Quarter of India's next round of bids to go to local producers

The CEO of India’s biggest solar company has told pv magazine that the Union Government’s plans to install 100 GW of solar will evenutate only after some time but that a quarter of the latest round of tenders are set to be supplied by local manufacturers.

In a revelation that will make interesting reading to the parties to the ongoing World Trade Organization dispute between the U.S. and India over the domestic content requirement (DCR) of the Jawharlal Nehru National Solar Mission, the head of Tata Power Solar said Indian manufacturers and Narendra Modi’s government had a gentleman’s agreement arising out of the conclusions arising last year from the anti dumping investigation.

"The government has committed, unofficially, to having around 25% of modules made in India," Ajay Goel, CEO of Tata Power Solar, told pv magazine, referring to the latest round of project bids. "When we and other domestic manufacturers agreed to withdraw the anti-dumping petition, it was on the understanding the government would make a commitment to the domestic market in return.

"We think that will be around 25%. That number may go up or down, and I don’t think we will get a formal commitment to a fixed amount but we don’t expect the government to backtrack on that understanding."

In an attempt to get around that agreement, U.S. thin film giant First Solar has already opened talks about manufacturing panels in India in return for made-in-India status, according to Goel.

"We will see a lot more Chinese products coming into India but also other foreign manufacturers will be starting," he added, "which will be good news for our manufacturing base and employment."

The Tata Solar chief has welcomed the government’s ambitious plans and outlined his company’s plans to retain their current market share of an Indian solar market which he says is expected to grow up to five times in the next few years.

"With the 100 GW target," added Goel, "India will become a player on the world market. This puts India on the map.

"We will have to be hyper-competitive because the new focus on India will bring other big players into our domestic market.

"I think 100 GW is ambitious and super-visionary. It drives a lot of action into our policy machinery. The 100 GW target, we believe, is realistic, but the time frame is sure to be more like 10-12 years," said Goel, in reference to the government’s aim of hitting the 100 GW mark within seven years.

"A lot of moving parts have to come together to make this policy happen," he added, "and things like land acquisition and transmission always take longer than in other countries.

"But the target sends out the right message. In the next eight years, if they reach 40 or 50 pre cent of the target, that’s 50, that’s still 5-6 times more than India has been developing so far."

Tata rising to the challenge

Tata Power Solar has doubled its module manufacturing capacity to 200 MW in 12 months and aims to keep pace with a rapidly expanding market during what Goel predicts will be an initial solar gold rush in the nation until overseas companies encounter the difficulties of working in India.

"The challenge facing all of us is that the speed at which the Indian government moves is very slow," said Goel, "It’s very hard for someone coming in from another country to realize how complicated some of the issues will be. That may scare some companies off and others may find out the hard way."

Mindful of the interest of foreign players, Goel said Tata was open to the idea of joint ventures, more likely in module manufacturing given the company’s already dominant position in EPC work in its domestic market.

EPC opportunities are also set to expand with international companies already established in India, such as Germany’s Juwi, listed by Goel as potential competitors, but the biggest bonus for Indian solar companies is the rush of investment the government’s grand ambitions will trigger, according to the Tata Solar boss.

"There will be a healthy influx of global money into the market," said Goel, "we have spoken to international investors who have told us they would not invest previously in India because of the size of the market. They are interested now, though!

"So we will see a lot more equity inflow to the market from Japan and the US as well as from European utilities.

"For instance, where will the profits come from in Europe for E.ON’s new renewable business? Utilities like E.ON will look at India as a renewable growth opportunity and their counterparts in France and Italy – and maybe some UK utilities – will not be far behind."

Ultra-mega on the wane?

It is the government’s plans for state-based solar parks – rather than ambitious ultra-mega dreams or distributed generation (DG) – that will drive Indian solar in the short and medium term, predicted Goel.

"Instead of the 4GW ultra-mega parks originally conceived, with all the related capacity and transmission problems, they are looking at state-specific 1 GW solar parks where connection and land can be provided, making it easier to attract developers," he told pv magazine. "With a lot of states pursuing the development of their own solar parks too, I think this will be the biggest piece of the puzzle.

"DG is starting to take off in a big way, driven by high tariffs and lack of power in some parts of the country that leads to long blackouts.

"Tata is the largest DG provider in the country but it makes up a fairly small piece of our market because it is an emerging segment and accounts for 10% or less of our revenues. The removal of the long wait for capital subsidies has started to unlock DG’s potential, however.

"Large-scale solar will be more important in the short-term – over the next three years – with DG growing over the medium term.

"Every household in India has a diesel generator and, over time, these will be replaced by affordable solar as the DG market grows. Affordable battery systems will also be a catalyst for DG."

Which is all to the good as far as Tata Power Solar is concerned, said Goel, as the company aims to at least retain its sizable market share.

"It will be an interesting market to be in," he added, "and we are excited to be involved as the oldest solar company in India."

The March edition of pv magazine will feature a series of special articles investigating the manufacturing landscape of the leading, and emerging, PV regions.

This article has been edited to reflect a clarification by Tata Steel. While original comments implied that the 25% domestic content "gentleman’s agreement" applied to the 100 GW goal, Tata has qualified that it applies only to the latest round of projects.

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