23 January 2012
Posted in News - SPVI news
The Solar Industry in India is an assorted mix of private entrepreneurial success and government’s incentive environment
The Solar Industry in India is an assorted mix of private entrepreneurial success and government’s incentive environment. The industry was opened to public participation with Feed-in-Tariff system to boost fast growth in the sector. This was followed by setting-up of the Renewable Energy Certificate (REC) and the Renewable Purchase Obligations (RPO) mechanism allowing for the development of a well-balanced solar energy market segment.
Phase I Batch II bidding completed
The second batch of bidding in the first phase of the Solar Mission was completed in August 2011 says a Bridge to India report, “The average tariff bid was INR8.7 per unit. The lowest tariff bid was INR7.49 per unit offered by Solairedirect SA of France for a 5MW project in Rajasthan while the highest successful tariff bid was INR9.39 per unit by GreenInfra Solar Farms Ltd. from India for a 20MW project, also in Rajasthan. As expected, the average tariff has shown a downward trend as compared to batch 1, falling by 27.5%.” However, for investors the main issues to grapple with is reverse-bidding on the prices.
Tobias Engelmeier, managing director of Bridge to India says that, “Chinese manufacturers like Suntech Power and Yingli Green Energy helped drive the drop in solar panel costs. The firms increased production of the panels and cut costs this year by about 30 percent to 40 percent, to less than $1 a watt, helping prices came down and suddenly things were possible that didn’t seem possible.”
Thomas Maslin, one of the analysts cautions that, “The Indian practice of awarding projects by auction creates uncertainties with regard to incentives and revenue streams in solar power generation. The availability of affordable finance remains an issue.”/Besides, analysts like him also predict that India’s ambitious National Solar Mission target of generating 20GW of solar energy by 2020 is likely to be unachievable and would likely be in the region of 10,000 MW of capacity by 2025.
Top Manufacturers of solar components
Tata BP Solar India is the country’s third largest cell manufacturer and panel maker. The British major BP Solar held a 51-percent stake along Tata Power to manufacture solar equipment in India, before it decided to exit the solar business segment in the next forty years. Tata Power is a utility company owned by one of India’s largest industrial company, Tata group, which owns among others, Corus Group as well as Jaguar Land Rover./The newly appointed Managing Director of, Tata Power Mr. Anil Sardana, says that “Tata Power is India’s largest private sector power utility with an installed generation capacity of about 3120 MW and a presence in all the segments of the power sector viz Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading.”/Tata BP Solar is now in the process of acquiring the 51-percent stake through its utility arm Tata Power Ltd. A new agreement has been instituted to transfer BP technology to Tata BP Solar until 2013./Currently, Tata BP Solar has a manufacturing capacity of 125 MW for solar modules. Speaking to Press Trust of India, Tata BP Solar CEO K Subramanya said that, “Going forward, the company is looking to grow with profitability, with the right dose of manufacturing and increased focus on market research.”/The company first aim, the CEO says is to, complete utilization of its manufacturing capacity to the maximum of 125MW as currently only 80MW of the power is being utilized with, “The company is implementing solar projects in different states, including Gujarat, Rajasthan and Jharkhand,” he noted./Other well-known names in domestic solar equipment makers’ include-Indosolar, a photovoltaic cells manufacturer and Jupiter Solar Power./Other manufacturers like Chennai-based Shan Solar have put their plans of Rs. 720 crores for manufacture of polysilicon cells on hold given the global downslide.
Indian Solar Developers Rely On Chinese Solar Equipment
The market trends reveal four types of solar players-national level power companies such as Tata Power is the first type. Indian conglomerates are the second category followed by a third category like SunEdison and a fourth India-focused solar companies such as Azure Power, New Delhi; Sun Borne Energy, Haryana and Kiran Energy, Mumbai./Leading the dusty march forward for Indian clean energy sources is Azure Solar plant, headed by Inderpreet Wadhwa, a first generation entrepreneur who dreams big on Indian ascendency as a global power. Azure Power tech is a massive solar farm of 63 acres in the vast desert lands of Rajasthan, in northwest of India, consisting of 36,000 solar panels. These panels were sourced from China’s Suntech Power./Mahindra Solar one, was one of the first to commission a bank-funded, 5MW solar plant on tracker technology in Rajasthan. The group’s MD and present Solar Advisory Panel head, Mr. Anand Mahindra said that,” We are proud to be amongst the first in India to deploy solar technology under the JNNSM scheme successfully and in record time. We aim to be one of the top 3 companies in this industry. The Mahindra Group has been at the forefront of businesses that are in step with the nation’s needs and Mahindra Solar One will provide a fillip to our nation’s solar competencies. We are committed to be involved in enterprises that provide sustainable solutions for a better life”./In fact, Indian developers seem more inclined to adopting advanced thin-film solar cells supplied by global manufacturers like First Solar based in Arizon, US.
Kiran Energy, a solar developer is a start-up from Mumbai, with the $50millin on US private equity funding and is today poised as the countries significant player in – financing, developing as well owning massive solar panel farms across India./There is a growing global trend that solar project developers are less risky investments in comparison to solar manufacturers. Some project developers such as Moser Baer, based in Gurgoan, Shashwat Green Fuels & Technologies located at Gujarat are experimenting with plantation farming, at the location of their solar power projects./Solar power projects in areas around Punjab are located long canal networks so that the pressures on land demand are minimized and the canals, carrying valuable water resources, can remain clean.
Foreign Suppliers key to successful commissioning of several projects
Bridge To India, a leading solar energy strategic consultant and project development organization based at New Delhi and with presence in Munich and Hamburg in its quarterly report states that, “A majority of the PV projects under execution in India are using modules from foreign suppliers. More than 140MW worth of projects have been commissioned in India in the year 2011; more than 80% of these installations have used imported modules./Suntech and First Solar have the largest share in the Indian market exceeding 150MW each. Industry sources suggest that they offer some of the lowest prices in India.”/ A KMPG report in 2010, the report predicts that a total of 67,000 MW of solar power would be generated in the country by 2022. The report also states that solar power prices would drop to 7% in the next ten years. The reasons for solar power generation becoming viable and affordable are – advances in solar energy generation, the quantum jump in the scale of solar production and localized manufacturing, which drive prices down to match conventional energy generation prices./The current high price of solar energy generation is because India lacks a well – developed local solar power component industry. However, this is likely to change Solar energy is generated using two methods - solar photovoltaic cells and solar thermal are the two most popular methods used.
China Sunergy’s success story
China Sunergy's CEO Stephen Cai, commenting on its Indian foray into solar PV industry says, "The Indian solar industry has huge potential, and the country is keen to expand its alternative energy usage. We are very committed to this market, and are very pleased that this project is now up and running, which is a testament to our reliable product quality. China Sunergy is not only further diversifying its geographic focus but also endeavoring to create better life for people all across the globe with our value-added products."/China Sunergy has made its presence in India by joining forces with Visual Percept, India’s leading solar entrepreneur. Mr. Akash Bhanshali, Director of Visual Percept's parent company, says that, “China Sunergy's high performance products and dedicated service strongly impressed us. We look forward to working with China Sunergy on future projects to realize India's National Solar Mission."
First Solar has tie-up with Reliance Power to supply 100MW of advanced thin film modules, for its Jaisalmer, Rajasthan solar power project. This is the largest PV module supply agreement in India, says First Solar’s Jim Brown, President of Utility Systems Business Group, adding that, “This agreement with Reliance Power continues First Solar’s momentum in India, helping develop the country’s long-term, sustainable solar market.”
Solar REC Market viable for India
Leading Indian energy analysts predict that the solar Renewable Energy Certificate’s (RECs) can now grow to be an excellent option in India. Mr. Mohit Anand, the solar expert at Bridge to India, states that “However, according to BRIDGE TO INDIA assessment, given the guarantee in REC prices for the period 2012-2017 and considering the CERC set floor price of INR9.3 (€0.16)/kWh (set by the CERC) during this period, project IRR’s become attractive to both strategic and financial investors. This makes the REC revenue stream extremely lucrative in the first few years of the projects. The future of the solar REC mechanism can also be understood by drawing conjecture from the non-solar REC market, which is showing early signs of promise. the NSM saw an average bid of INR8.5 (EUR 0.14) while state policies of Gujarat are also expected to implement reverse bidding which would lower offered tariffs. This makes the REC market an extremely lucrative alternate to developers.”