“MARKET POTENTIAL FOR SOLAR WATER PUMPING

SYSTEM AND COST BENEFIT ANALYSIS

OF DIESEL VS. SOLAR PUMP”

Prepared by: Kevin Kovadia (AM0712)

Guided By:

Dr. Mercy Samuel (Faculty Guide)

Associate Professor,

Faculty of Management, CEPT University

Mr. Nilesh Arora (External Guide)

Founder - Partner,

ADDVALUE Consulting Inc. (www.avci-lean.com)

July 2014

Flow of Presentation

Keywords

Abbreviation

Introduction

Research Objective

Literature review

Research Methodology

Cost Benefit Analysis of Diesel vs. Solar Water Pump

Conclusion

Bibliography

Appendix

Keywords

Solar Water Pump,

Off grid Solar Application,

Market Potential,

Cost Benefit Analysis,

Break even point

Abbreviation

SWP Solar Water Pump

MNRE Ministry of New and Renewable Energy

PVP Photo Voltaic Pump

PV Photovoltaic

AC Alternate Current

DC Direct Current

JNNSM Jawaharlal Nehru National Solar Mission

RKVY Rashtriya Krishi Vikas Yojana

GDP Gross domestic product

GHG Greenhouse gas

JGS Jyotirgram Scheme

Indian Pump Industry Overview

The Indian Pump industry has more than 800 manufacturers

with worker strength of over 40,000 producing about 5 million

pumps annually.

Year FY 2012 FY 2013

Estimated Market (in Rs) 5000 Cr 8375 Cr

Annual Growth rate 8% 12%

No. of Pump Manufacturers 800+ 800+

% of Demand meet by Domestic

Manufacturers

95% 95%

Source: (Singhi_Advisors, 2011), (TATA , 2013)

Solar Water Pump

It is a pump running on electricity generated by photovoltaic

panels or the thermal energy available from collected sunlight

as opposed to grid electricity or diesel run water pumps.

SWP system has three parts :

Pump

Inverter

Solar panels

Why Solar?

0

2

4

6

8

10

12

14

16

2011 2013 2015 2017 2019 2021

Co

st (

Rs)

(P

er

KW

h)

Solar PV Conventional Power Diesel Gen. Set

Source: Headway Solar (P) Ltd.

Market Potential

The estimated maximum total sales/revenue of all suppliers of product in market during a certain period. 1

Estimating Market Potential (MP) = N × P × Q

Estimating Market Potential (MP) of firm A = N × P × Q × MS 2

MP = market potential

N = total number of potential consumers

P = average selling price

Q = average annual consumption

MS = market share (%) of consumers buying from firm A

1. http://www.businessdictionary.com/definition/market-potential.html

2. http://plantsforhumanhealth.ncsu.edu/extension/marketready/pdfs-

ppt/business_development_files/PDF/estimating_market_potential.pdf

Cost benefit analysis (CBA)

CBA is a systematic process for calculating and comparing benefits and costs of a project, decision or government policy.

It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits compensate the costs, and by how much. It is also called as benefit–cost analysis (BCA).

CBA has two purposes:

To determine if it is a sound investment/decision

To provide a basis for comparing projects.

Cost-Benefit Analysis (CBA) estimates and totals up the equivalent money value of the benefits and costs to the community of projects to establish whether they are worthwhile. 3

3. http://www.sjsu.edu/faculty/watkins/cba.htm

Research Objective

The objective of this study is to analyze market potential of

solar water pumps.

To analyze what is the need of Solar Water Pump.

To conduct a comparative cost benefit analysis among Diesel

vs. Solar Water Pump.

Literature review

The electricity consumption in agriculture sector amounts to

27% of total consumption of electricity in India. About 25%

of electricity consumption is account for Irrigation pumps used

in the agriculture sector in India.

48.89 % in Gujarat,

43.39 % in Haryana,

42.27 % in Karnataka

21 million irrigation pump sets in India, of which

9 million are run on diesel and rest are grid based.

(Source: Amit Jain; Stellina Jolly, 2012)

Literature review

According to the KPMG report, a cumulative potential of

around 16 GW from agriculture category could be realised

by 2022. (JNM Target is 20 GW by 2022)

Innovative business models such as integrators of pump set and

solar modules may be required to realize this potential.

(Source: KPMG, n.d.)

Literature review

India’s Ministry of New and Renewable Energy estimates

700,000 diesel pumps that could be replaced are bought in

India every year.

Tarun Kapoor, the joint secretary, MNRE said that “Irrigation

pumps may be the single largest application for solar in the

country” (SPROSS, 2014).

Literature review

Source: Self Compiled

Literature review

(Image Credit: Sunible.com)

Research Methodology

Interview: The interview includes questions like - what is

capacity of solar water pump, what is process of installing

SWP, effectiveness of Government subsidy etc.

five structured interviews were carried out of solar water

pump users. And this all SWP user belong to north central

Gujarat.

Kheda District - 3 Interviews

Gandhinagar District - 1 Interview

Banaskantha District - 1 Interview

Cost Benefit Analysis of Diesel vs. Solar Water Pump

5hp Diesel Pump Costing Assumptions

Particular Scenario 0 Scenario 1 Scenario 2 Scenario 3

No. of Hour Pump Usage /day 1 2 4 8

No. of Sunny Days/ Year 250 250 250 250

No. of Hour Pump Usage/ Year 250 500 1000 2000

Price of Diesel/ litre (Rs) 63 63 63 63

Diesel Usage/ Hour (5HP) 1 1.7 1.7 1.7 1.7

Hike in Diesel Price (%) 10 10 10 10

Total Running Cost (Rs) 26775 53550 107100 214200

1 (Source: Seleshi Bekele Awulachew (IWMI), 2009)

5hp SWP Costing With and Without Subsidy (30%)

Year

Capital Cost

Without

Subsidy (A)

Capital Cost

With 30%

Subsidy (D)

Operating

Cost (B)

Maintenance

Cost (C)

SWP Cumulative Cost

W/O Subsidy

(A+B+C)

SWP Cumulative Cost

With 30% Subsidy

(D+B+C)

1 489400 342580 0 2500 491900 345080

2 0 0 0 2500 494400 347580

3 0 0 0 2500 496900 350080

4 0 0 0 2500 499400 352580

5 0 0 0 2500 501900 355080

6 0 0 0 2500 504400 357580

7 0 0 0 2500 506900 360080

8 0 0 0 2500 509400 362580

9 0 0 0 2500 511900 365080

10 0 0 0 2500 514400 367580

5hp Diesel Pump vs. SWP Costing (Scenario 0)

Year Capital

Cost (A)

Operating

Cost (B)

Maintenan

ce Cost (C)

Total Cost

(A+B+C)

Diesel Pump

Cumulative

Cost

SWP Cost

Without

Subsidy

SWP Cost

With 30%

Subsidy

1 30000 26775 5000 61775 61775 491900 345080

2 0 29453 5000 34453 96228 494400 347580

3 0 32398 5000 37398 133625 496900 350080

4 0 35638 5000 40638 174263 499400 352580

5 0 39201 5000 44201 218464 501900 355080

6 0 43121 5000 48121 266585 504400 357580

7 0 47434 5000 52434 319019 506900 360080

8 0 52177 5000 57177 376196 509400 362580

9 0 57395 5000 62395 438590 511900 365080

10 0 63134 5000 68134 506725 514400 367580

Total 506725

Breakeven Point in Scenario 0

0

100000

200000

300000

400000

500000

600000

1 2 3 4 5 6 7 8 9 10

Cum

ula

tive C

ost

(R

s)

Break Even Duration (Year)

Diesel Pump

SWP without Subsidy

SWP With 30% Subsidy

5hp Diesel Pump vs. SWP Costing (Scenario 1)

Year Capital

Cost (A)

Operating

Cost (B)

Maintenan

ce Cost (C)

Total Cost

(A+B+C)

Diesel Pump

Cumulative

Cost

SWP Cost

Without

Subsidy

SWP Cost

With 30%

Subsidy

1 30000 53550 5000 88550 88550 491900 345080

2 0 58905 5000 63905 152455 494400 347580

3 0 64795.5 5000 69796 222251 496900 350080

4 0 71275.05 5000 76275 298526 499400 352580

5 0 78402.56 5000 83403 381928 501900 355080

6 0 86242.81 5000 91243 473171 504400 357580

7 0 94867.09 5000 99867 573038 506900 360080

8 0 104353.8 5000 109354 682392 509400 362580

9 0 114789.2 5000 119789 802181 511900 365080

10 0 126268.1 5000 131268 933449 514400 367580

Total 933449

Breakeven Point in Scenario 1

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

1 2 3 4 5 6 7 8 9 10

Cum

ula

tive C

ost

(R

s)

Break Even Duration (Year)

Diesel Pump

SWP without Subsidy

SWP With 30% Subsidy

5hp Diesel Pump vs. SWP Costing (Scenario 2)

Year Capital

Cost (A)

Operating

Cost (B)

Maintenan

ce Cost (C)

Total Cost

(A+B+C)

Diesel Pump

Cumulative

Cost

SWP Cost

Without

Subsidy

SWP Cost

With 30%

Subsidy

1 30000 107100 5000 142100 142100 491900 345080

2 0 117810 5000 122810 264910 494400 347580

3 0 129591 5000 134591 399501 496900 350080

4 0 142550.1 5000 147550 547051 499400 352580

5 0 156805.1 5000 161805 708856 501900 355080

6 0 172485.6 5000 177486 886342 504400 357580

7 0 189734.2 5000 194734 1081076 506900 360080

8 0 208707.6 5000 213708 1294784 509400 362580

9 0 229578.4 5000 234578 1529362 511900 365080

10 0 252536.2 5000 257536 1786898 514400 367580

Total 1786898

Breakeven Point in Scenario 2

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

1 2 3 4 5 6 7 8 9 10

Cum

ula

tive C

ost

(R

s)

Break Even Duration (Year)

Diesel Pump

SWP without Subsidy

SWP With 30% Subsidy

5hp Diesel Pump vs. SWP Costing (Scenario 3)

Year Capital

Cost (A)

Operating

Cost (B)

Maintenan

ce Cost (C)

Total Cost

(A+B+C)

Diesel Pump

Cumulative

Cost

SWP Cost

Without

Subsidy

SWP Cost

With 30%

Subsidy

1 30000 214200 5000 249200 249200 491900 345080

2 0 235620 5000 240620 489820 494400 347580

3 0 259182 5000 264182 754002 496900 350080

4 0 285100.2 5000 290100 1044102 499400 352580

5 0 313610.2 5000 318610 1362712 501900 355080

6 0 344971.2 5000 349971 1712684 504400 357580

7 0 379468.4 5000 384468 2097152 506900 360080

8 0 417415.2 5000 422415 2519567 509400 362580

9 0 459156.7 5000 464157 2983724 511900 365080

10 0 505072.4 5000 510072 3493796 514400 367580

Total 3493796

Breakeven Point in Scenario 3

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

1 2 3 4 5 6 7 8 9 10

Cum

ula

tive C

ost

(R

s)

Break Even Duration (Year)

Diesel Pump

SWP without Subsidy

SWP With 30% Subsidy

Conclusion

Particular Scenario 0 Scenario 1 Scenario 2 Scenario 3

No. of Hour Pump

Operating/ day 1 2 4 8

No. of Sunny Days/ Year 250 250 250 250

No. of Hour Pump

Operating/ Year 250 500 1000 2000

Break Even Point

Without Subsidy 10 Year 6

1

4 Year 3

3

4 Year 2 Year

Break Even Point

With 30% Subsidy 7 3

4 Year 4

3

4 Year 2

1

2 Year 1

1

2 Year

Conclusion

Farmer buys a solar water pump mainly because of two reasons. One is unavailability of electricity at farm and other is increasing price of diesel.

Out of the primary survey it was found that farmer also buy solar water pump because of land ownership issue. To get electricity connection, farmer need land ownership document and signature of related owners.

Normally one can become land owner from his father’s land and father’s land is shared among his children. Now to get signatures of all related owner is difficult.

So, in this situation to get electricity connection is difficult. So, farmers prefer to buy solar water pump.

Bibliography

Amin, R. (n.d.). An Overview of Indian Pump Industry. pp. 1-2.

Amit Jain, S. J. (2012). Is Solar a solution to Blackouts in India: A case study with agriculture

diesel pumps sets?

Brian McSorley, M. M. (2011). Solar Pumps: A solution to improving water security in drought

prone areas. Oxham.

Census of India. (2011). Source of lighting: 2001-2011, Houselisting and Housing Census Data

Highlights - 2011. Registrar General & Census Commissioner, India (ORGI), Government of

India.

EmCON. (2006). Feasibility Assessment for the Replacement of Diesel Water Pumps with Solar

Water Pumps. NAMIBIAN RENEWABLE ENERGY PROGRAMME (NAMREP).

GIZ. (2013). Solar Water Pumping for Irrigation: Potential and Barriers in Bihar, India. Indo-

German Energy Programme (IGEN), Deutsche Gesellschaft für Internationale Zusammenarbeit

(GIZ) GmbH.

Gupta, R. K. (2011). The role of water technology in development: a case study of Gujarat

State. (pp. 1-14). Zaragoza, Spain: UN Water.

Hu, B. (2012). Solar Panel Anomaly Detection and Classification. Waterloo: University of

Waterloo.

Bibliography

IEA. (Octomber, 2011). energy for all: financing access for the poor. energy for all conference (pp. 19-22). Oslo, Norway: International Energy Agency.

K Palanisami, K. M. (2011). Spread and Economics of Micro-irrigation in India: Evidence from Nine States. REVIEW OF AGRICULTURE, 1-6.

KPMG. (2011). “The Rising Sun - A Point of View on the Solar Energy Sector in India”. Mumbai: KPMG.

lorentz. (2008). Solar Water Pumps in Namibia: A Comparison Between Solar And Diesel.

MNRE. (2013). Jawaharlal Nehru National Solar Mission - SOLAR PHOTOVOLTAIC WATER PUMPING SYSTEMS.

Seleshi Bekele Awulachew (IWMI), P. L. (2009). Pumps for small-scale irrigation. IWMI.

SELF. (2008). A COST AND RELIABILITY COMPARISON BETWEEN SOLAR AND DIESEL POWERED PUMPS. Solar Electric Light Fund (SELF).

Shah. (1993). Groundwater markets and irrigation development: Political economy and practical policy. Bombay: Oxford University .

Shah, T. (2008). Crop per Drop of Diesel! Energy-Squeeze on India’s Smallholder Irrigation. Anand, India: International Water Management Institute, .

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Bibliography

Shamaila Zia, T. A. (2012). easibility Assessment of photovoltaic pumping for irrigation in West Bengal, India. 1. Institute of Agricultural Engineering (440e) Universität Hohenheim, Stuttgart, Germany 2. Indian Institute of Technology, Kharagpur, India.

Shiv Lal, P. K. (2013). Techno-economic analysis of solar photovoltaic based submersible water pumping system for rural areas of an Indian state Rajasthan . Science Journal of Energy Engineering, 1-4.

Singhi_Advisors. (2011). Pump & Valve Industry – Overview & Opportunities.

Somasekhar. G, B. G. (2014). Marketing Methodology of Solar PV Power Packs. IOSR Journal of Economics and Finance (IOSR-JEF), 38-43.

SPROSS, J. (2014, February 7). India Wants To Switch 26 Million Water Pumps To Solar Power Instead Of Diesel. Retrieved April 15, 2014, from http://thinkprogress.org: http://thinkprogress.org/climate/2014/02/07/3265631/india-solar-pump-swap/

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The Times of India. (2013, March 4). Power-full’ Gujarat gives 24-hour electricity. Retrieved May 10, 2014, from indiatimes.com: http://timesofindia.indiatimes.com/india/Power-full-Gujarat-gives-24-hour-electricity/articleshow/18786012.cms

Tushaar Shah, S. V. (n.d.). Real-time Co-management of Electricity and Groundwater: An Assessment of Gujarat’s Pioneering ‘Jyotirgram’ Scheme. International Water Management Institute, Anand, India.

Site location of SWP User (1) near Hirapur Chokdi

Site location of SWP User (2) near Hirapur Chokdi

Site location of SWP User (3) near Hirapur Chokdi

Site location of SWP User (4) near Palanpur

Site location of SWP User (5) near Ghamij Village

Thank You !!!

CEPT/ MTM/ AM0712/ Kevin Kovadia/ kkovadia@gmail.com