To boost manufacturing within the country, there should be aggressive policies to promote domestic content that incorporates the best, newest and globally proven technologies. India has the advantage of lower labour costs and a huge local market that offers the right opportunities to develop the indigenous solar value chain
By Richa Chakravarty
Wednesday, March 21, 2012: The solar PV manufacturing base in India comprises cell and module manufacturing, primarily. The current scale of manufacturing in India is small in comparison to global standards but the country has ramped up its production from around 0.06 GW in 2005 to more than 1 GW now. Yet, it is completely dependent on the import of raw materials. Informs Sunil Goel, vice president, Maharishi Solar Technology Pvt Ltd, “Critical raw materials such as ethyl vinyl acetate (EVA), backsheets (tedlar sheets), various production machinery, etc, are mostly being imported. Even the solar cell and solar glass manufacturers import their solar wafers and raw glass as India, till date, does not have any manufacturing unit for these raw materials.”
The solar value chain starts from extracting silicon from sand, a process that not only requires high-end technology but is also energy and investment intensive. Around 80 per cent of the silicon wafers in India are imported from diverse sources abroad. Some effort was made to manufacture locally, but this met with little success till Maharishi Solar Technology Ltd set up its facilities to produce solar grade polysilicon and subsequently, ingots and wafers. The company has complete vertical integration, and is known to be present across the entire PV value chain, from manufacturing solar grade polysilicon and ingots, to wafers, cells, modules and systems.
In this scenario, let us review the value chain—examining its importance, requirements and the efforts undertaken by both the players and the government to develop it.
Wafers: Wafering involves growing silicon ingots from polysilicon and then cutting the ingot into wafers. Polysilicon is the raw material for the crystalline solar cell. At present, polysilicon consumption in India is very low. Globally, the crystalline silicon (c-Si) wafer industry is dominated by a few companies, with LDK Solar, REC, GCL Poly, MEMC, Yingli Energy and Renesola sharing over 80 per cent of the market. “Indian manufacturers today primarily depend on the import of silicon wafers or strips to make PV modules. The silicon market has been fluctuating a lot in the past, leading to an imbalance in the demand supply equation, fluctuating prices and the availability of the raw material,” informs Hari Kiran Chereddi, managing director, Sujana Energy Ltd.
Though the industry is highly dependent on imports, Lanco Solar Pvt Ltd (LSPL) is setting up a manufacturing facility to produce 1250 tonnes per year of polysilicon and 80 MWp of ingots and wafers in Cuttack, Orissa. Bhaskar Silicon Private Ltd (Bhaskar Solar Power) is yet another company that is expected to start operating its Rs 50 billion polysilicon and wafer processing facility in West Bengal’s industrial township, Haldia, this year. This unit will have a production capacity of 2500 tonnes of polysilicon per annum, capable of generating 250 MW of energy.
Raghunandan, vice president, engineering, Kotak Urja Pvt Ltd, is optimistic. Says he, “India is still at the developing stage when it comes to the availability of
raw materials. The establishment of polysilicon plants will generate byproducts such as silane gas, which is consumable in production of solar cells. Currently, silane, along with other chemicals, is being imported from other countries. At the module level, the encapsulant materials are also imported, at present.”
Ethylene vinyl acetate: A solar module is an inter-connected combination of several solar cells. In a commercial module design, these solar cells are normally packed between a back sheet on the bottom and a tempered glass window on the top. The cells are then encapsulated by a polymer encapsulant of ethylene vinyl acetate (EVA). It is a co-polymer of ethylene and vinyle acetate. This material possesses good clarity and gloss, with almost zero odour. EVA has been the most versatile and trusted encapsulant material used in the manufacture of monocrystalline, polycrystalline and thin film photovoltaic (PV) modules for many years. EVA has been an import dependent commodity and still continues to be so for the simple reason that no manufacturing initiative has borne fruit in actual practice. Though Kotak Urja plunged into developing encapsulant material in 2007, shelved the idea halfway.
Renewsys, a renewable energy division of Positive Packaging Industries Ltd, has firmed up its plans to produce EVA. This company will be catering to the needs of the solar energy sector by setting up India’s first EVA encapsulant sheet line in Bengaluru. Brij Footcare Pvt Ltd, is another company that has commenced manufacturing of EVA within the country.
The manufacture of EVA presents immense opportunities. As per available estimates, 70 per cent of the output of the Indian PV module market goes in to the
export markets and 30 per cent meets for domestic requirements. However, the target for the Jawaharlal Nehru National Solar Mission (JNNSM) is 20 GW of capacity installation by 2022, creating a strong demand for EVA film and back sheets, which are currently being imported.
Glass: Low iron content glass is used for multi- and monocrystalline solar PV modules. Market experts believe that locally available glass has the potential to lower the cost of solar PV power by 15-20 per cent. This is also because of the reduced per-unit cost of manufacturing. The cost cutting effect is expected to be even more in the case of solar thermal technology, as glass comprises around 33 per cent of the total cost of the product (a solar cell, in this case). The majority of the raw materials needed by the glass industry are available indigenously, thus providing excellent scope for the growth and development of this sector. Gujarat Borosil Ltd has been engaged in the production of high quality sheet glass at its Bharuch plant in Gujarat. In its first solar initiative, the company has started the production of low iron glass to meet the needs of emerging PV applications worldwide. This will meet the needs of solar modules, solar thermal collectors and greenhouses as well.
Machinery: Apart from the above mentioned raw materials, the sealants, terminal boxes, large inverters, machinery for automated cell lines and module assemblies are also being imported. The cell lines are mostly automated as the manual process of handling solar wafers/cells results in high damage rates. Automation ensures maximum yields and higher performing cells. The module manufacturing process involves laminating the cells in a glazing material, and housing in an environmentally protective substrate and frame to deliver direct current (DC) electricity. There are around 50 module manufacturers in India;
however, only a handful of them have fully automated production units.
Adds Raghunandan, “The right technology for the complete value chain is available from various turnkey providers. However, building indigenous equipment would require a combination of rapid technological developments at research centres and in industry, government support and market demand.”
What’s needed to develop this value chain
While the JNNSM seeks to develop a solar PV manufacturing ecosystem in India by mandating the use of indigenous components (especially for PV cells and modules) for the solar power projects, there is another school of thought that feels that the ‘100 per cent local content’ restriction may slow down the deployment of new and innovative solar technologies. Thus, a free run has been given to manufacturers adopting both the thin film and concentrator technologies, for the simple reason that indigenous technology is almost entirely unavailable currently. India with its advantage of lower labour costs, offers domestic suppliers opportunities to manufacture economical yet high quality modules/cells, enabling a competitive edge in the world market. To provide a boost to manufacturing in the country, aggressive domestic content is required, without keeping out the best, newest and proven technologies.
For decades, established industry leaders have been committed to solar manufacturing in India and are increasing their investments further. “Some leading businesses setting up integrated solar manufacturing facilities and other segments of the supply chain, such as materials, need to be established for the
industry to be able to innovate and drive down costs. It would be most appropriate to extend the purview of the domestic content requirement to apply to projects addressing state solar recovery point objective (RPOs). These efforts will pave the way for a day when our solar energy ecosystem will be able to support all domestic requirements as well as export opportunities,” says Hari Kiran Chereddi. However, additional R&D efforts are needed in this area to continue driving down the costs, and to develop affordable and applicable solutions that will increase the adoption of solar energy in the country. Indian manufacturers have to differentiate themselves from their competitors if they have to be successful in this market and reduce the country’s dependence on other developed nations.
In order to reduce our dependence on imports, Sunil Goel suggests that, “We should encourage local manufacturing of raw materials by streamlining imports of basic materials, tools and machines (like EVA, backsheets, sealants, terminal boxes, etc). Also, there should be regular updation of the import classification list, as many new materials are being developed all the time. To cite an example, many different types of backsheets are now in use and are being imported, whereas the classification list of imports only recognises multi-layered sheets with a tedlar base. Besides this, government should encourage the setting up of local test facilities and even subsidise the testing and certification of raw materials manufactured locally, as testing is generally very costly and time consuming.”
Adds K Subramanya, CEO, Tata BP Solar India Ltd, “Solar PV deployment on a large scale, the creation of solar manufacturing hubs for domestic and export demands, the rationalisation of tax and duty, the promotion of R&D clusters, and creating a talent pool across the entire solar value chain will help in creating a complete ecosystem for solar related manufacturing. This will encompass all elements of the solar value chain and be supported by complete infrastructure availability. This will create a secure supply chain and also optimise costs by ensuring common utilities and economies of scale.”
The challenges ahead
Finance, the high CAPEX, lack of indigenous technology and high power consumption in the manufacturing processes are some of the major challenges in developing the complete supply chain. Apart from these, manufacturers and developers are faced with the issues of sustained market demand, power and infrastructure, availability of skilled manpower, an irrational duty structure, apart from the lack of a stable policy regime and level playing field. However, experts counter this pessimistic view by pointing out to the huge local demand within the country. Opines Hari Kiran Chereddi, “Local demand will fuel the industry and scale it up to make it sustainable and profitable. Cost reduction can be achieved by nurturing local manufacturing, increasing scale, and reducing balance-of-systems costs. If we meet the targets set out by the JNNSM, the solar energy sector will grow rapidly like the telecom sector. Since the solar thrust has gained momentum recently, the right planning, along with investments and judicious implementation, will help India gain and retain technology leadership in the global community.”
Emphasising the need for funds and exemption from duty, K Subramanya shares, “There is a need to expand the National Clean Energy fund and dedicate it to implement solar RPOs at the state level. Also, the current tax and duty structure regime translates to 23 per cent taxes and duties on imported machinery (except for SEZs and EOUs). This needs to be exempted to facilitate quick capacity build-up in the country to cater to the domestic market.” Highlighting the irrational duty structure, K Subramanya adds, “States have imposed central sales tax (CST), and value added tax (VAT) to the tune of 5 per cent against the sale of solar PV cells/solar PV modules, solar SPV systems, solar collectors, solar water heating systems and various other systems running and operating on solar energy. Since this is not applicable to imports, it makes domestically manufactured goods even more uncompetitive. VAT and CST on these items should be permanently removed to promote manufacturing and the sale of renewable energy products.”
A shortage of skilled manpower is another severe challenge faced by the country. There is a requirement of more than 10,000 technicians/ITI personnel and 1000 engineers in order to realise the targets set for solar energy generation in the country. Further, well qualified faculty is not available, leading to an ineffective, out-dated and non-pragmatic curriculum. Developing skills pertinent to the solar industry is a key factor in ensuring the competitiveness of the industry.
To counter these challenges, not only private players but the government, too, has taken a number of steps to promote the industry. Policy makers are providing incentives and creating platforms for R&D, technology transfer, manufacturing, financing of projects and developing solar missions to ramp up the commercial adoption of solar power. However, solar is not a market that will subsidise over long periods of time. But the current challenges should be perceived as opportunities in disguise as the current outlook for the industry is bright and persistence will pay attractive dividends. Says K Subramanya, “The government’s strategy has been to attract the private sector to invest in and install the renewable energy generating capacity. The power thus generated is purchased by the government at a feed-in tariff, which is set such that the investors recover their investments and make a profit. This ‘generation based incentive’ is the concept on which the solar energy sector is being developed.”
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