The Next Solar Frontier

Forbes : Ucilia Wang

Europe has been the largest solar energy market for years, but it has ceded some of the spotlight this year to India as India becomes a new frontier for American manufacturers.

India’s solar electric production should reach 141 megawatts by the end of this year, according to a new report by GTM Research. The number may not seem high considering that countries such as Germany and Italy install gigawatts of solar power each year. But
India didn’t really have a solar market to speak of just two years ago. Then came the state of Gujarat, which launched a solar incentive program in 2009. The national government followed by starting its own solar program in 2010.

The national government is thinking big. It has set an ambitious goal of adding 20 gigawatts of electric grid-connected solar projects by 2022, as well as 2 gigawatts of off-grid solar.

“We see a significant growth, and (India) will develop into a very substantial market,” said Tobias Engelmeier, managing director of consulting firm, Bridge To India, which worked with GTM to produce the report. Engelmeier, which discussed the report during
a webinar on Thursday, said India should start to add more than 3 gigawatts of solar annually by 2016.

Promoting solar energy makes sense for a country that is hungry for power and needs to reduce its greenhouse gas emissions. About 25 percent of India’s residents have no access to electricity, according to the International Energy Agency’s “World Energy
Outlook 2011.” That means 288.8 million residents don’t get to turn on the lights at night.

The country also is among the world’s top three producers of greenhouse gas emissions. About 80 percent of India’s electricity comes from power plants that burn fossil fuels such as coal and natural gas, according to the U.S. Energy Information Administration.

India promises to become a booming solar market at a time when growth in Europe has slowed. The weak financial market has made it more difficult for project developers in Europe to line up money for installations. Changes in solar incentives in the top two
markets, Italy and Germany, caused uncertainties earlier this year and prompted developers to hold off on completing installations. Overall, the global solar market will add 23.8 gigawatts of solar in 2011, up 34 percent from 17.7 gigawatts in 2010, said IHS
iSuppli. In comparison, solar installation doubled from 2009 to 2010.

India’s national solar policy requires biddings among project developers to determine the prices that utilities will pay for solar electricity. State policies vary; the one in Gujarat involves the government setting firm solar electricity pricing that is
higher than the price paid for conventional power and should deliver a good return for developers.

Polices aren’t alone in boosting solar energy generation, however. The U. S. government has been a playing a key role as a financier of solar power projects in India. The Export-Import Bank of the United States, for example, provides loans or loan guarantees
to companies that buy American-made solar panels and other equipment and ship them abroad. The bank has announced seven loans or loan guarantees totaling $180.1 million so far this year for India-bound projects, and manufacturers who have benefited included
First Solar, Abound Solar and MiaSole.

First Solar began disclosing sales agreements for India-based projects in December 2010. Back in the summer, it upped its 2011 shipment forecast to India from 100 megawatts to around 200 megawatts. The company is enjoying a big advantage that eludes many
of its rivals: it’s not subject to a rule in the national solar policy that requires the use of Indian made solar cells. The rule only applies to silicon solar cells, which are the most common type on the market today. First Solar’s panels contain cells that
are made with cadmium-telluride.

Abound Solar and MiaSole, both venture-backed startups, also don’t use silicon solar cells. Abound Solar makes cadmium-telluride solar panels while MiaSole uses copper, indium, gallium and selenium to make its solar cells.

The government is using the domestic cells mandate in order to build up a solar manufacturing industry in India. The country already has silicon solar cell and panel makers, such as Tata BP Solar and Moser Bear, but it doesn’t have nearly as many as, say, China.
The world’s top 10 solar cell and panel makers are based in China, the United States, Taiwan, Japan and Germany. Tata BP Solar, by the way, is a joint venture of Tata Power and BP Solar, and it is both a manufacturer and project developer.

Whether India will develop a booming solar manufacturing industry is a big question. The country once fancied becoming a chip manufacturing hub, but it couldn’t pull it off.

“The chance of India becoming a significant market for solar energy is higher than the chance of it becoming a strong manufacturing” base, Engelmeier said.

(The views expressed above are the personal views of the author)

[Source MEA]


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