PV module production in India could hit 6 GW by 2015

21. December 2011 | Global PV markets, Industry & Suppliers, Markets & Trends | By:  Becky Stuart

The photovoltaic cell and module manufacturing industry in India has developed from less than 200 megawatts (MW) in 2007, to around two gigawatts (GW) in 2011. Bridge to India estimates that it will see "significant" growth over the next few years.

India small solar photovoltaic installation

While there is a domestic content requirement under the NSM, many states haven't taken it onboard in their individual policies.

Specifically, it believes that due to falling raw material costs, expected to be triggered by the development of a "healthy" domestic supply chain, module production will grow from 1.3 GW in 2011, to six GW in 2020. Meanwhile, cell production is forecast to increase to four GW, from 700 megawatts (MW) in the same period.

Ingots and wafers, which were not manufactured in India until 2010, will grow to represent capacities of four GW in 2020, up from just 17 MW this year, according to the research company.

It goes on to cite companies like Lanco Solar and Birla Surya, which are in the process of establishing complete integrated module manufacturing facilities up to 600 MW in size. "Various smaller and new business entities such as Alfa Solar, JBM Group, Chemtrols Solar, Vorks Energy and Sonali Energies as new entrants in the PV industry are also planning to build new facilities for production of modules," it adds.

Moreover, in the next five years, already-established players like Tata BP, EMMVEE, Moser Baer and XL Energy, will also reportedly expand their existing production capacities by over one GW, thus serving to boost the domestic market.

Domestic content requirement

Under the first batch of projects of the National Solar Mission (NSM), crystalline photovoltaic modules must be manufactured in India. Meanwhile, in the second phase, only those crystalline modules which contain solar cells manufactured in India will be permitted. Thin film cells and modules are, at this time, exempt from the domestic content requirements.

This is beginning to cause some controversy in the industry, as was reported yesterday by Bloomberg in its report on the U.S.-China trade case moving to India.

As was also highlighted yesterday, many of India’s states have their own solar policies. Under those in Gujarat, Rajasthan and Karnataka, there is no domestic content requirement. "Other states such as Tamil Nadu, Orissa and Andhra Pradesh are also expected to not mandate domestic content in projects," writes Bridge to India.

It adds that, based on the current supply contracts signed, over one gigawatt (GW) of modules will be imported into India by the end of 2012. "More than 60 percent of these will be for thin film modules, all from foreign manufacturers," says the research company.

Currently, there is 90 megawatts of installed solar capacity in India. Of this, it says that 77 megawatts (MW) comprise thin film photovoltaic modules.

The top crystalline silicon module supplier to the Indian solar market is Suntech, at 200 MW. It is followed by Sharp Corp. at 25 MW, Proinso and Trina, both at 20 MW, Suniva at 15 MW, Sunergy at 10 MW, SunPower at six MW and SolarWorld at five MW.

In terms of thin film module suppliers, First Solar is the clear leader, having signed contracts worth 200 MW. The second biggest supplier is Sungen, at 36 MW, followed by Schott Solar and T-Solar, both at 35 MW. NexPower and Solar Frontier come in fifth place at 30 MW each, followed by Abound (25 MW), DuPont Apollo and Sulfur Cell, both at 20 MW, Proinso (13 MW) and Canadian Solar (10 MW).

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Madhavan Nampoothiri

Saturday, 24.12.2011 18:04

It is indeed surprising to see the forecast of "6 GW by 2015" since that seems highly disconnected with the ground realities.(I make this comment based on my experience in working with actually establishing 3 module lines and in doing diligence on the solar manufacturing sector for some large MNCs during the last two years).This warranted a closer look at the forecast methodology in the report and it has come to attention that the report actually says "6 GW of module production capacity by 2020" and not 2015 as mentioned in the title of the article.

While I will be extremely glad if these numbers(6 GW by 2020) are realized, I have serious reservations if this can be achieved . This is inline with the recent outcry for help as seen in the media from many of the manufacturers for support and unless there is some serious policy intervention from the MNRE to incentivize PV manufacturing these numbers might just be that, numbers on paper.

Some of the reasons are given below.

1. Even though the current module capacity is estimated to be somewhere around 1.5 GW(much of which is only nameplate capacity), the actual capacity utilization factor is very low. In my interaction with industry, I have heard numbers from as low as 15-20% to the highest being about 60% and if one were to assume an average production of 30% actual production, this translates to less than 500 Mp of actual production per year.

2. The global excess production capacity of modules(close to 50 GWp/year as against total demand of about 25 GWp in 2011&2012 each) is having its negative impact on Indian manufacturers as well. In addition to that, the PV module inventory in the global supply chain is huge(more than 7 GWp by end of 2011- http://www.pvgroup.org/node/1881).

3. The global dynamics mentioned in point 2 above has crippled the Indian manufacturers in two ways- first, it has become extremely difficult to compete against other lower cost global players in getting orders for their modules and second, even if they are able to sell, their margins are close to zero or even negative. (with a a few exceptions). Quite a few of the Indian players have shut down their cell and module manufacturing plants partially, and in some cases fully, for an indefinite period. Many of the capacity expansion plans of more successful companies have been either put on hold or have been abandoned.

4. The local content requirement of the JNNSM has not had the desired impact on the development of a local solar PV manufacturing ecosystem and as rightly pointed out by the Bridge to India report, more than 60% of the solar PV installations in 2012 in India will use imported thin film modules. This means that even though there is sufficient cell and module capacity in India, the demand for Indian made c-Si modules is very low.

5. The implications of the points above is that module manufacturing in India will remain an economically unviable option in the short term and there is very strong likelyhood that a some of the existing module manufacturers will have to exit this business. In addition, this is prompting many newcomers to delay their decision in investing in the solar PV manufacturing business.

6. Some of the reputed global module line equipment suppliers confirmed to me that they are hardly getting any new orders these days from India. A couple of them even lamented the fact that some of their clients who had placed their order for equipments either completely cancelled their orders or have scaled down their capacity targets significantly. This is in line with the global scenario where the book-to-bill ratio for PV equipments have been continuously declining(http://www.pvgroup.org/node/1886).

To conclude, the majority of existing Indian PV manufacturers are facing significant market challenges and in this backdrop, the newcomers to the sector will face major challenges to become profitable under the current market conditions, unless they have a distinguished business model. Unless the government comes up with some strong incentives to support the sector, there is a danger of extinction of a lot of players in the Indian PV manufacturing sector. I do hope that collectively we will be able to address the challenges posed, and investors and newcomes to the sector get in fully aware of the challenges ahead so that they are not caught blindsided.

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