Financial viability of solar industrial process heating and cost of carbon mitigation: A case of dairy industry in India

Abstract

Dairy industry in India has a substantial demand for process heating at temperatures that can be provided with solar collectors. However, the acceptance and dissemination of solar industrial process heating systems would also be affected by their financial attractiveness for the users. Another attractive feature of SIPH systems is their ability to mitigate environmental emissions. Results of a financial viability analysis including estimation of cost of mitigating carbon emissions with use of SIPH in dairy industry in India are presented in this paper. Seven locations in India with dairy plants have been selected and annual useful thermal energy output of SIPH systems at these locations has been estimated. Further, levelized unit cost of useful thermal energy (LCUTE) delivered by the SIPH systems is estimated and a comparison with the existing process heating options being used in the dairy industry in India have been made. Other measures of financial viability such as discounted payback period, net present value and internal rate of return for an investment in SIPH systems in dairy plants have also been estimated. Finally, the cost of carbon mitigation with use of SIPH in dairy industry in India has been estimated. Results presents that in terms of LCUTE solar industrial of process heating systems doesn’t seems financially viable. Moreover, payback period of the SIPH systems are very higher thus lower value of NPV and IRR, therefore, their use does not seem to be much attractive. Also the cost of carbon emissions likely to be mitigated with use of SIPH is on higher side. Therefore, In view of the long term economic and environmental benefits of using SIPH in dairy industry there is a need of marginal support to ensure their financial viability as compared to fossil fuel based systems, the government may consider providing suitable incentives for the same.