Is America 'celling out' India’s solar mission?

On August 17, the Centre for Science and Environment (CSE), a not-for-profit advocacy group based in New Delhi, accused the United States of offering loans at below-market rates to India’s solar project developers, contingent on the purchase of thin film solar cells and modules made in America.

Although India has a domestic content requirement for all crystalline photovoltaic equipment, thin film technology is not addressed by the JNNSM mandates. Therefore, according to the Centre, America has used a "loophole" in the law to its own advantage, thus "distort[ing] the market completely in favor of U.S. companies."

Specifically, CSE charges that the damages have been twofold: First, pressure on project developers to buy American solar products "has skewed the market completely," with close to 60% of the panels installed in India of the thin film variety, although the Centre maintains that merely 14% of global capacity is thin film; and Second, CSE claims, fully "80 percent of the Indian manufacturing capacity is in a state of forced closure and debt restructuring, with no orders coming to them," while U.S. manufacturers continue to rake in profits.

The money trail

Following CSE’s attempt to level the solar playing field, pv magazine asked U.S. organizations that are financing loans and filling orders in India to level with us about their intentions and tactics.

While CSE alleges that the United States is dipping into a US$30 billion Fast Start fund to offer loans at rates as low as 3% in India, the investments on record do not support that premise. The loans at issue are those being proffered by the United States under the aegis of:

  • Fast Start, which is an agreement to provide financing to developing countries made by the delegates to COP 15 in Copenhagen in 2009 (total U.S. financing to India, on record as of year-end 2011: $26.8 million);
  • The Export Import Bank of the United States (Ex-Im Bank), a federal agency dedicated to creating and sustaining U.S. jobs by financing sales of exports to international buyers (current exposure in India: over $4 billion); and
  • The Overseas Private Investment Corporation (OPIC), a federal agency that mobilizes private capital to solve critical development challenges and helps U.S. businesses gain a foothold in emerging markets (current exposure in India: $250 million in financing, earmarked to enable India’s Infrastructure Development Finance Company [IDFC] to expand its own lending to solar photovoltaic projects and other renewable energy initiatives.)

In response to CSE’s wallop, Lawton King, a spokesman for New York City-based Ex-Im Bank, came back swinging, telling pv magazine that, "Ex-Im Bank is not an aid agency. Ex-Im Bank is an export-credit agency that exists to support U.S. jobs by providing official financing for U.S. exports on the condition of reasonable assurance of repayment. Ex-Im Bank follows the principle of ‘additionality,’ which means that the Bank provides its financing where financing is otherwise unavailable on commercially viable terms. The Bank charges interest on its direct loans and exposure fees on all of its transactions. Ex-Im Bank does not offer concessional loans, except in the rare instance of a matching request to level the playing field for a U.S. exporter (about one deal every 3 to 5 years)."

There are strict rules for international finance and King was careful to point out that the Export-Import Bank adheres to each and every one of them. He noted, "Ex-Im Bank processes its transactions in accordance with international agreements and the laws of the individual host nations. More specifically, Ex-Im Bank’s export-credit products are governed by the Organisation for Economic Co-operation and Development (OECD) and are not tailored for any particular market."

What’s more, King said, rather than using a so-called loophole to gain entry to a market, "It is very important to note that Ex-Im Bank is ‘demand driven’. That is, our funding is only provided when we receive a request for financing."

And he strongly believes that customers in India are buying American thin film technology, because it is superior in quality. "What ultimately drives demand for U.S. solar equipment," he commented, "is the quality, price and after-sales support offered by American exporters."

Over at OPIC, an official spokesperson concurred with King. In an interview with Recharge, he stated unequivocally that the agency "does not require its clients to procure US goods and services". In addition, he clarified, of OPIC’s 6 current solar projects in India, 4 do not involve U.S.-made solar panels.

What has OPIC actually spent in India? The agency wants it on the record that it committed $1.1 billion to the renewables sector in 2011, nearly one-quarter of which was allocated to India.

In regard to funding, Washington, DC-based consultant Jigar Shah, former CEO of both the Carbon War Room and SunEdison LLC, had strong opinions of his own. He told pv magazine that the Centre for Science and Environment was simply "talking rubbish," adding in defense of the U.S. agencies, "These are very standard programs. I think that the U.S. Export-Import Bank has supported the export of products for decades, and has done it in the very same way that export-import banks from India and Germany extend assistance to their own domestic manufacturers. How can they point the finger at U.S. practices when they do the same thing?"

True (red, white and) blue

On September 6, when pv magazine asked for comment from America’s most successful thin film producer, Tempe, Arizona-based First Solar, Inc., the company had just closed another deal in India. Under the terms of the latest agreement, First Solar will supply thin film solar modules for a 25 MW project in India’s Rajasthan State to renewable energy developer Green Infra Limited of New Delhi.

However, according to director of public relations EMEA, Brandon Mitchener, "The Green Infra project did not receive any Ex-Im Bank financing and the modules will be manufactured in Malaysia using glass from India."

While Mitchener was happy to discuss how Export-Import Bank financing had opened doors in India, he made it clear that an "exception in the law for innovative solar technologies that are not yet established in India" was neither a loophole nor a scam. And whether or not the Ex-Im Bank had offered excellent terms, Mitchener stated with conviction, "First Solar is not dumping in India."

Instead, he singled out First Solar’s thin film advantage as the reason for its recent successes. "First Solar modules are unique in many respects, including a superior temperature coefficient," he stated, "and our price-per-watt is why we sell so well."

Colleague David Robinson, president of Havertown, Pennsylvania-based Senergy Solar Corporation, concurred that quality has been, and continues to be, the main issue. "Maybe if India’s manufacturers used better solar cells in their panels, domestic project managers would want to buy them. They use broken cells – and I’m here to say it. That’s the reason why they are losing deals to U.S. companies."

And Adam Browning, executive director of Vote Solar, a non-profit grassroots organization based in San Francisco that fosters economic opportunity by bringing solar energy into the mainstream, told pv magazine, "The goal of policy efforts is – or should be – to bring down the cost of solar in order to expand markets and bring the benefits of clean solar energy to an ever wider global audience. Financing has long been understood to be a key element in lowering costs and successfully building projects. If there is any place where efforts to bring low-cost solar power should be welcome – and applauded – India surely should be near the top of the list. We should be asking governments to do more, not less."

Finally, according to John P. Smirnow, vice president of Trade and Competitiveness at the Washington, D.C.-based Solar Energy Industries Association (SEIA), "India has its own export-import agency. Export credit is generally acceptable and does not violate global trade rules."

Smirnow believes there is only one reason why First Solar and other U.S. companies are winning contracts in India: "First Solar makes a world-class product," he said. "Thin-film generally targets large, utility-scale sites and that is what the Indian project developers are doing right now. They are looking at cost-per-watt and First Solar is winning based on the advantages it offers. If that’s unfair, so be it."