With a market size of nearly Rs. 500 Crores and growing at a clip of approximately 10 % p.a., the solar water heater pot is boiling even as it is being watched. It is hard to ignore the environment spillover of a product category like this but at the same time there are many wet-wood areas like lifespan TCO, usability, application-width, control over manufacturing costs, and efficiency conversion rates. The market, at the same time is effervescing excitedly around breakthroughs like nano-materials (lead-selenium instead of silicon), better storage mechanisms, nano-rods etc. This brings us to question the viability and the progress of this category, specially for Indian terrains.
Talking of India, amidst players like Bajaj electricals Limited, Honeywell etc there are companies like Racold Thermo Limited that claim of being the country’s largest and fully integrated water heater manufacturing plant, with the latest to offer in technology and international standards, specially adapted to suit Indian conditions.
Pratima H checks the temperature of this category with Nitin Sangle, Business Head – Renewable Energy Business at Racold Thermo Ltd who helps us understand this niche (if we can call it that) and its subtle corners better with special knobs turned on unorganized market pieces, role of subsidies, affordability, economics, lessons to be picked from China and other market drivers.
What has been your observation when it comes to adoption of water heaters in India, specially with economic and pragmatic challenges around?
The SWH (Solar Water Heater) use in India on commercially visible scale started in 1980s but the market size was still very insignificant owing to the high prices and hence the higher payback time to recover the initial investments done to buy SWH. The lower acceptance or adoption of SWH by consumers was also because of the relatively new age technology which did not enjoy a very high consumer confidence. Hence, there were sporadic instances of SWH usage in India till late 1990s. During this period government offered various incentive programs for consumers in the form of soft loans in order to encourage them to opt for SWH.
However, by the year 2000, the number of SWH installations in India was at a significant level wherein potential new consumers could gather a positive word of mouth about it from the existing consumers who were using it for a few years. The benefits of SWH were very clearly addressing the biggest need gaps for Indian consumers like ‘savings in fuel bill to heat water’ and ‘healthier – safer – reliable flow of hot water throughout the year barring a few monsoon days which are around 30-50 cloudy days based on the geographical location’. By this time, the electricity cost was also going up at about eight to 10% per annum thus making it highly expensive and affordable proposition.
Owing to these favourable factors and also because of the abundance of sun radiations across India throughout the year, the SWH usage really started increasing post 2000-2001. The SWH industry though in its nascent phase of growth was roaring to make a significant mark thanks to the government support in various forms of financial support and promotional campaigns to popularise the SWH usage. Around this time, many leading industry players like Racold also invested resources in creating awareness through marketing programs.
Has the industry aligned and consolidated itself to new changes through all these years?
The large part of the industry was dominated by the unorganized players most of which were from the small scale industry. We have also witnessed that the consumers in few parts have witnessed sub-standard (poor) quality and cheaper (price) versions of SWH which eventually led to some questions on the technology and hence the consumer confidence on the SWH as a technology.
However, a lot has changed over last 10 years as most of the sub-standard (poor) quality and cheaper (price) SWH manufacturers could not ensure the sustainable business operations and now, we are witnessing that the large part of the market share is controlled by the organized and quality conscious industry players who have a positive long term outlook about running the operations.
Another recent boost for SWH usage came post launch of the Jawaharlal Nehru National Solar Mission (JNNSM also known as the National Solar Mission) in 2011 through which the government offered attractive subsidy (30% of the total price) to end users. This has really helped in accelerating market growth of SWH in India because it lowered the initial purchasing cost (or consumer investment) and further improvement in payback period.
Are there any unique Pros and Cons that India as geography and as its market potential presents?
The industry size is approximately Rs. 500 Cr per annum and it is expected to grow at some 10% CAGR over next three to five years period. The growth will be fueled through accelerated penetration of SWH solutions in wider geographies as well as in wider set of applications in domestic and commercial applications like realty, hospitality, hospitals, dairy and process heating in industries. The list can go on and on for SWH usage and we can say that SWH can be explored to use in any application where hot water is required or in cases where people want to use hot water from SWH as a source of heat for other heating application.
India is blessed with abundance of solar radiations (energy) throughout the major part of the year and it’s true for larger part of Indian geography. This sole reason is the key backbone for the bright future of the SWH penetration in India.
How crucial are factors like affordability and accessibility here?
Prices for SWH has significantly come down over the years thanks to the benefits accrued from the increasing economies of scale in manufacturing and entry of large number of competitors in the market. Another important factor for prices becoming affordable is the faster penetration of use of Vacuum Tube Collector (VTC) technology which is economically cheaper option as compared to the erstwhile Flat Plate Collector technology which was based on copper usage which is bound to be more expensive. Many competitors continue to make inroads into wider geographies in order to make the SWH products available to the last mile users including in rural parts of the country. With increasing distribution infrastructure, consumers are able to access knowledge about the benefits of SWH along with having easier access to products and after-sales service from the respective solution providers.
And coming back to Cons?
There are a lot of factors at play here. Like Technical ones or Space and building designs. SWH requires sufficient shadow-free space for installing the collectors / absorbers (plates or tubes) which absorb sun energy. These requirements need to be planned at the design stages of the new buildings in order to be solar energy dependent.
Further, cheaper and poor quality products can prove not only a loss making proposition because of poor performance and low life expectancy but also unsafe and life threatening at times.
Unavailability of sun on cloudy days is another issue. Though it is for a limited period of the year, it can be addressed by providing sufficient electrical heating back up in the SWH system itself. This enables consumers to have uninterrupted hot water even if solar energy is insufficient. This electrical back up in SWH proves to be a better than standalone electrical heating option because even on cloudy days, most of the time, water still gets lukewarm because of some solar radiation absorption. Water quality, too, has a lot of impact on the performance as well as the life expectancy of a SWH. A water with high level TDS (salts) or impurities can prove to be a damaging for the product performance. Leading companies like us have developed products which can last in such kind of poor water quality areas.
As to the ecosystem of SWH installers, there are limited skillful resources that can do SWH installations. With growth in SWH market, the ecosystem of SWH installers (designers, plumbers, system integrators) needs to rapidly go up. This is also an area of opportunity of job creation. Indian government has also tried to accelerate the growth of SWH penetration by making it mandatory for new buildings. The implementation and complete enforcement of this policy directive across India still has a large scope of improvement which needs to be cautiously and relentlessly driven by the respective monitoring & enforcing agencies on the ground. The penetration of SWH has significantly improved in areas where the enforcement of mandatory usage is done in the right spirit of the policy.
How do you reckon problem areas around viability of alternative energy means like these? Any comparisons (cost, lifespan TCO, usability, application-width) with erstwhile means? Also, has the technology evolved enough when we think of issues so far around manufacturing costs, overall economics, conversion efficiency of cells, as well as new advances like nano-materials (lead-selenium instead of silicon), better storage mechanisms, nano-rods etc.
Every potential consumer of the alternative energy powered devices will always like to draw comparison of the new option with the existing options available over years. The comparison is drawn most likely on the multiple dimensions like technical feasibility (or simply put ‘ease of usability’ in a consumer parlance), performance reliability, durability, application spectrum and most importantly the costs factors including the initial buying cost (investment) & operating (running) / maintenance costs.
As far as SWH is concerned, all the factors related to ‘ease of use’ and ‘performance reliability’ etc. have been completely established because of the positive experience of early adopters who used these devices over couple of decades now. In a country like India where the traditional means of water heating were largely through electricity or combustion of wood / gas, the scarcity / unreliability of all these means have always been an area of concern for masses at large. Moreover, barring the electric powered water heaters, other means were largely unsafe and unhealthy because of the risks involved in handling the hot water or the dangerous gases emitted during burning processes. SWH solutions have solved all these problems as what can be termed as ‘panacea for water heating worries’. Barring a phase of few cloudy days during monsoons, SWH provides uninterrupted supply of hot water to its users in a much more ‘reliable – safer – healthier – eco-friendlier way’.
Can you talk of the economic Maths in detail?
At current market operating prices of SWH, the initial investments put on buying SWH can be easily recovered within 18-30 months period through the savings accrued by replacing the traditional means like gas / wood or electricity. As per our experience, this is true for large part of domestic and commercial users across India. E.g. A 100 LPD (Liter per day) capacity SWH system is available at about Rs. 18,000. Electricity consumed in heating 100 LPD daily will be five units; assume that SWH can provide hot water for 300 days per annum and at a cost of Rs. five per unit of electricity, the annual electricity bill will be around Rs. 7,500. Thus, money invested in buying SWH system can be recovered within just 30 months.
However, users must have a sufficient rooftop or open space to install the collectors (panels / tubes) which are open to sky (Sun) for absorbing solar energy. This technical requirement needs to be fulfilled in order to use SWH.
Is there any correlation with the market for green-housing picking up noise recently?
The concept of green housing catching up these days is definitely a key direction to move towards a sustainable world. In the broader framework of green housing, SWH becomes one significant component in the energy efficiency or energy saving aspects of it. However, as per the government mandate, all the new buildings must have SWH installation as a compliance requirement.
How do we stack up vis a vis markets like China that have advanced in penetration rates in a short span of time? Any take-aways from them? Are incentives, subsidies, supply chain and ecosystem factors in line with the growth being chased?
In terms of market potential and sun radiations availability, China & India are truly comparable. However, in terms of the actual penetration so far, India is far behind. China’s installed SWH base at > 160 mln sq meters of solar collectors (absorbers of heat) is staggeringly high as compared to five mln sq meters of that of India.India today is among the top-10 SWH markets in the world and our SWH story seems to have just begun… and there is a long way to go!
China story however can be crucial for learning and accelerated penetration in India. India government has also been offering subsidy in order to accelerate the SWH usage. The key growth factor here could be the enforcement for mandatory use of SWH among new building developers and heavy users in commercial segments like industries, hospitality, hospitals, educational institutes etc. While this push of mandatory usage can at times be viewed as one-sided approach, it is completely true that usage of SWH is win-win for all the stakeholders including users who might feel initial pinch while investing in SWH.
The key role of government agencies in ensuring the effective enforcement for usage of SWH in new buildings (or heavy electricity / fuel users in commercial segments like factories) will give a strong impetus of growth to SWH industry. It will also help the DISCOMs in bringing the peak load electricity demands down significantly. Possibly, solar penetration could also help improving the electrification penetration in India by allowing DISCOMs to create and use surplus of electricity to untapped areas so far.