Atomstrom freie. (2007) b. http://www.pvresources.com/en/top50pv.php.
- Bansal NK, Minke G. Climatic Zones and Rural Housing in India. Scientific Series of the International Bureau. (1988) Kernforschungsanlage J
lich GmbH. - Tiwari GN. Greenhouse Technology for Controlled Environment (2003) New Delhi: Narosa Publishing House.
- Anon. Damoder Valley Corporation Annual Report (2008) http://www.dvcindia.org/index.htm.
- Prakash O, Chel A, Tiwari GN. Performance evaluation and economic analysis of PV integrated mud house for composite climate. (2007) 3rd International Conference on Solar Radiation and Day Lighting. SOLARIS 2007.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||














