Energy 2.0


Posted on: July 8, 2008

The clean development mechanism (CDM) would promote use of renewable energy technologies by providing benefits of reduction in emission of green house gases. The solar thermal technologies, especially the solar water heating systems, are becoming commercially viable in India. The CDM mechanism could push these technologies further. The major issues related to CDM in context of solar thermal systems in India are Addationality, Baselines, Cost, and Monitoring and Verification etc.



The solar water heating systems are becoming economically viable in some of the sectors, in such case meeting the additionally criterion becomes critical.


Technical additionality

The solar water heating systems are fully manufactured in India. New mechanisms for increasing the adoption of solar water heating systems, like the energy services company and the third party financing would meet this criterion, as these concepts have not been demonstrated in India. Further, in case of medium temperature concentrating collectors for industrial and commercial applications in India, since this technology is not being used anywhere, implementing such a project satisfies this criterion.


Financial additionality

Though the solar water heating systems are becoming economically viable in some sectors, the initial costs are still higher thereby meeting the financial additionality criterion. In case of concentrating collectors, the costs are even higher (the systems have negative NPV against the present costs of solar system and fuel).


Offset additionality

The solar thermal technologies are zero emission technologies. The solar water heating system, for domestic application has potential of saving 1.5 tonne of CO2/annum. The emission reduction is 0.3 tonne/annum/m2 in case of oil replacement.



The baseline for estimation of emission reduction will be different for different type of applications of solar thermal systems. In case of domestic solar water heating systems the baseline would be the electrical saving resulting from the SWHS and the emission reduction will depend on the average emissions for power generation, and the resource mix for power generation. In case of industrial systems, the existing boiler (or the boiler with maximum efficiency with present technology) will form the baseline.



The cost of CO2 varies form application to application from US$ 3/tonne of CO2 to US$ 12/tonne of CO2. The costs of CO2, given in table below, are estimated considering a minimum internal rate of return of 18% and 21%, for commercial and industrial systems and for domestic systems respectively, based on the cost of capital employed.

Cost of Carbon Dioxide

System /Application


Cost of CO2  (US $/tonne)

Solar water heating system for domestic application

Domestic water heating using electric power. Emission saving based on resource mix for power  generation , presently 1.1 kg  CO2 emission /kWh

 3- 5

Solar water heating system for industrial  application

Heating using boilers fired fuels  oil/diesel


Medium temperature solar

thermal systems using solar


Heating using boilers fired by fuel




Monitoring And Verification

The distributed nature and smaller individual capacities of solar thermal systems increases the monitoring and verification costs. As per one estimate the monitoring and verification costs could be as high as 60% of the project cost.


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