Solar thermal energy-based electricity and desalination in India: the impact of viability gap funding (VGF) to normalize levelized cost or production.

Solar thermal energy-based electricity is capital-intensive, and complex while technically evolving to achieve an optimal design. Global commitments and timelines to increase renewable energy share in the grid have promoted technically mature solar photovoltaics and wind. However, the potential of solar thermal energy for industrial applications, cogeneration and polygeneration is on the back foot for lack of policy, complexity, technical readiness level, cost of components and workable business models. Solar collectors that can generate high-quality steam for power generation is complex and costly; while, modified version of linear Fresnel reflector's (LFR) are prospective for various requirements. The current work looks into the possibility of an LFR and heliostat combination to generate steam at 45 bar, 400C temperature to produce electricity. The levelized cost of electricity (LCOE) and levelized cost of water (LCOW) is found to be INR 5.11 kWh−1 and INR 43.03 m−3, in a 70:30 debt–equity scenario. An IRR of 8.55% is achieved with a payback of 12.5 years, with the sale of electricity at INR 10.11 kWh−1 and water at INR 45 m−3. To reduce the LCOE, LCOW and have an attractive IRR, the viability gap funding (VGF) as an option is tried out. The impact of VGF at, 0%, 10%, 20% and 30% on water generation, electricity generation, IRR, NPV and payback are found. It is found that as the VGF increase, there is a better generation cost for electricity and water, with an improved IRR. However, with the VGF trend and corresponding reduction in electricity and water production cost, it will be ideal to have the VGF close to 15% to keep the electricity sale price at approximately INR 8.5 kWh−1 and water pricing at INR 46 m−3. [ABSTRACT FROM AUTHOR]