Bhoo’s interview with Narsi, EAI on “Aspiring High with Solar Thermal”
For those of us glued to the solar radar, most of what we see and hear today are news about solar PV.
As if solar thermal simply did not exist. Or matter.
And if at all we hear anything on the thermal side, it is about how large scale solar CSP plants under the National Solar Mission are facing tough times.
Newspapers and mainstream blogs have a purpose – to report mainstream news.
But most emerging (and attractive) business opportunities are not mainstream. Which is why these should be more interesting to entrepreneurs and investors.
Solar thermal is one such.
Until a few years ago, the equation was simple.
Solar thermal = solar water heaters: those nice and reliable tanks on our roofs which gave us water at 65 °C. A nice product, of course, but nothing any entrepreneur would go ga-ga about.
Fast forward to 2010, and you suddenly start seeing interesting movements in the solar thermal scene.
Let me start from the very beginning.
What indeed is solar thermal?
Leaving aside CSP (concentrating solar power), which is for power generation, the heat of sunlight when used for heating purposes is solar thermal.
As I said before, think solar water heaters. But now, extend your thought.
Solar water heaters can give up to 65 °C; all right, stretch it a bit, perhaps 70 degrees.
Which is fine for household purposes and select commercial units, but what about industrial units which require water at much higher temperatures? Say, 120 degrees?
Your ordinary solar water heater will not be able to help.
This is where medium temperature solar thermal kicks in.
Let me lay the stuff out for you.
Using the Heat of the Sun
Type of solar thermal Low temp solar thermal Medium temp solar thermal class I Medium temp solar thermal class 2 High temp solar thermal for power generation
Example Solar water heater Enhanced solar heaters Concentrating solar thermal (CST) Concentrating solar power (CSP)
Temperatures Upto 70 °C 70-120 °C Upto 250 °C Upto 450 °C
You can observe the gradation from the low 70 °C we obtain from solar water heaters up to 450 °C required for generating power from the solar heat.
The first two – water heaters and enhanced solar heaters – use fairly simple technologies and materials and hence can be considered fairly low on capex.
The last two depend on concentrating sunlight to produce much higher temperatures, and you are suddenly getting into more sophisticated and expensive territory.
The Enhanced Solar Heaters thus falls in an interesting intersection – it is fairly simple in terms of technology and operations (similar to solar water heaters), but provides significantly higher temperatures than the water heaters.
And the 70-120 °C is an interesting sweet spot for a whole host of industries and commercial units.
This is the sweet spot Aspiration Cleantech Ventures is trying to tap into.
Bhoovarahan Thirumalai (popularly called Bhoo), is a well-known entrepreneur in the solar thermal field, having been an early mover in medium temperature sector with a solution providing distinct benefits. And with the memorable nickname Bhoo, he has ensured that no one can forget him either.
His company, Aspiration Cleantech Ventures, has ploughed along and stayed course in this pioneering area, and today he is a position to show some of his first successes. His innovative PAYS model, that eliminates capex investments for end users, appears close to an inflexion point.
Having known Bhoo for almost 5 years now, I felt that there is no better time than this to sit down with him and do a detailed interview.
Here we go.
I ask Bhoo: So, tell me a bit more on how you got into this. I have known you for a long time, but somehow never got to know some of your history.
Bhoo: Well, my partner and I were running the software company Aspire Systems, a successful software venture specializing in software product architecture support. I wanted to do something that is different and ventured out, and solar appealed to me.
To begin with, I explored solar PV. Our company did a fair bit of work in developing solar PV systems for mobile telecom towers to offset diesel use.
Soon after this, I explored solar thermal and zeroed in on enhanced solar thermal for industrial heating and drying.
Me: The sweet spot you are aiming at, the 70-120 °C bracket for industries – what are its characteristics? Somehow, I had thought that it was not a big enough opportunity.
Bhoo: Well, that sweet spot is indeed a significant opportunity. A Rs. 50,000 crore business sector of which solar thermal has the potential to have a Rs. 20,000 crore piece of the pie. Now, if Rs. 20,000 crores per year is not a big opportunity, I have to start asking what is.
What is not well known is that there are many pre-treatment processes and low hanging heating processes in industries that require only temperatures up to 120 °C. For instance, in the automobile industry there is a pre-treatment process before painting. This is typically a 7-tank wash, of which 5 tanks require moderate heating temperatures. Add the hundreds of automobile units across the country, and many other industries where such pre-treatment or pre-heating is required, and we are looking at a pretty sweet spot for the 70-120 degrees bracket.
For a large automobile company alone, such pre-treatment fuel costs could touch upwards of Rs 40 crores a year. There are hundreds of companies for which these costs will range between Rs 2-10 crores per year.
Me: Which would these target industries be, that will be glad to have a renewable solution for the 70-120 °C bracket?
Bhoo: Some of the sectors that will find medium temperature solar thermal useful are: Consumer durables (including automotive), chemical industries, companies in the dairy and food industries
Me: We are talking about replacing fossil fuels such as furnace oil, diesel, LPG, or natural gas, right?
Me: What % of these fuels could be replaced by your solution?
Bhoo: That depends on the company, the type of heating required, and more importantly when the heating is required. For a company that works mainly in the daytime, Aspiration’s solution could replace as much as 60% of fossil fuel used. For companies that run three shifts, I would put the replacement at a more conservative 25%
Me: Now that gets me to ask: Why are you not storing heat as it is well accepted that storing heat is not anywhere near as expensive as storing electricity?
Bhoo: I agree that thermal storage is not as expensive as storing power in batteries. But the reason for us not venturing storage still has to do with cost. And this is why:
The solar thermal system itself is not as expensive as a PV system (for equivalent energy delivered). Now, while the cost of thermal storage is lower than that for PV, the cost for storage as a % of total plant cost is still pretty high – it could be as high as 70%.
With time, I am confident that we will start using storage as well, but that time perhaps is not right now.
Me: I have had the opportunity to talk to Mr. Manoharan who is the engineering brain behind your solution, but would like you to explain in simple English how your technology works and why it is different from a solar water heater.
Bhoo: The basic system is the same as an ETC (Evacuated Tube Collector) solar water heater. Which is why ours does not cost a lot more.
As you know, in an ETC we have two tubes – the outer tube is transparent and the inner tube, filled with a fluid, is painted black. The vacuum between the tubes acts as the insulator. Due to this configuration, the temperature reaches 160-170 °C in the inner tube within 10 minutes of exposure to sunlight. The challenge lies in transferring this heat – transferring heat to reach temperatures much higher than 50 °C is the challenge, and this is the challenge that our solution overcomes.
Our solution achieves temperatures upto 120 °C using three engineering principles:
Integrative – Heat gets added by passing the liquid through multiple tubes
Flow engineering – Change of flow in each tube to add heat rather than change tube size, to keep manufacturing simple
Stay Liquid – Pressurised to prevent turning into steam
Me: So, essentially, you guys have modelled an ETC where you have extended the length of the ETCs but optimized the overall resources required, flow, and phase maintenance so that it can fit within as small a roof area as possible?
Bhoo: Simplistically put, yes.
Me: What kinds of investments are we talking about, and the payback?
Bhoo: Well, we have a unique business model, based on the ESCO model, called PAYS – which stands for Pay As You Save. Under this model, the end user has to put in only a small upfront investment; essentially he pays only for the amount of heat energy used.
So there really isn’t an equity payback involved in this model, but if one were to hypothetically consider an equity investment, it would pay off within 24 months against fuels such as LPG.
Me: That’s interesting, the PAYS model, which derisks it for the end user by removing the capex. What are the prices we are talking about for the heat delivered by your business model/solution?
Bhoo: We have two prices – one during the contract period which typically runs for a duration of 7-10 years, and beyond this period we charge only for maintenance. Prices will vary from one installation to another, but typically are in the range of Rs. 5 per kWh (thermal, 60-90 °C) delivered during the contract period, and in the range of Rs 1.2 per kWh for the maintenance period.
Me: And what kinds of savings benchmarks do we have against fossil fuels?
Bhoo: That depends on the fossil fuel being used. At today’s prices, furnace oil costs about Rs 5/kWh delivered, so we might not be exceptionally attractive against furnace oil today (though we could in a couple of years from now when the FO prices are likely to be higher). We are very attractive when measured against more expensive heating fuels such as LPG, diesel, or natural gas.
Solar Thermal Energy cost (per unit) is equal or lower than current fossil fuel cost during the payback period and remains closer to Rs 1 per KWH after the payback period – for the entire asset life of 20-25 years. So customers can invest in future energy security, without affecting their current cash flows are bottom line
The chart below provides a visualization of the cost savings our solution provides. During the first seven years of the contract period under the PAYS model, you are looking at moderate savings compared to use of fossil fuels. But look at what happens starting year 8, and you suddenly see the jaw dropping savings making their entry.
Me: What are the other highlights of your solution?
Some other highlights include:
Using a heat exchanger and closed-loop system allows the end-user to avoid water quality issues, increasing longevity. Domestic water heaters often fail in 3-4 years due to water quality
Heat exchanger water is topped up every 7-10 days
Hybrid heat – easy switch from solar to fossil fuel and back
5 crores is cost of plant after all benefits; payback in 24 months if substituting LPG
Me: What are your future plans for enhancements and improvements?
Bhoo: While our technology is stabilising fast, the following are some of the ideas we are working on in the context of future enhancements/improvisations:
Reduce weight from 40 kgs/sq.mtr
Extend temperature to 150 °C
Some work on energy storage
Direct air heating (80-100 °C) – the flow is different: liquid heating only requires 1-2 HP pump for 630 kWh plant but air heating requires more
Reducing temperature required in the manufacturing process
Me: Can you tell me something more about your current installations for this solution?
Well, we are just about entering the commercialization phase. The first three industrial installations we have done are all for some fairly well known firms.
Wheels India – 630 kWh – replaces Fuel Oil (largest offgrid decentralised solar water heating project in the world)
Sona Koyo Steering – 210 kWh – replaces Diesel
Harita Seating – 360 kWh – replaces LPG
Me: How does your solution compare with CST (Concentrating Solar Thermal)?
It is true CST produces much higher temperatures, but use of CST would be an overkill for many companies that do not require such a high temperature. For those firms, it is sub-optimal to use CST. In addition, at a more conceptual level, in CST losses to atmosphere is higher as the temperature differences (deltas) being higher, and this again leads to lower efficiency.
Me: We also know that solar PV requires only minimal maintenance. What about your solution in this regard – what extent of maintenance does it require?
The solar side – the evacuated tubes, etc. – requires minimal maintenance. However, maintenance is required to some extent for flow engineering and heat exchangers, especially if one is using an external heat exchanger.
If maintained well, our system can easily operate up to 25 years.