Last week, the US-based module manufacturer Abound Solar revealed its plans to file for bankruptcy due to the difficulty of operating in the current competitive environment. Like most of its competitors, Abound Solar was selling its products with a 25-year warranty. The company has sold modules in India to Punj Lloyd for the 5MW Rajasthan project and to Solaris for the 2MW Andhra Pradesh project. With the company going bankrupt, its customers will not get the 25-year warranty coverage for the modules they have already purchased. This is particularly bad for the company’s Indian customers, as PV modules have a higher warranty claim rate in regions characterized by hot and dusty climates.
In a period that has witnessed the closure of dozens of solar panel manufacturers, the financial stability of the seller has become the leading factor for PV purchase decisions. Large companies with reserves that could last for, at least, the warranty period or firms such as Canadian Solar (NASDAQ: CSIQ) and Suntech (NYSE: STP), who offer a warranty insurance mechanism, will be preferred by the buyers in general and institutional buyers in particular.
In another development, Moser Baer Photovoltaic, a subsidiary of Moser Baer Group, has come under immense criticism from Tata Power Delhi Distribution (TPDD), which sent a letter to the Ministry of New and Renewable Energy, calling for "debarring” Moser Baer Photovoltaic for their “performance of solar projects.” TPDD is a joint venture between Tata Power and the Government of Delhi, India. TPDD had awarded three solar projects to Moser Baer. The former has complained that the solar power plants installed under the agreement are much below the “industry standards.” Moser Baer has not been able to meet its deadlines and has used poor quality machinery and manpower, which has resulted in high system losses; therefore, “actual electricity generation” is “much less than the guaranteed generation.” Furthermore, the company has also failed to offer adequate customer service and support to the clients.
Following the letter, Moser Baer has started taking appropriate measures. An official from TPDD thinks that if Moser Baer makes the right decisions then “we may withdraw the letter.” On the other hand, a spokesman from Moser Baer insists that his company has “reached an agreement on resolving the issue and the same is under execution."
In the meantime, Tata has further expanded into solar by purchasing the remaining shares of Tata BP Solar, Tata’s joint venture with BP Alternative Energy Holdings. Tata BP Solar is the pioneer in the Indian solar industry and has now effectively become a complete subsidiary of Tata Power Company. The business has been operational since 1989 and has a manufacturing capacity of up to 125 MW, but is now facing stiff competition. The performance of the company can be judged from the fact that it failed to secure even a single order under the 900MW Gujarat solar project or the 600MW National Solar Mission (Phase-1).
On the other hand, some Chinese and US manufacturers, including US-based SunEdison (NYSE: WFR) and China-based China Sunergy (NASDAQ: CSUN), were able to secure orders in the country. In fact, China Sunergy had supplied solar modules to 45 MW facilities in the state of Gujarat. The company is also interested in working in the country through local partnerships. China Sunergy was also one of the hosts of the second India Solar Summit held earlier this year.
Tata Power Company, the parent company for Tata BP Solar, is India’s largest private power utility company. The business has a massive generation capacity of 5.2GW, which it aims to increase to 26GW by 2020. By expanding in solar, the company has shown its increasing interest in renewables. The news of the takeover was received well by the market as the company’s shares increased by approximately 4%.
The Indian solar industry is growing, albeit slowly. The unique feature of the country’s solar industry will be the Domestic Content Requirement (DCR), which will be introduced under the second phase of the National Solar Mission (NSM), whereby all solar PV projects that are commissioned under the NSM will be required to use locally manufactured crystalline cells and modules. The legislation aims to improve domestic manufacturing and encourage self-reliance in the solar sector. However, it is also viewed as an obstacle by many foreign firms. On the other hand, the Indian market is too big to be ignored. According to recent estimates, the demand for solar in the country will stand at 12GW cumulatively by 2016. With or without the DCR, the country will continue to attract foreign investment in its solar sector.
Apparently, most of the solar industry’s news from India comes from the states of Gujarat and Rajasthan. Although these two are among the country’s biggest (in terms of area), besides them, India has 26 states and seven union territories. The Delhi government, representing the capital territory, has sanctioned just 2.5MW of solar energy, as opposed to Gujarat, which plans to generate 654 MW from solar. Experts have advised the government to provide more incentives so that the entire country can tap into solar.
India’s leading PV manufacturers such as Azure Power, Kiran Energy and Reliance Power, are expected to gather for the PV Project Development Summit India 2012 in New Delhi, which will be held on 30-31 July. Some of the foreign companies including Conergy and SunEdison are also expected to be represented at the event. The companies will reveal their past performance, specifically under the first phase of NSM. The Ministry of New and Renewable Energy and other relevant government agencies will also attend the summit and will provide updates related to the new regulations and subsidies for the solar sector.
