Incentives for promotion of solar industrial process heating in India: a case of cotton-based textile industry

Abstract

An approach to estimate the required extent of incentives so as to make solar industrial process heating (SIPH) financially competitive with conventional process heating system for cotton-based industry in India has been presented. The levelized cost of useful thermal energy (LCUTE) delivered by the conventional (furnace oil based) and SIPH systems in cotton-based textile industry in India has been estimated. The estimates for the LCUTE of SIPH systems vary from Rs 1035 to Rs 1392 per GJ, and the same are relatively higher than the corresponding estimate for the furnace oil-based process heating system (Rs 924 per GJ), thus justifying the provision of incentives in the initial phase. Frameworks have been developed to estimate the extents of each of the incentives required to make SIPH systems financially competitive with the existing furnace oil-based process heating systems (in terms of LCUTE). From the results, it is noted that the required amounts of viability gap funding (capital subsidy) vary from 8 to 34% of the capital cost, while the required rates of interest on the debt component vary from 3.3 to 9.5% at different locations having clusters of cotton-based textiles in India. Similarly, the required rate of investment tax credit for the investment made on SIPH system varies from 8.6 to 37%.