CHAPTER 2

ECONOMIC ANALYSIS OF SOLAR ENERGY:

A REVIEW OF EMPIRICAL EVIDENCE AND ISSUES
FOR RESEARCH
 CHAPTER 2

ECONOMIC ANALYSIS OF SOLAR ENERGY:

A REVIEW OF EMPIRICAL EVIDENCE AND ISSUES FOR
RESEARCH

2.1. INTRODUCTION

In this chapter, an attempt has been made to review briefly the important
articles, papers, research projects published on various kinds of renewable energy and
solar energy in particular in India and outside India. Only a few numbers of studies
and researches are found in India compared to those in other countries. During the
review, we can find that solar energy can be looked into two ways one, by how solar
energy is converted into a useful energy. Here it is classified as passive and active
solar energy and, secondly by the type of energy converted into and grouped into
solar thermal energy, solar photovoltaic power and solar concentrating power.

Irrespective of the area of the study, large amount of studies are found related
to electrification of rural area with the solar energy, more specifically rural areas of
the developing countries. Studies say that it is viable technically and economically to
use solar energy in the rural area. A few studies can also be found related to market
potentiality for solar energy and some studies say that target customers can be
builders, domestic people to promote solar energy. Further, studies are also found
related to the role of solar energy in mitigation carbon emission and other health
haggard gases coming by using other fossil fuels. This leads to sustainable energy
system, thereby promising to be cleaner and more secure future.

The present chapter is organized on the basis of the studies conducted on solar
energy at international and national level. The issues found in the review are like solar
energy economic feasibility, role in mitigating green house gas emission, rural
electrification and future market. It is observed that more importance and systematic
studies on solar energy started during the seventies. During the past, most of the studies
concentrated on solar energy and its role to meet rural energy demand, but in recent past
we can find studies related to the development of technology in harnessing solar energy,
its role in reducing carbon emission, development in photovoltaic technology etc studies
are found. Since, the studies are arranged on international and national level, there
maybe possibility of different themes repeated from time to time.

13
2.2. REVIEW OF LITERATURE

It is found during the review of literature that studies conducted on solar

energy at the international and national level mainly concentrated on the economic
benefits, its use in rural energy demand, environmental purification, market feasibility
and social benefits. A few studies are concentrated on comparing benefits between
solar energy with different conventional and fossil fuel energy sources. Some of the
authors argued that solar energy is not the substitute to the conventional energy but it
is just one of the alternatives. The studies also say that publicity given to solar energy
systems is not adequate and most of the people don’t know its long term benefits
especially in the developing countries like India. Some authors have given the hint as
to who are the target customers.

2.2.1. Studies conducted at International Level

Harrigan (1976) in his study opines that solar total energy power-generation
facility can moet both the thermal and electrical needs of the community. It is found by
the researcher that at $4. 00/GJ and collector costs of $107/m2, sales of thermal energy
not only pay for the distribution system but also help offset the high cost of solar
electrical generation in high-density situations. Because of the high capital cost of a solar
total energy system, maximum utilization of all solar energy collected is necessary for
optimum economics. If the equipment costs used to displace the fossil fuel, then the
operating expenses and capital recovery factor would decrease from 0.06678 to
approximately 0.05410. This would drastically affect the economics of the highly
capital-intensive solar total energy concept by reducing the annual revenue requirements
for capital equipment by 19 percent.

It is also worthy of note that the value of thermal energy varies from $7.00/GJ to
$8.35/GJ. This compares with the current rate of approximately $7.00/GJ for electric
resistance heating energy at $0.025/kWhr. Both conventional electric energy and solar
total energy facilities are highly capital-intensive and the costs of thermal energy from
the two technologies appear to be equivalent. The shift to capital-intensive technologies
to displace fossil fuel consumption will precipitate higher energy costs, regardless of the
technology.

Shams and Fichtenbaum (1976) in their study propose an approach for dealing
with the economic uncertainties by utilization of solar energy as an alternative means of

14
providing heat for residential structures. Using a simulation model the authors obtained
data on the performance of a solar heating system (used in conjunction with a
conventional heating system) for an average insulated house. Relating performance data,
solar heating system costs is used a multiple regression technique to estimate the cost
functions for simulated solar heating system design. Then constructed cost functions for
the present value of conventional fuels taken over the expected life of the solar heating
unit. Using these cost functions the writers were able to find the combination of solar
and conventional heat which would minimize heating costs and conserve conventional
fuels, then examined the role of government-policy in promoting the utilization of solar
energy. Cost functions suggest that the proposed tax credit can provide an economic in­
centive to install a solar unit with a greater capacity and thus increase energy
conservation.

Reiger (1978) opines that life cycle cost of the solar energy system is used by
the business firms to make decisions on capital out-lays by builders, lenders etc.
Author says that it is the builders who are most often first customer or decision maker
to consider the use of solar energy or not (Reiger, 1978: 249). While considering the
solar system, builders cross check the marketability or salability of the units and the
cost of the building as a determining factor. In case of lenders they assess the extra
carrying cost of the solar systems and pay back assurance. Lenders are in favor of this
because energy saving cost will improve the pay back capacity. For home buyers, it is
more attractive if it is marketed within their limits and government benefits since
these are the important stimuli to buy the solar energy systems. The paper also tried to
point out that solar energy systems have more attraction if the systems have added
features (Reiger, 1978: 251).

Rosenberg (1978) in his paper takes a cautious view of the solar thermal
energy use as a reasonable alternative to fossil fuels for heating and cooling of
buildings. The paper emphasized on the two areas one is the relationship between
solar thermal heating and cooling of building and electric utility rates, secondly, the
social and private opportunity cost of solar thermal heating for single-family
residence (Rosenberg, 1978: 306). The author concludes that the price of solar space
heating is not only competitive with alternative heating systems using fossil fuel or
electricity in single family residence but also mentions that the solar heating plant is

15
not an alternative to conventional heating plant. Rather it is an add-on facility,
because the basic fact is solar energy competency with kWh level.

Gerdon (1981) in his article reviews various models on solar market

penetration, specially related to non-cost and buyer behavior factors which are
emphasized. All the revived models are categorized as technical-economic models
and purchase intention models. The technical-economic models fundamentally
depend on the solar adaptation decision in the cost and performance of solar
technology. Whereas, the purchase intention models are designed to relate the
probability of purchase of a solar system by an individual or organization to financial
and non-financial attributes of technology (Gerdon, 1981: 67). Finally author made
the recommendations like financial evaluation for solar system which should be
changed over time as the constraints in the conventional fuel market might lead to less
stringent financial requirement for solar, number of successful solar installation
should be considered before taking any future installation decision, performance in
financial incentives, difference in decision making among different types of firms and
organization to serve as a basis for market segmentation.

Brown (1988) in his study says that there are three ways of collecting solar
energy, namely, flat-plate collectors, focusing collectors and passive collectors. The
collected heat can be used heating purpose, cooling purpose, to pioduce electricity
and can also be used for transportation purpose etc. Among all the renewable energy
sources, solar energy is capable of supplying more energy. Suppose energy available
4.5x1014+ kWh per annum is taken into consideration, and then it gives continuous
yield of 2.90x10I0+ kW. This would supply 2.4 kW to 12.1 billion people. Since this is

greater than the estimated caring capacity of the earth, this would be enough energy to
supply the entire planet regardless of the population.

Charters (1991) outlines that solar energy options - exist for both developed and
for developing nations although the form of technology employed most widely may vary
greatly from country to country. The efficiency and cost-effectiveness of solar energy
plant is highly locale dependent and will be strongly influenced by governmental policy
and planning decisions. One of the attractive aspects of solar energy utilization is the
creation of jobs. In developing countries, the labour intensive nature of die solar plant
can lead to job creation for the mass of unemployed labour; in the developed nation’s
new service industries can be created from an active solar programme. Recent estimates

16
indicate job employment possibilities at 248/thousand GWh/year for the solar industry as
compared with 116/thousand GWh/year for the coal industry which is becoming
increasingly centralized and mechanized. Finally it is said that in the energy economy of
the 21st century, solar energy utilization will play an increasingly important role as the
world with its increasing population struggles to achieve a truly sustainable energy
society.

Coldicutt and Terry (1992) in their paper attempt to show the importance of
implicit concepts in the consideration of energy use for passive climate control in
buildings. Much contusion results from widespread failure to define key concepts,
especially those related to human requirements. The paper also argued that
meaningful quantification of total solar energy use is impossible, and has therefore
argued against attempting to make such statements. If the aspect of solar energy use is
to be quantified, the purpose of quantification should be stated, the aspect should be
carefully defined, and any contextual qualifications should be stated. In some cases
this process purpose of defining, type, use, baselines and context may show that
quantification cannot be meaningful. The authors also opine that if the use of solar
energy were unimportant to life on the earth and, if its use is entirely outside our
control, then we might reasonably ignore these difficulties of definition.

Flavin and Nicholas (1992) in their article say that the transition to a renewable
energy based economy will inevitably reshape many aspects of today's societies. While
some of the changes can be anticipated, others can only be guessed. However a
sustainable energy system promises to be cleaner and more secure future. Since non­
renewable energy sources may be more expensive, the renewable energy system as a
whole will likely be far more economical.

The authors sensed that the world has already embarked on the next great energy
transition - under the pressures of economic, environmental, and social limits. This has
made the old system unsustainable and obsolete. The main danger is that the new energy
systems will evolve too slowly, overtaken by environmental problems and the social and
economic upheavals that could accompany them. Societies, therefore, have only a few
short decades to achieve a sustainable energy economy. In the end, the key to
overcoming the political barriers is demonstrated that a solar economy would have major
advantages over today’s dirty and crisis prone fossil fuel-based systems. As the
opportunities become clearer, the political momentum for change will build.

17
 Kuhne and Aulich (1992) in their study infer that compared to the enormous
theoretical and technical potential of solar energy conversion, little use is being made so

far of already developed and demonstrated solar technologies. Solar thermal and photo­

voltaic generators are reliable and safe, and they offer the prospect of significant fuel

savings in combined solar-conventional heat hybrid power plants as well as in stand­

alone systems. Solar thermal power plants (with an integrated fossil backup system) are

close to being economic in areas with high solar radiance. The use of PV generators is,
so far, limited to small-scale remote applications.

For strategies of a massive CO2 reduction, energy conservation together with the
broad-scale implementation of renewable technologies, including the combined use of

solar-thermal and PV systems, become indispensable. But the question of energy storage
has to be addressed again. A significant reduction in the cost of PV systems has already

been achieved, but further reductions are still necessary. For a large-scale use in the

power sector, production processes must be developed for efficient thin, layer modules

requiring less energy than the presently prevailing crystalline silicon technology. PV

components should preferably be integrated into existing structures of buildings, thus

reducing or avoiding the need for investment in components such as supporting

structures or foundations. In addition, feeding power into the electricity grid would

reduce emissions aad limit the need for expensive batteries.

Subsidies for die build-up of large-scale production lines for PV components

may be one of the options to enhance the dissemination of solar energy systems. On a
shorter time scale, major worldwide demonstration programmes for remote applications,

and for feeding solar electricity into the public grid by means of decentralized and large-

scale central systems seem more appropriate to improve our understanding of PV

systems thus stimulating the demand for building large-scale PV factories. To encourage
solar energy, the authors say that penalizing pollution and emissions seem the most
effective approach, and it should be pursued in a determined but a careful way and it is
also said that politicians should involve more in the decision making process on what

energy options should be chosen for the future.

Liebenthal, Mathur and Wade (1994) indicate that the countries in the pacific

islands with low load density, usually in rural districts that use electricity mainly for
house lighting and where the load is not expected to grow rapidly, individual solar

photovoltaic (PV) systems may be cheaper than small diesel systems. Initially,

18
equipment failures were important problems with the early PV systems which later
were rectified. The authors opine that in future, institutional considerations will be
critical in determining the success of solar PV systems, even though technical
considerations (such as the choice of components and the design and sizing of the
system) will remain important factors in the development of solar PV power for rural
electrification. Thus, the main challenge in the pacific islands for the proper
maintenance and expansion of PV systems will be the development of an appropriate
institutional approach. A number of institutional approaches have been attempted in
the pacific islands, but most of them have failed to deliver reliable electric power to
the consumers.

A comparison of the costs of the solar PV and diesel systems should be based
on the life-cycle costs of providing the final services that the customer desires (e.g.,
household lighting, refrigeration) for a number of years. The broad components of
life-cycle costs are customer costs which consist of the initial and replacement costs of
end-use appliances; generation equipment costs which consist of the initial and
replacement or overall costs of the equipment used to provide electricity to the
customers; and operation and maintenance costs.

Based on data from the pacific islands in terms of life-cycle costs, solar PV
power is competitive with stand-alone diesel systems for serving the small loads
typical of rural households in remote areas, although the difference in the overall life-
cycle costs of solar PV and diesel systems is less than 15 percent. Thus, under the
right circumstances, solar PV systems are marginally cheaper than diesel systems for
rural electrification.

Ishiguno and Takamasa (1995) in their discussion paper mention that energy
demand in the non-OECD countries during the 1980s increased at a rate of 2.8 percent
per annum. In the Asian developing countries, the growth of energy demand was 5.3
percent per annum in the same period; it was considerably higher than in any other
region in the world. As a result, the share of Asian developing countries in world energy
consumption increased from 8 percent in 1970 to 11 percent in 1980 and 15 percent in
1990. It is expected that this trend will continue. The causes of this rapid increase
included high rates of economic growth, high-energy intensities, the rapid pace of
industrialization, growing proportion of energy-intensive industries in the industrial
sector, rapid electrification of industries and households, and rapid motorization.

19
 The expected large increase in energy demand in these countries is likely to
cause several issues, including environmental deterioration, high costs of enlarging the
energy infrastructure (especially for electricity) and increases in world energy prices.

To meet the increasing demand for energy, the Asian countries will need to
increase domestic energy supplies, build additional power plants and hydroelectric dams,
expand electric distribution systems, expand port facilities where fuel imports are
delivered and strengthen the systems for transporting coal and petroleum. The cost of
these investments is expected to be very high.

In 1990 the developing countries of Asia accounted for 8.4 percent and 11.9
percent of world imports of petroleum and coal respectively. These shares are expected
to increase substantially in the future. Due to high domestic demand, China is believed to
have become a net importer of petroleum in 1993, and Indonesia is likely to become a
net petroleum importer before the end of the decade. Since coal is expected to remain the
main energy source for electricity generation, imports of coal into these countries will
also increase at a rapid pace. The importance of growing energy demand in the Asian
developing countries in world energy trade has been increasing over time and will
continue.

One way to control the growth in energy consumption would be to place greater
emphasis on energy conservation. Energy efficiency in most of the Asian developing
countries is still quite low compared with that in industrialized countries. In the industrial
sector, much of the equipment used in these countries is old and inefficient. Energy
conservation efforts have been encouraged in the industrial sectors of some of these
countries, but there is still much room for improvement. Energy efficiency could also
improve significantly if new mass-transit systems were built in urban areas. The
replacement of older household appliances with more energy-efficient ones would also
reduce energy consumption significantly. Paper also mentions the argument that
investment in energy conservation does not provide adequate financial returns, the
beneficial impacts of reduced energy consumption by firms and individual persons on
the environment, on the energy related infrastructure, and on world energy prices would
be substantial. Controlling the increases in consumption through conservation would
widely benefit energy consumers by holding energy prices down.

20
 Cabraal, Davies and Schaeffer (1996) mention that most of the governments in
developing world give high priority to rural electrification to meet economic, social,
political, and regional development goals. By 1990, after nearly two decades of
aggressive public investment in the energy sector, an additional 1.3 billion persons in
developing countries had gained access to grid-based electricity, of these about 500
million living in rural areas. Despite these efforts, the pace of electrification could not
keep up with world population growth, which increased by 1.5 billion persons during
this same period. In 1990, about 1.8 million people in rural areas of developing
countries were still without grid-based electricity.

Grid-based electricity is more expensive in rural than in urban areas due to

lower load densities, lower capacity utilization rates, and often higher energy losses.
The costs of grid-based rural electrification extensions have ranged from $230-$ 1,800
per connection, with a median cost of about $ 520 per connection (excluding the cost
of basic generating equipment and high-voltage transmission lines). Since these costs
rise considerably in areas with small loads and low load densities (i.e., areas with low
population density), alternative approaches are necessary in order to meet rural
electricity needs in the least expensive way.

Over the past decade, the use of photovoltaic (PV) powered solar home
systems in remote communities has received increasing attention as an economically
viable alternative to grid connections, kerosene lighting, and rechargeable or
disposable batteries that power appliances. Governments, non-governmental
organizations (NGOs), the private sector, and the donor community have acquired
considerable experience in the design and implementation of solar home system
projects. The PV niche within a national rural electrification strategy would comprise
those areas where small amounts of electricity are required and load densities will
remain modest. Early solar home system programs encountered a variety of difficulties.
These included unreliable technical performance, organizational and cost recovery
problems, and user dissatisfaction resulting from unrealized expectations. More recent
projects utilizing improved systems have incorporated lessons learned from these
experiences and are performing quite well. As a result, the number of PV programs has
grown substantially. About 4,00,000 solar home systems are now installed worldwide.
These include 50,000 in China, 40,000 in Mexico, 20,000 in Kenya, 20,000 in Indonesia.

21
 Rockefeller (1996) in his report states that 70 percent of population in the
developing world is still using kerosene and fuel wood, which resulted in 400 million
people health under risk. Solar energy is ultimate solution for this problem but private
player still has not taken much interest in the market because of large investment and
problem of handling capital flow. This report proposes the value chain of investors
and includes pension funds, endowments, insurance companies and investment banks
can securitize the loan portfolio. The leasing companies can be finance companies,
regional banks, national banks and loans to end users are originated by village credit
facilities, local banks and retailers. This is all about financial services value chain and
the report also suggests the product value chain.

Aires (1998) says that if the present carbon emission is continued then it will
reach 49 billion tons of carbon by 2175 with an average global temperature rising to
maximum 6°C. If the solar energy prices will fall by 50 percent per decade, then it
will replace fossil fuels in every economic activity by 2065. If the cost of solar energy
decreases by 30 percent per decade then all economic activity run by solar energy by
2015. Due to efforts of US government, solar energy systems are all ready making
sales about US $ 1 billion. India should think in terms of carbon emissions and money
saved, the equation (The high cost of Solar Energy plant) - (Thermal earned from
trading the saved emissions) = (The low cost of coal power plant) (Aires, 1998: 3). In
India, cost of carbon saved through solar thermal power plant is about US $ 64-82,
which is higher compared to industrial cogeneration, wind farms etc.

World Bank (1998) study yielded two key products that are immediately
applicable in other situations in which power system planners use data to guide their
decisions and minimize the serious impact of power production on the environment. The
first is a testa! decision making process to help planners develop sound plans for power
development. The second key product is a ‘toolkit’ consisting of a series of planning
‘modules’ that can be used flexibly and that provide a variety of choices to users in
different states with a wide range of concerns.

The study says that the set of structured questions should be scheduled to explore
the environmental impact of reform and may be answered through the appropriate
application of modeling tools. The questions could include what the consequences would
be of choosing plants on the basis of economic costs and allowing environmental costs to
be internalized or, to explore the feasibility of technical options, questions could include

22
how much it would cost to use new clean coal technologies to wash coal, what the
potential would be for renewable energy supplies, and what level of environmental
benefits could be achieved by using these methods? Once the questions are clear, it is es­
sential to determine basic parameters, such as the study boundary (which consumers and
power plants will be studied), the study period and assumptions to be used for modeling.
Scenarios can then be developed to determine what results would occur in specific sets
of circumstances of interest to planners for example stated economic policies, energy
sector policies, policy instruments and power sector options.

Sahin, Aksakal and Sunar (1999) in their primary data based study say that the
availability of solar energy at north-eastern Saudi Arabia is high. Naturally, the
authors mention that daily mean and maximum temperature and solar radiation is high
in the summer and low in the winter season (Sahin, Aksakal and Smnar, 1999: 324).
Mainly in June, they found the highest monthly average radiation but interestingly
peak daily solar radiation is low on that month. Finally, the study says that although
the total solar radiation is high during summer the diffused solar radiation exhibits
little variation throughout the year. That means solar system can be used throughout
the year.

Tucker (1999) in his article says that cooking with the sun energy has become
a potentially viable substitute for fuel wood in the developing world. Fuel wood
scarcity is growing problem and it is addressed poorly. Solar cooking is one possible
solution but its acceptance has been limited partially due to cultural barriers, relatively
high start-up costs, and a lack of continued support subsequent to introduction. One
possible source of some binding solar cookers may be the Clean Development
Mechanism (CDM) (article 12 of the Kyoto protocols) aimed at reducing carbon
emissions to curtail the impact of global warming. CMD funding is shown to be
promising but only a partial solution. With CDM as a possible source of at least seed
capital, more ambitious solar cooking programs are feasible but their success will be a
function of addressing cultural barriers and providing support for adaptation well
beyond the introductory stage

Kaufman et al. (2000) in their research article state that roughly 2 million
people still lack grid electricity and Solar Home Systems (SHSs) which can make a
small but important contribution to climate change mitigation. Typical SHSs of 10-50
Wp will directly displace 0.15-0.30 tons of C02 per year through fuel substitution.

23
Further they explain that with 10 percent market penetration SHSs can reach 34
million households, which leads displacement of to 9.9 million metric tons of CO2
and with 50 percent market penetration SHSs can reach 170 million households which
leads displacement of 38.7 million metric tons of CO2 but from battery charging just
0.9 million metric ton CO2 is displaced (Kaufman et al., 2000: 8 and 10). And also
SHSs have significant socio-economic and environmental benefits. To make this
dream come true, the government and non- government agencies have to take lead in
terms of policy and practice.

Macauley et al. (2000) in the research suggest that Satellite Solar Power (SSP) is
an alternative to terrestrial energy resources for electricity generation. The study considers
the market for electricity from the present to 2020, roughly the year when many experts
expect SSP to be technically achievable. It is found that several trends from the present to
2020 should influence decisions about the design, development, financing and operation of
SSP. The paper contains four set of observations. The first sets of observations are:

• Current trends indicate increasing global demand for energy in general, and electricity
in particular, during the period 2000-20. Electricity demand growth rates will vary
significantly by region of the world and by stage of economic development. The
highest growth will be in the developing economies.

• Deregulation of electricity internationally will strengthen the trend toward

decentralized, private ownership and management of utilities in most countries
(developed and developing) a major departure from the tradition of nationalized
utilities.

• Nevertheless, the investment and operation of conventional electricity markets in

developing economies will likely continue to be or will be perceived to be as risky as
previously because of capital constraints, infrastructure limitations, and institutional
and environmental factors.

• Electricity generation costs in 2020 likely will be no higher than prevailing recent
levels and probably will be significantly lower.

• Global climate change is not presently a major factor in power investment decisions in
developing countries. Willingness to pay for clean technologies tends to rise with
increasing incomes, but in developing countries, clean energy may not rank highest

among health and environmental concerns.

24
Second set of observations pertains specifically to challenges facing SSP:

• The festive immaturity of the technologies required for SSP makes it difficult to assess
the validity of estimated costs and the likely competitiveness of SSP.

• State-of-the-art conventional power generation technologies increasingly incorporate

numerous environmental controls, eroding somewhat the environmental advantage of
alternatives to fossil fuel technologies, such as SSP.

• Actual and/or perceived health risks associated with exposure to electric and magnetic
fields generated by SSP are likely to be of significant public concern.

• National security and national economic considerations may discourage some

countries from participating in an SSP system operated by another country or group
of countries. Countries with these concerns may require equity participation in SSP,
limit their reliance on SSP to only a small share of their energy portfolio, or decline
use of the technology altogether.

Third set of observations pertaining economic and market is as follows:

• The energy industry should be invited to be ‘at the table’ in technical and economic
analysis of SSP - that is, to both participate in conducting the analysis and learn about
the results.

• Modeling of the economics of SSP should explicitly incorporate analyses of risk and
uncertainty and should include marketplace data about competition from terrestrial
energy markets, and provide a means for structuring an efficient long-term technology
development program that includes industry participation.

• Continued public funding of SSP for terrestrial power markets must consider the
relative return on taxpayer investment in SSP compared with other technologies in
general, and energy technologies in particular (for instance, photovoltaic’s).

Finally, the authors identified specific topics for future research:

• Focusing on the use of SSP in terrestrial markets. SSP capabilities may be applicable
to non-terrestrial systems, such as the international space station, other large orbiting
platforms, lunar bases, and other activities that are used to explore and develop space.
The benefits and costs of these opportunities should be investigated in the course of
future SSP analyses.

25
 • Perceived safety, health, and environmental risks associated with SSP in its terrestrial
and non-terrestrial power markets should be assessed and discussed in public forums
that engage both scientists and the public.

Mulugetta, Nhete and Jackson (2000) in their present study try to explore the
complexities associated with diffusion of small scale photovoltaic systems in rural
areas of developing countries, with the experience of Global Environment Facility
(GEF) project of Zimbabwe. GEF has founded 41 renewable energy projects in 26
developing countries to the tune of US $ 480 million by 2000 (Mulugetta, Nhete and
Jackson, 2000: 1070). The authors are of the opinion that GEF programme is quite
successful in achieving the targets and in creating the awareness and benefits of PV
systems. It is able to take good use of subsidy and has created a good number of stake
holders. The project also addresses the health and environmental issues etc. At the
same time, the project is no exemption to its limitations. The authors tell that any
system or projects should address the special problems of the under developed
countries like poverty, employment etc. The paper also throws light on the macro
economic problems like inflation and explains how depression will curse success of
the PV industry. As a policy matter the authors stress upon the need of sustainable
energy policy, political stability and more demand pull approach than technology
push etc (Mulugetta, Nhete and Jackson, 2000: 1078).

Spooner et al. (2000) in their study give critical analysis of large distributed
residential PV power system installed in the athletic village of the 2000 Olympic
Games at Sydney. The solar power suburb is named ‘Newington’ which consists of
629 permanent houses to able serve 15,300 athletes and officials and 7000
Paralympics (Spooner et al., 2000: 1059). The authors say that this large scale
installation of solar system is a model to the world. But as policy issues, they suggest
that electricity industry should be restructured, environmental preference, tariff etc.

Andersson and Jacobsson (2000) opine that technological change is the

driving force for development, thus policy makers have a need to understand the
techno-economic dynamics. The authors have given a model, in that they say the
present dynamics of solar cells is the technology and market, specifically for the long
run. They also write that real beginning of PV technology was in 1960’s, especially in
US, when oil crisis occurred and due to the progress in PV technology the annual
sales of PV systems have increased by 33 percent in the last decade. They also found

26
that the target set by different countries like Europe aims 3 GWp electricity
production, Japan 4.6 GWp and US 7 GWp production by 2010 (Andersson and
Jacobsson, 2000: 1044). It is Japan and USA who play very important role in the PV
technology and usage; thus the patents taken by these countries are highest in the
world. Particularly Canon and Sanya companies of Japan and, Solaex and ECD
companies of USA will act key actors in the world of PV market. As policy issues,
authors have suggested that measures should be taken towards the diffusion of solar
cells in terms of procurement of cells, new competing design and, at last, policy
should ensure careful material and environmental management (Andersson and
Jacobsson, 2000: 1048).

Alsema and Nieuwlaar (2000) in their paper analyze the energy payback time
(EPBT) of PV systems by assuming 25 percent energy loss in the production. They
have mentioned that EPBT is only 2 to 6 years, whereas life of the P V system is 25 to
30 years. In the paper given availability of future technology of PV systems and
further they have mentioned that future technology will reduce EPBT to 1.5 to 2 years
(Alsema and Nieuwlaar, 2000: 1006). In the paper it is also found that CO2 emission
from conventional electricity is 0.57 kg/kWh, but by PV systems emission is only 50
to 60 g/kWh (pp 1007), they have also written that CO2 emission is even less in bio­
mass and wind energy. In the policy implications the authors suggest that cost
effective technology should be developed and still life of system should be increased.
Finally, the paper concludes that PV system will play an important role in the future
in sustainable energy supply, especially after 2010 (Alsema and Nieuwlaar, 2000:
1010).

Barua (2000) says that the progress made in terms of large investments in the
development of technologies will reduce the cost of Solar Photovoltaic (SPV)
electricity and it is expected that the next century SPV will be a sustainable source of
clean energy. The cost of SPV electricity is also likely to be commercially viable in
the next 10 to 15 years. The paper also says that, with increase in production volume,
material will be a major factor for choosing technology. In that context, silicon-based
technologies are much ahead of others. It is also expected that within the next decade,
the PV module cost will be less that $2/Wp, which will greatly boost the market. The
author also opines that the cost goal of Sl/Wp is likely to be achieved within next 15
to 20 years by one or more of the thin film technologies. It is projected that in the next

27
decade the production of PV module will rise to 35 GW/year from present level of
200 MW/year.

Blakers (2000) in his paper strongly opines that wind energy, solar thermal
electricity and photovoltaic’s are the only truly large-scale sustainable electricity
generation technologies available. They are the only technologies that could completely
displace fossil fuels over the next 50 years. These technologies are almost free from
adverse environmental impacts. Unfortunately, the cost of fossil fuel electricity
generation is effectively subsidized by the failure to properly include environmental
costs.

About wind energy, he says that the world is now using a conventional
generation technology and several countries produce 10 per cent of their electricity
from wind energy, and 10 per cent of the world's electricity is likely to come from the
wind by the year 2020. In good sites, wind energy is competitive with all but the
cheapest coal-fired electricity. Australia has excellent wind energy resources by world
standards.

About Photovoltaic’s the author has found that it is an attractive niche markets
in remote areas and small systems. In addition, several countries have embarked on
ambitious programs to subsidize PV systems on house roofs. Costs are declining, but
are still much higher than electricity from the grid. Two new subsidy schemes
available from the Australian government (the +2% scheme and the diesel excise
subsidy scheme) will open a substantial market for PV systems over the next four
years. Finally, about Solar Thermal Electricity (STE) the author says that it suffers
from a lack of niche markets. STE systems need to be large to have reasonable costs.
However, large systems generally must compete directly with the state grids, whose
costs are substantially lower. The +2 percent schemes and the diesel excise subsidy
scheme are not likely to be of great assistance to STE systems because the market will
favor PV over STE. Presently there is no commercial sale of STE systems anywhere
in the world. It is difficult to see this situation changing in the near term unless
substantial inducements are offered.

Thus, the author concludes that the international concern over the enhanced
greenhouse effect will likely to continue to increase. The consequence of this concern
will be ever increasing support for wind, photovoltaic and solar thermal electricity. It is

28
to be hoped that Australian government policies will play in the forefront of the rapidly
growing renewable energy industry. In particular, dedicated and strategically directed

funding of research and development is required to complement funding made available

for commercialization

Oliver and Jackson (2000) in their paper illustrate that the trade-offs between

environmental and economic factors in PV technology by the use of life-cycle

inventory analysis and standard economic discounted the cash flow. In the analysis, it

is maintained that CO2 emission from PV systems ranges from 0.10 to 0.17 kg/kWh,

whereas from conventional electricity production systems its 0.55 kg/kWh, due to this

reason it is concluded that PV technology plays a vital role in CO2 abatement in

future. The present life span of PV systems of 25 to 30 years is expected to increase
with improved technology, leading to reduction in cost of technology (Oliver and

Jackson, 2000: 1015). Finally paper concludes that solar resource is much more

evenly spread compared to wind, fossil and nuclear energy.

Molly and James (2001) offer approaches to estimating the market for the use of
Space Solar Power (SSP) as a source of power to in space activities. It is suggested to

have a conceptual model and estimates based on two approaches, firstly the annualized

cost of Electrical Power Systems (EPS) from interviews and engineering data, and

econometric estimation for a customer class. Secondly, the authors also indicate the
relative market sizes for different classes of potential customers. The customers'

willingness to pay is likely to be affected by technological innovation in EPS alternatives

to SSP. Finally, it is also speculated about institutional arrangements for government and
the private sector in serving as possible suppliers of SSP. In future research, refining the
market estimates to better account for the benefits and costs of SSP could proceed in

tandem with specific deployment and cost scenarios for supplying it. Study indicated the
willingness to represent a customer point of view in serving on future SSP engineering
design teams. For advocates of SSP as a source of terrestrial power, future study could
also consider overlap in developing SSP for in-space power as well and thus contribute

to setting priorities for SSP engineering research,

Wamukonya and Davis (2001) in their study enumerate that after using Solar

Household Lighting (SHL) systems, the quality of life has improved, working hours
are increased in a day, children education is improved, income generation increased

and SHL is safe to use, thus leading to improvement is the quality of human life. The

29
problem of SHL quality of light is poor compared to grid and it does not give desired
hours of light (Wamukonya and Davis, 2001: 13). The author also suggests that
migration of rural population to urban area can be solved by installing solar energy in
rural area.

Bakos and Soursos (2002) assess the techno-economic feasibility of PV

systems in comparison with the diesel system at the tourist bungalow in Greece. The
assessment was carried out by using the statistical tools like Internal Rate of Return
(IRR), Year-to-positive cash flow, Net Present Value (NPV), Simple Payback Period
(PBP), in three alternative financial scenario viz. 70, 100 and 40 percent initial cost
covered by owner. The ROI is 13.5 to 29.5, NPV is between $ 89681 to 49326, PBP is
4.1 tol0.2 years and cash flow is 3.7 to 8.4 years (Bakos and Soursos, 2002: 190).
Lastly, they have concluded that, electricity producing from the diesel generators is
more costly than producing from PV systems. They also opine that solar
electrification is more reliable and PBP is faster than the diesel systems.

Bakos and Tsagas (2002) in their paper examine the techno-economic

reliability of grid-connected solar thermal system used for electrical saving in the
residential sector in comparison with natural gas fuel. The economic assessment is
performed using the Life-Cycle Saving (LCS) method and Payback Period (PBP) of
the investment’s initial capital cost is determined. In assessment cost of the items like
hardware, labour, operating expenses, interest, different taxes, resale value, fuel and
maintenance costs are taken care by the authors. They say that solar savings are the
difference between the cost of energy delivered from natural gas fuel and energy
delivered from the solar thermal system (Solar savings=Cost of natural gas-cost of
solar energy) (Bakos and Tsagas, 2002: 626). The results are, solar thermal should
meet the annual energy demand of an average residence and it provides an average
energy of 2501.04 kWh(e) plus 13000 kWfyth) for water heating which, as a total 73
percent of annual energy demand, that is 21088 kWh and finally the study shows that
present worth of the gains from the solar energy systems is US $ 5787. Before
arriving at the above results the following assumptions are made approximately 90
percent is financed out of total cost of the system with 9 percent interest, the resale
value is 40 percent of the original value after 20 years, cost of the natural gas is
expected to rise at 10 percent per year, maintenance cost is 1 percent, property tax 2

30
percent of the system, 6 percent effect of inflation and market discount rate is 8
percent etc.

Salameh (2003) in his paper supports the energy expert’s projection that, the
global oil production will be peak sometime between 2013 and 2020. After the peak
level, whatever the gap will come between energy demand and supply should be
bridged by non-conventional and renewable energy like solar, hydrogen, wind etc.
The author says that economic and population growth are most important drivers of
growing global energy demand, due to these factors global oil consumption is
projected to increase by 1.9 percent per year, reaching 95.8 million barrels per day
(mbd) in 2010 and it will increase to 115 mbd by 2020. The contribution from
renewable energy is only one percent to the total global energy requirement at present,
but this percentage of share is projected to go up to 6 percent in 2025 and 13 percent
in 2050 (Salameh, 2003: 39). Among the major energy sources, solar energy share is
increasing due to development in technology and awareness, usage growth was 20
percent per year in the past decade. But the installed base remains small, with only
about 1000 megawatts of power being produced through, mainly in Japan, USA and
Germany. They finally wrote that research and development should be given more
importance, so solar systems made available at the less cost.

Biswas, Diesendorf and Bryce (2004) in the paper explore the possibility of
attaining sustainable rural development in Bangladesh through fostering decentralized
rural companies based on photovoltaic (PV) technologies, because authors opines that
the solar electricity could be a promising business and able to generate employment
opportunities to landless and marginal farmers as it is not a much seasonal business
like agriculture (Biswas, Diesendorf and Bryce, 2004: 1199). The paper begins with
the discussion on the scope of P V technologies in Bangladesh, and then tries to apply
different models for sustainable rural development In different models, the authors
explain the role of the government, rebate strategy, consumers, local industries, price
of solar electricity, NGO’s etc. Further they explain the role of stake holders namely
NGO’s, training institutes, marginal agriculturist etc (Biswas, Diesendorf and Bryce,
2004: 1206). Lastly, they conclude that PV technologies used appropriately may
improve the quality of life of rural people and provide income generating
opportunities and also stresses on the requirement of the new model that specifically
address social, economic and environmental issues.

31
 Ciorba, Pauli and Meona (2004) analyze the potential economic impact of a
demand of photovoltaic (PV) devices in terms of induced production and job creation,
directly and indirectly. The authors say that implementation of PV manufacturing
facilities may stimulate several economic activities helping to set up local industries
and inducing more environmental development. Presently, USA and Japan are the
leading countries in production of electricity from PV systems and total world
electricity production through this means is about 400 MW in 2001, in business value
it is 2.5 billion euro dollars (Ciorba, Pauli and Menna, 2004: 951). Finally, the
analysis concludes that PV installation has not only created direct and indirect
employment but also has made an impact on the GDP growth of the country.

Gabler (2004) in the study covers the experience of different countries off-grid
electricity supply with solar photovoltaic in house hold electrification. Electricity
needed for the household purposes is for reading, writing, radio, television etc. It is
said by the author that, it is very difficult and costly to provide electricity to hills and
valleys of remote country side in Asia, Africa and Latin America. The solution for
this is off-grid solar photovoltaic supply. Solar photovoltaic systems have
considerable impact in improving the economic and social life style of its owners.
Majority of the families having solar electricity go to the bed later than before
electrification and that extra time they will use for productive purpose. The share of
the families owning radio, cassette players and TV sets has increased three to four
times. Further he mentions that the use of Solar Home Systems (SHS) will replace
kerosene lamps and batteries and SHS can be used for commercial activities like retail
stores, music shops, hair dressing etc (Gabler, 2004: 77). With this back ground, the
governments in many countries are incorporating SHS for individual households in
their national electricity programme. In the limitations of the SHS market, the author
does mention that only 3 to 10 percent of rural people in the developing world can
afford PV systems and another 50 percent of people can afford if appropriate
financing scheme exists and remaining population will buy only when there is heavy
subsidies are available. These possibilities are named by the author as ‘business
route’, ‘financial route’ and ‘social route’ respectively.

Green (2004) in his primary data-based study analyzes the effect of PV

systems in rural area for electricity generation in Thailand for mainly solar home
systems (SHS) and solar battery charging stations (SBCS) PV systems. Thailand is

32
one of the largest subsidies market in the world, under taken by public work
department (PWD) and department of energy development and promotion (DEDP).
The data collected on random sample basis from the government staff and village
stake holders are collected, and analyzed. The results are divided into three sections
comprising economic, technical and social sections. In the technical components, we
can find that people are using incorrect charging techniques and using old spare parts
(Green, 2004: 753). In the economic section, findings say that the PV systems had
increased the income generation activities of the rural people. Due to subsidy, people
are affording the systems. But the drawback is 20 percent of the loan sanctioned to
purchase PV systems is used for personal expenditure, high variation in the charging
fees from village to village. As a society point of view, the use of solar systems have
empowered the rural women and people are able to have more entertainment facilities
and rural migration is able reduce marginally (Green, 2004: 756). Lastly, it concludes
that, PV programme is not successful at large but is able to improve the standard of
living of the rural people marginally.

Hamakawa (2004) in his paper says that solar photovoltaic (PV) technology
plays an important role in the sustainable development of civilization in the 21st

century and he further mentions that the development of clean energy technology is
most important task of modem science. By the mass consumption of fossil fuels,
pollutants like CO2, NO2 etc will be omitted which leads to global warming. Then, the
author built a model called as ‘3E-Trilemma\ The model illustrates cyclical
correlation of the economy, energy and environment. The writer also mentions that,
Asia by 2010 will import 69.2 percent fuel to meet its total demand (Hamakawa,
2004: 03). Then, the paper deals with the key issues of PV technology and its bright
future in different stages. Finally, he concludes that with PV technology, a new kind
of energy revolution will take place, within next 25 years.

Khan Shinwari, Fahd Ali and Nayyar (2004) opine that solar photovoltaic
systems are prohibitively expensive in terms of installation costs. Power from them is
also available intermittently - only when energy from the sun is available. On the other
hand, the PV systems are free of the ever-rising costs of input fuel. They also incur
much less operation and maintenance costs and are supposed to have a longer lifetime
than, for example, a fossil fuel power plant. Thus using solar PV power looks
uneconomical in the short term, but may be profitable in the long term. It is, therefore,

33
interesting to identify the factors that can make investment in solar PV power generation
acceptable. The paper also carries out a financial analysis of installing a 10 MW solar

photovoltaic power generation plant for sale of electricity to a grid. It compares the

level zed cost of this mode of energy generation as compared to a fossil fuel plant. It

also calculates the cost of electricity generation and tariff for power from this plant. It
then identifies the factors that can make the investment in a grid-scale solar PV plant

more favorable than investment in other conventional and non-renewable sources.

Gullberg, Ilskog, Katyega and Kjellstrom (2005) in their paper have

demonstrated the implications of introducing PV systems and compact florescent

lamps in rural Tanzania. The study is based on the cost-sensitivity analysis of PV

systems with traditional diesel systems with certain assumptions. The analysis says
that the PV options are most expensive for the low load case, whereas traditional

system is most expensive for the high load case. The papers throw the light on the

environmental aspects like stoppage of cent percent CO2 emissions by using PV

systems (Gullberg, Ilskog, Katyega and Kjellstrom, 2005: 1296). Lastly, as a policy

matter author suggests that from a national policy point of view, introduction of

renewable technologies such as PV power kits for household use, should consider that

other development goals might be over seen if infrastructure planning focuses on

individual and short term needs.

2.2.2. Studies conducted at National Level

Ramkumar (1976) says that renewable (solar) energy sources can be utilized in
rural areas in developing countries by employing small-scale decentralized energy

systems. They can provide energy to satisfy the basic needs of life and build up rural
agro-industrial structures. This process is very vital to the stability and well-being of

developing nations and eventually of the entire world. All progress in the modem sector
is transient unless there is a healthy growth in the rural sector. A conscious effort must

be made to develop and apply appropriate technology at the rural level and create
millions of workplaces worldwide. Otherwise, rural unemployment becomes urban

unemployment.

Long-term real needs of the poor can be satisfied only by a technology that is
suitable for labor surplus societies. Only such technology can build up self-reliance
without destroying the psychological structure. Further, the author opines that the

34
establishment of an energy center to provide energy for the basic needs of human exis­
tence and later expanding its functions to encompass agricultural and small-scale
industrial needs appear to be a natural choice for developing countries to adopt.

Desai (1978) in his paper mentions that in India 60 percent of the villages
having less than 500 persons of them only 11.5 percent were electrified. For the
process of more economic development, electrification to all over the country is an
important programme more specifically in rural areas of developing countries.
Further, he mentions that 82.5 percent of electricity in the rural area is used for
agriculture and remaining is used for the commercial, industrial, domestic, street
lighting etc purposes (Desai, 1978: 211). The author suggests that the solar
electrification is more viable for small village with low load requirement and also
mentions that village potentially of solar energy is determined on the basis of distance
of the village from the main grid which supplies traditional electricity. Further he
suggests that if village is in more distance to the main energy grid then solar energy is
more viable and vice-versa.

Ganesan (1978) studies the spatial distribution, seasonal variation, frequency

distribution of global solar radiation, annual range (mean monthly maximum-mean
monthly minimum) of bright hours of sunshine over India, and identified the areas of the
country where insulation conditions are maximum to provide possibilities of solar
technology applications for water distillation, water heating, drying, cooling, cooking,
refrigeration, air conditioning and pumping water for irrigation etc. With these
objectives, the study concludes its observation on the arid and semi-arid regions of the
country viz. Saurashtra, Kutch, Gujarat, Rajasthan and parts of Peninsula with a high
frequency of oceurrence-of solar radiation with values 400-600 cal/ cm2 /day and above.
During the hot weather period (March to May) are most suited for application of suitable
technology for utilization of abundantly available solar energy.

Subba Rao and Jayachandran (1985) carry out the study with the main purpose
of identifying the market prospects for solar water heaters as an exploratory attempt.
During the study the authors interviewed various kinds of consumers like domestic,
industrial, institutional etc. Some of the findings of the study are the most popular
devices for heating water are geysers, boilers and some time electricity, except in the
larger institutions and households where hot water is required for purposes other than
bathing, hot water is generally required only in the mornings. It is felt that the

35 */ '■ , :
publicity given to solar water heaters is not adequate. Though the awareness of the
existence of solar water heaters is quite good, most people do not really know how a
solar heater works and its long term benefits. The most popular sources of information
of solar water heaters are newspapers and magazines, more than half of respondents
interviewed showed, a willingness to change over to the solar water heating system.

The main reasons for being unwilling to change for solar water heating system
are: high initial cost of investment, inability to use it in cloudy weather, lack of full
knowledge about the working and benefit of the solar heating system. The awareness
of tax incentives given by the Government of India on the purchase of solar water
heating system is very poor and most the people are unaware of it. Large number of
people is willing to install a solar heater if it is available at a lower cost. Outright
purchase seems more' appealing than either leasing or hire purchase schemes, though
institutions do seem interested leasing as an alternative. Finally, people consider that
the acquisition of a solar heater will not affect their social status in anyway

Doraswami (1994) in his article finds that the organized efforts by Indian
government to promote solar energy started in the year 1984 (Doraswami, 1994: 51).
Initially Government gives subsidy to SWH up to Rs 3000, but now giving direct
financial benefit is all most abolished, then also demand for SWH is increasing in
1986, 1300 SWH was installed and in 1996 more than 15000 were installed. The
article also focuses on the economical benefits of SWH. The best system capacity of
giving trouble free service for say 10 years and heating 100-LPD from 25° C to 70°C
for 300 non-overcast days a year and save about 5.25 kWh a day and hence about
1600 kWh a year. In monetary terms, the saving amount is about Rs.2000 a year and
in 10 years it leads Rs.20000. These figures may be about 50 percent higher than the
actual savings because the system is over designed (Doraswami, 1994: 57).

Kathikeyan, Raviprakash and Sethumadhavan (1996) in their paper discuss the

vital role that can be played by solar and other renewable energy sources in preserving
the precious vegetables, fruits and other perishable commodities in the remote villages
in India. It is estimated that, foods worth Rs.1000 to 1500 crores coming from the
villages get perished every year due to lack of adequate cold storage facilities. In
addition, around 30 percent of the nutrition value of the produce is lost due to poor or
non-availability of storage facilities by the time the produce reaches the utility point.
Hence, to develop a solar assisted cold storage facility, a pump-less vapor absorption

36
refrigeration system (PVARS) works solely on thermal energy. The thermal energy
requirement, for PVARS can be met by solar or any other locally available renewable
energy sources. On the cost front, the authors calculate that the capital cost of the
PVARS is higher by 25 percent over the conventional systems and when the system
capacity is more, the operating cost of PVARS is less than conventional systems. In
addition, the PVARS operates solely on low-grade energy thereby scores over
conventional systems in its suitability for villages. Moreover, it has been calculated
that, the cost of installation of this cold storage can be recovered in a period of 5 years
by-way of saving of perishables.

Kishore and Kumar (1996) are in the opinion that by solar pond, water can be
heated up to 60° to 80° C and already experiments are made at Bhavnagar,
Pondichery, Indian Institute of Science Bangalore, Kutch Gujarat, Marur and Hubli in
Karnataka. Government of India spent about $ 7 lakh to construct these solar ponds
(Kishore and Kumar, 1996: 27).

Nandwani (1996) in his study discusses the quality and quantity of energy
used for cooking in Costa Rica and in the world, and then compares the advantages
and limitations of solar ovens with conventional firewood and electric stoves. Though
solar energy is free and abundant (on global level), it is not available 24 hours a day
and, cannot be stored and transported (as with conventional fuels). Thus, the use of
solar ovens cannot completely replace conventional fuels. But to the extent that solar
ovens can be used, they will greatly reduce deforestation, air pollution, and family
health problems, and will conserve conventional fuels already solar cookers have
begun to gain the image of an effective fuel saver, particularly as a supplementary
option to commercial fuels such as LPG and kerosene. The study shows that the
payback period of a common hot box type solar oven, even if used 6-8 months a
year, is around 12-14 months. Even if only 5 percent of persons facing fuel shortages
in the year 2005 by the use of solar ovens, roughly 16.8 million tons of firewood will
be saved and the emission of 38.4 million tons of carbon dioxide per year will be
prevented.

Singh and Prasad (1998) in their study report that Karnataka needs 72 million
units of electricity every day, but it has only 61 million units on hand. And if Solar
Water Heaters (SWH) installed in the 1.6 lakh all electric homes (AEHs) in the state,
which are can be called potential to have sun power, then daily deficit of 11 million

37
units can be reduced to just 3 million. The author also stresses that to promote solar
energy, Karnataka Electricity Board (KEB) is already giving 5 paisa concession on
each unit of power consumed by owners of solar heaters, Canara Bank offers soft loan
of Rs. 12000 to Rs.70000 at 5 percentage interest rate and Government of India
opened Aditya Solar Shops across the country.

Ghosh, Tamal and Samir (1998) carry out their study on box type solar
cookers in and around the city of Calcutta and evaluated the economic and
environmental benefits for the use of solar cooker. The authors found that solar
cooker has been used as an additional cooking device in urban households because of
its easy operation and minimum recurring maintenance cost and its inability to be a
base cooking system. At the present level of use Rs.28 per month per household can
be saved. It has also been established that solar cooker is environmental friendly and
time saving device if the public awareness is enhanced through demonstration and
exhibitions. The study also shows that gas is the predominant cooking device before
and after using solar cooker; the study also adds that households use cooker only for
150 days in a year, thus the authors opine that there is enough scope for increasing the
effective use-time of solar cooker.

Suganthi and Williams (2000) mention that the energy requirement in India is
steadily increasing, which can be met by renewable sources like solar, biomass wind
etc. by large extent. An optimum model was developed by the authors to determine
the optimum allocation of renewable energy in various end uses by 2020-21. The
present study is started with literature review on the availability of different models
on renewable energy allocation at both macro and micro level, and then constructed a
model considering price, income, efficiency and environmental factors of India. The
commercial energy requirement during 2020-21 is expected to be around 23.73xl015
kJ and renewable energy requirement is around 8.12xl015 kJ. Among the renewable
energy sources 2.32 x 1015 kJ can be met by solar photovoltaic and 1.01x10 15 from
solar direct thermal, that is more than 40 percent of renewable energy requirement
will be met by solar sources alone. The study also mentions that the entire
requirement of lighting, cooling and heating will be met by solar photovoltaic and
solar thermal (Suganthi and Williams, 2000: 1100). Sensitivity analysis is carried out
by the authors on varies parameters like demand, potential reliability, emission,
employment and social acceptance. It is finally concluded that s< ‘

38 / tit 4.
contribution will increase continuously because of immense availability, but cost-
efficiency is a major challenge to the scientist and policy makers.

Akker and Lampa (2002) in the article opine that installation of solar PV
pumping system (SPS) started in big scale under IREDA (India Renewable Energy
Development Agency). The system can be installed in less than five hours of the
capacity of 2Hp i.e. 1.4 lakh liters of watering per day, having 20 years life time and
maintenance free (Akker and Lampa, 2002: 41).

Chakrabarti and Chakrabarti (2002) in their study examine the feasibility of

decentralized SPV system in a remote located island, from the point of view of an
impetus to growth and its impact on the socio-economic life of the people and
environment In the study we can find the comparative analysis of the costs of power
supply by conventional method and also SPV plant. In economic comparative analysis
the authors mention that generation, transmission and distributions are important cost
factors in energy sector. These costs are very high under centralized power stations,
but it is nil or less under decentralized power stations, for example solar energy.
Further, they mention that per unit energy cost is very low in centralized thermal
systems compared to SPV systems, but SPV systems are more viable if the distance of
the centralized power production station is more (Chakrabarti and Chakrabarti, 2002:
34). In continuation they say that, in countries like India, where people are more
dependent on import of fuel, SPV systems are feasible because of rapid increase in the
fuel cost. Thus, by 2010 SPV systems become economically more viable. In
analyzing the environmental aspects, the authors write that fossil fuel is the prime
cause for the human health hazard and environmental pollution. In India, 40 percent
of total CO2 emission is due to electricity generation and they further mention that
emission of CO2 to the atmosphere amounts to about 1.2 and 0.9 kg/kWh produced
from coal and oil respectively. But production of power is free from such health
hazards. For the social importance of SPV system writers gave the case study of a
‘Sagar Dweep’ island. In the island SPV system helped the students to study more,
shopkeepers to open their shop for long hours, people able to avail more
entertainment facilities and SPV system also helped the women in the household work
(Chakrabarti and Chakrabarti, 2002: 39). Finally, they say that production of solar
power may not be cost effective in all cases and SPV plant can also supply power to
hospitals.

39
 Kolhe, Kolhe and Joshi (2002) analyze the economic viability of stand-alone
solar photovoltaic (SPV) system with sensitivity analysis using a life cycle cost
computation. The analysis concludes that, the PV powered systems are the lowest cost
options at a daily energy demand of up to 15 kWh/d, even under unfavorable
conditions, where as in the economic favorable conditions PV systems are
comparative up to 60 kWh/d. Analyses are also carried out about PV array cost, PV
best and worst case viability as compared to diesel powered system.

Chaurey (2004) in his paper traces the development of PV in India through

distinct phases on a time line from early seventies to early twenty first century. While
discussing this developmental cycle, the paper presents a set of policies, incentives
and institutional efforts that have propelled the market from one phase to another, thus
setting an example for other countries. It can be learnt from the paper that for the
commercialization of the renewable energy, it is the policies and financial instruments
which will play a critical role in the different stages of developmental cycle. Public
funding is an important source of financing for solar PV markets and it is likely to
remain in due course of time, because these technologies are often a part of rural
electrification. It is also mentioned that, there is an emerging trend which indicates
that the private sectors are taking lead in embracing the renewable energy business,
both at urban and rural areas. Further local communities are emerging in financing of
clean energy especially for low scale applications. This trend takes the form of micro-
finance of community based green funds as mechanisms of consumer financing.
These funding sources can play a significant role in enhancing the affordability of
renewable energy products and services.

Ramachandra, Rajeev, Krishna and Shruthi (2005) in their articles mention

that energy plays a prominent role in human society. As a result of technological and
industrial development, the demand for energy is rapidly increasing. Existing power
sources that are mainly fossil fuel based are leading an unacceptable legacy of waste
and pollution apart from diminishing stock of fuels. Hence, the focus is now shifted to
large-scale propagation of renewable energy. Renewable energy technologies are
clean sources of energy that have a much lower environmental impact than conven­
tional energy technologies. Solar energy is one such renewable energy. Most renewable
energy comes either directly or indirectly from the sun. Estimation of solar energy
potential of a region requires detailed solar radiation climatology, and it is necessary

40
to collect extensive radiation data of high accuracy oovering all climatic zones of the
region. In this regard, a decision support system (DSS) would help in estimating solar
energy potential considering the region's energy requirement.

The article also explains that as the world struggles to control energy related
greenhouse gases, electricity starved rural families in the developing world toil to build
decent lives. Solar energy can potentially play a very important role in providing most of
the heating, cooling, and electricity needs of the world. With the emergence of solar
photo-catalytic detoxification technology, solar energy also has the potential to solve our
environmental problems. Some of the emerging developments in technology would also
help in large-scale propagation. The technologies and methods used to develop and
deploy DSS to aid in solar energy assessment make work easier for a decision maker.
The possibility of quickly accessing, processing, and analyses of spatial databases would
offer a tremendous improvement. In spite of rapidly advancing computer technology and
the proliferation of software for decision support, relatively few DSS have been
developed for assessment of solar energy.

2.3. CONCLUSION

The detail review of literature is conducted to find the research gap and also to
know the studies conducted on solar energy which can be used as reference to carry out
the present study. By the review of literature it is found that most of the studies referred
the technicalities of solar energy in terms its technology, applications, availability, usage,
future importance, environmental importance etc. A few studies have been under taken
on the socio-economic aspects of solar energy concerned to mral area.

In the review of literature it is found that demand for energy in the world is
increasing, more particularly in Asian developing countries where rate of increase in the
demand for energy is more than fifteen percent. It is due to high rates of economic
growth, high-energy intensities, the rapid pace of industrialization, growing proportion
of energy-intensive industries in the industrial sector, rapid electrification of households,
rapid motorization etc. This large increase in energy demand is likely to cause several
issues, including environmental deterioration, high costs of enlarging the energy
infrastructure (especially for electricity), and increases in world energy prices. To meet
the increasing demand for energy, the need is to increase the domestic energy supplies

41
both from conventional and non-conventional energy sources.

As a part of economic analysis, it is found in the literature that because of the

high capital cost of a solar total energy system, maximum utilization of all solar energy
collected is necessary for optimum economies. Some papers also emphasized on the
two areas, one is the relationship between solar thermal heating and cooling of
building and electric utility rates. Secondly, the social and private opportunity cost of
solar thermal heating for single-family residence. World has already embarked on the
next great energy transition - under the pressures of economic, environmental, and social
limit made the old system unsustainable and absolute. Thus, it opined that renewable
energy is sustainable energy which promises the cleaner and more secure energy for
future.

Massive reduction in the cost of solar energy should be the area of concern. It is
because if the solar energy prices will fall by 50 percent per decade, then it will
replace fossil fuels in every economic activity by 2065. If the cost of solar energy
decreases by 30 percent per decade then most of the economic activity will run by
solar energy by 2015. Karnataka needs 72 million units of electricity every day, but it
has only 61 million units on hand. And if SWH’s are installed in the 1.6 lakh all
electric homes in the state, which can be called potential to have sun power, then daily
deficit of 11 million units can be reduced to just 3 million. It is also opined that
combination of solar and conventional heat can minimize heating oosts. Some authors
have opined that the main reasons for being unwilling to change for solar energy
system are high initial cost of investment, inability to use it in cloudy weather, lack of
full knowledge about the working and benefit of the solar heating system.

Large amount of studies are found on the use of solar energy in the rural area.
Solar energy sources can be utilized in rural areas in developing countries by employing
small-scale decentralized energy systems. They can provide energy to satisfy the basic
needs of life and build up rural agro-industrial structures. Particularly, individual solar
photovoltaic is more economical for the rural area. Grid-based electricity is more
expensive in rural than in urban areas due to lower load densities, lower capacity
utilization rates, and often higher energy losses, thus the use of photovoltaic powered
solar home systems in remote communities has received increasing attention as it is
economically viable. We can also find that studies which enumerate that after SHL
systems the quality of life has improved, working hours are increased in a day,

42
children education is improved, income generation increased and SHL is safe to use.
The problem of SHL is that the quality of light is poor compared to grid connected
energy and it does not give desired hours of light. The migration of rural population to
urban area can be solved by installing solar energy in rural areas.

Some important studies can also be found on the role of solar energy in the
reduction of green house gas effect. For the massive CO2 reduction and energy
conservation, broad-scale implementation of renewable technologies, including the
combined use of solar-thermal and PV systems is more effective. The attempt of most of
the countries making large investments in the development of technologies is to
reduce the cost of solar photovoltaic electricity. It is expected that the next century
SPV will be a sustainable source of clean energy. In some papers it is opined that wind
energy, solar thermal electricity and photovoltaic’s are the only truly large-scale
sustainable electricity generation technologies available. They are the only technologies
that could completely displace fossil fuels over the next fifty years. These technologies
are almost free from adverse environmental impacts.

A few researchers have opined that role of government is very important for the
better exploitation of solar energy. Government should take interest in installing solar
system, where there is high frequency of availability and need of solar energy, for
example, in India places like Saurashtra, Kutch, Gujarat, Rajasthan and parts of
Peninsula. It is also said that builders and lenders are the first customers of solar
energy. It is also found that the use of solar energy should be extended more
intensively in industrial and institutional applications.

Thus it is found that no studies had estimated the socio-economic aspects of solar
energy in cities at household level. So review of literature explores the relevant
findings which are already available. Some of the literature reviewed is directly
relevant and hence used as a preface to explain the background of work. The analysis
in this chapter is helpful in providing a direction to the empirical survey of the solar
energy in the study area and also a macro analysis of the growth and development of
solar energy at the global and regional level and its comparison with the use of other

sources of energy.

* * * * *

43