An Ernst & Young report declares India as one of the best destinations for investment in solar energy. Also, the government’s Jawaharlal Nehru National Solar Mission (JNNSM) promises to trigger tremendous growth in this segment. However, in reality, India is way behind even Germany, which has installed 7 gigawatt (GW) out of the overall global output of 16 GW of photovoltaic (PV) generated solar power in 2010, despite the country receiving half the sunlight that India receives annually. On the other hand, for the past 15-20 years, India has set up PV installations that amount to just 200 megawatts (MW). However, the Indian solar industry is currently growing rapidly and the price of solar energy, as compared to last year, has come down significantly. Thus, there are phenomenal opportunities for the existing players to expand, and new players to venture into this domain.
Saturday, August 20, 2012: Immense biz opportunity
Silicon production: Among the competing technologies, which include organic solar, thin film, ribbon solar, etc, crystalline silicon technology is the most common and accounts for 85 per cent of the market. Silicon is used in solar PV as the basic/core material for monocrystalline and multicrystalline wafers as well as for thin film silicon modules. More than 90 per cent of the annual solar cell production is based on crystalline silicon wafers. However, India has no polysilicon or wafer production capability and the raw material ecosystem is also not fully developed, leading to over dependence on imports. Here lies huge potential for the investors in the solar industry—silicon and wafer production. The government and those looking to enter the field should look for international collaboration and help allow investments and technology to flow into the country.
Solar cell production: Manufacture of solar cells, the basic element for solar modules, holds tremendous opportunity as India has only a handful of players in this space. There are as many as 60 companies making solar modules, of which about 15 to 20 manufacture solar cells. However, at present, solar PV cell manufacturing in India is totally dependent on imports of crucial raw materials. Currently, India has a solar cell manufacturing capacity of 600-800 MW and module capacity of 1000 MW, which is expected to double in the next two years. Thus, there is immense potential for those who are willing to invest in solar cell production to get profitable returns on their investment.
Off-grid solar power: So far, in India, the off-grid segment has been the most dominant and popular. This comprises standalone home lights, street lights, telecommunication devices, chargers, inverters, etc. Solar power as alternate energy is not just clean and safe but is also the need of the hour. Off-grid applications that are highly relevant to rural India, are also receiving due recognition. States like Gujarat and Rajasthan have their own solar policies for rural development and propagation of off-grid products to light up villages and supplement the electricity crunch in various areas. The present statistics reveal that 23 million households still do not have electricity. In such a scenario, solar products like lanterns, home lights, streetlight, water pump and community power points hold great potential for business. Also, the government’s incentive programmes and loan facilities have supported the popularising of these solar off-grid products.
Telecom sector: Major driver
This is another sector that is projected to push the solar segment forward. With the government making it mandatory for telecom operators to run telecom towers on solar energy rather than on diesel run generators, new avenues are bound to open for solar players. This segment also offers good opportunities for engineering, procurement and commissioning (EPC) contractors. Integrators who can help corporate houses in availing complete solar solutions will also see an upsurge in business opportunity.
The demand for solar energy and its products, whether it is for grid connected power generation farms or for off-grid products, can certainly be met by domestic players. This segment holds immense business opportunities that span the residential, commercial and utility segments. However, all said and done, for projections, forecasts and plans to become reality, all that the solar industry requires is frugal innovation that can create harmonious living standards and generate
Despite several hindrances, the domestic demand for solar energy can be met with some strategic long term planning and government support. With favourable and stable government policies and support from the financial sector, many more players can venture into this sector. Favourable tariff policies, subsidies in export/import duties and raw materials can help the segment flourish. For example, backed by strong government support, countries like Germany, Italy, Japan and California have achieved phenomenal growth. In order to boost domestic manufacture, there is a compelling need for stable policies that will increase PV deployment and simultaneously increase R&D in the segment. Policy makers should not tweak policies with every changing season.
Domestic companies should partner with MNCs on an equal footing so that there is value added from both sides. Players must collaborate to benefit from each other. Domestic manufacturers should help project India as a highly capable, inventive nation that can do advanced research to come out with top class innovations. It will also help in creating jobs and investment opportunities.
This article is based on the talks given by K Subramanya, CEO, Tata BP Solar India Ltd, at the ELCINA-EFY CEO Summit in February 2011, in New Delhi
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine