Impact of Incentives Towards Lowering the Levelized Cost of Electricity of Concentrating Solar Power Plants in India
Abstract
Among the two options for harnessing solar energy for generating electricity, the levelized cost of electricity of concentrating solar power (CSP) plants is much higher than that for solar photovoltaic (PV) power plants. To make CSP plants financially competitive, several potential strategies are being explored including design of financial/fiscal and regulatory incentives. The extent of various incentive(s) that makes CSP generation financially viable largely depends on the type of proposed incentive. In view of this, an attempt has been made in the present study to undertake an assessment of relative efficacy of five potential incentives for 100 MW wet-cooled parabolic trough solar collector (PTSC) and dry-cooled central tower receiver (CTR) based CSP plants with the provision of 6.0h and 12.0h of thermal energy storage (TES) in Indian context. With in the framework of broad assumptions made about the provision of an incentive for debt and equity component in the plant financing, it is observed that the investment tax credit is likely to be an effective incentive as the same leads to reduction in the LCOE in the range of 31.4-33.5%. The other potential incentives that helps in lowering the LCOE are viability gap funding (26.3-28.2%) followed by soft loan as interest subsidy, generation based incentive and production tax credit (25.7-27.5%). The financial support mechanism that reduces equity amount in early stage of useful life of the CSP leads to relatively higher reduction in LCOE.