With JA Solar announcing yesterday that construction is soon to begin on a 500 MW solar cell facility in Indias Andhra Pradesh state, the future for Indias domestic solar market looks more robust than ever.
GTM Researchs senior solar analyst, Mohit Anand, believes that JA Solars plans which include a further 500 MW solar module facility by 2017 allied to a recent 2 GW module production commitment from Chinas Trina Solar are an encouraging sign of the solar industrys belief that India is poised to enter the PV fast lane.
"The JA Solar agreement highlights the seriousness with which international players now view Indian demand and their willingness to finally put money on the table to meet it," said Anand. Despite boasting a handful of local PV manufacturers for many years, India has always operated on a level below the leading solar producing nations, largely due to the highly competitive supply from neighboring China.
Further, said Anand, international companies supplying the fledgling Indian solar market of a few years ago preferred to supply from the outside, reluctant as they were to tie their on-the-ground ventures to shaky Indian demand and unreliable policy support.
Today, that landscape has evolved. Prime Minister Narendra Modi has been a vocal supporter of clean energy development, and the Jawaharlal Nehru National Solar Mission (JNNSM) has been pivotal in driving up installation rates.
The 2022 target of 100 GW of solar PV capacity may be ambitious (Anand says that actual installations may not exceed 60 GW by that date), but a domestic content requirement of 5 GW by 2022 is perfectly feasible and proving attractive to international solar firms.
Another pull factor for the Indian market is the need for leading Chinese solar firms to diversify their manufacturing base away from China and Taiwan in order to dodge anti-dumping duties and continue to serve the lucrative U.S. and European markets.
"It is pretty clear that a big part of the decision to set up Indian manufacturing is driven by the need to diversify beyond Chinese and Taiwanese manufacturing to avoid anti-dumping duties and become more competitive in Europe and the U.S.," believes Anand. "Nonetheless, given the numerous alternatve locations available for new manufacturing [such as Malaysia and Singapore], JA Solars decision on India shows that the local demand is a big draw."
Further, Anand argues that Indias manufacturing ecosystem long-derided as being logistically challenging and mired in red tape and high taxes is evolving to such an extent that it can support large-scale manufacturing operations of the type required of the solar industry.
"The decisions on local manufacturing by solar majors such as JA Solar and Trina Solar shows that Indias competitive manufacturing incentives and input costs, along with the adequate availability of human capital suited to solar manufacturing, makes it a much more favorable location than has been recognized so far," Anand added.