Thursday, June 17, 2010

Foreign Firms Eye India's Solar Power Market

India's drive to ramp up solar capacity may trigger a stampede of firms from Asia, Europe and North America, chasing a share of the $3.5 billion of business up for grabs by 2013 and trampling over smaller domestic players.

Arizona's First Solar and China's Suntech Power Holdings are working on plans to enter the market as India commits to an ambitious $70 billion program to build 20 gigawatts (GW) of solar capacity by 2022, from about 30 megawatts (MW) now.

"Solar is the new activity. It is absolutely a game changer for the country," said Anil Srivastava, CEO at French group Areva's renewable energy unit, which is scouting for solar project contracts in India.

Foreign firms such as Suntech and First Solar, which have the scale and ability to sell solar gear cheaply are likely winners as this market grows, along with Taiwan's Motech Industries, which has signed a cell supply deal with India's Solar Semiconductor.

"As the market evolves, we're prepared to make the investments required to drive growth, including setting up a local office," said Rory Macpherson, a spokesman at Suntech, China's largest solar panel maker.

"In the near term, the Chinese and Taiwanese will be big beneficiaries," said CLSA solar analyst Charles Yonts, adding he expects a shift over the long-term to domestic production.

For now, though, those with advanced technology such as Areva and California-based solar-thermal developer eSolar Inc have a clear advantage.

Though India's rising power demand and high irradiation levels make it ideal for harnessing solar energy, the country is highly dependent on imports of critical raw materials including silicon wafer used for solar cells and panels. India is a manufacturer of solar concentrator collectors for another type of solar infrastructure -- solar thermal energy. But its industry is underdeveloped in terms of technology.

Unlike silicon-based solar cells found in panels that directly convert sunlight into energy, solar thermal harnesses the sun's heat using mirrors or lenses to concentrate sunlight on fluid, creating steam that runs turbines to generate electricity.

India is building an initial capacity of 1 GW by 2013, enough to power close to 1 million homes. It would then add 3-10 GW by 2017, before aiming to hit capacity of 20 GW by 2022.

India's top solar players including Tata BP Solar, a joint venture of Tata Power and BP, and Moser Baer have announced expansion plans. But limited resources and a lack of know-how could slow them down as they compete with bigger foreign firms for contracts with solar developers.

India's top power producer NTPC Ltd, through its NTPC Vidyut Vyapar Nigam (NVVN) unit, will lead the plan's initial phase via long-term contracts to buy the first 1 GW of energy from developers at Rs 15.31 per kilowatt-hour (kwh) for solar thermal and 17.91 rupees/kwh for solar module -- about eight times the cost of coal power.

Solar energy will be bundled with cheaper sources of electricity at the power utility and sold to distributors, who would reflect the solar cost on the rates they charge consumers. NVVN plans to award up to 700 MW of solar contracts this year. Opportunities in the solar sector are not without risk, say industry experts.

"Financing would be an issue," said Andy Kerr, director at the School of Geosciences at Edinburgh University, noting that a shortage of funds could threaten continuity of the India program. NVVN will harness an additional 2-3 GW of capacity, but has no mandate for now to issue contracts beyond that.

India hopes international funding and technological support would help build the rest of the capacity. Companies, for now, are keen to participate in various solar projects the government will develop in the next 3-5 years. "It's a big market and should offer opportunities for solar players," said Yonts.

SOURCE

2 comments:

ZenHomeEnergy said...

If we placed enough solar panels in the Sahara desert to cover just one percent of it, we could generate enough electricity to power the entire planet.

Solar Energy

jigar said...

Solar will be cheap enough at some point, but rather than handing out tax credits, they should fund basic research and have a prize for the first team to hit a certain efficiency per square foot, and another prize for output per dollar.