First Solar has announced plans to develop a 45 MW-AC solar PV project at two sites in the newly established Indian state of Telangana, which split off from Andhra Pradesh two months ago. The company plans to begin construction of the project by October 2014, with commercial operation scheduled by May 2015.
First Solar’s business model combines thin film solar PV module manufacturing with project development, construction and operations and maintenance services. While the company has been the largest module supplier in the Indian market, this will be the first project that First Solar has developed in India.
Mercom Capital CEO Raj Prabhu notes that none of the top developers in India right now are also manufacturers, and that First Solar will be the biggest vertically integrated player in the nation’s market. It’s an endorsement to the Indian solar market, for one of the largest solar companies in the world to come develop in India, says Prabhu. It pretty much says its is an important market in the future and they don’t want to miss out on that opportunity.
Prabhu says the price of the power purchase agreement (PPA) between the Southern Power Distribution Company of Telangana State and First Solar is also notable. The projects will sell power at INR 6.49 (US$.106) per kWh for 20 years. This is a blanket price that Andhra Pradesh has offered developers, which was widely considered to be too low to be viable and attracted limited interest.
First Solar has two major cost advantages over domestic Indian companies. The first is that it can supply its own modules at cost to projects. The second is that as a major American company, First Solar can attract capital at a much lower rate of interest, including capital from the U.S. government lending institutions.
They are a developer who has a deep pockets, who makes their own panels, and they can do pretty good business in India, notes Prabhu.
As such, Prabhu notes that First Solar was a target of protectionist policy moves in India. The nation’s anti-dumping investigation named solar PV products from six nations, including the United States and Malaysia, where most of First Solar’s manufacturing is located. However, Prabhu expects that First Solar will be viewed differently now that it is not only exporting solar PV modules but developing projects in India.
First Solar also says that the project will address the energy deficit in the new state of Telangana. And while Prabhu says that it is too soon to have data on the power deficit in the state, he notes that data from Andhra Pradesh shows a significant deficit. It’s one of the hottest states in India, and they have severe power deficits like any other state, reports Prabhu. Power is an issue in every state in India.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: email@example.com.