High prices of oil, escalating energy costs and growing environmental awareness have combined to spur frenzied interest in alternative and renewable sources of energy. Solar energy, particularly photovoltaic technology (PV), is once again in the spotlight thanks to improvements in conversion efficiencies, use of newer materials, lower production costs, modular scalability, and quick deployment capabilities. Dr. Henning Wicht, senior director and principal analyst for MEMS and PV at market research firm iSuppli predicts that worldwide demand for solar power will continue to be robust in the coming years. And that’s what stimulating companies around the world to invest in solar PV, including India.
Nascent Utilization
India has abundant solar resources—it receives 2,300 to 3,000 hours of sunshine every year (equivalent to over 5,000 trillion kWh), and the daily average solar energy incident over different parts of country ranges from 4 to 7 kWh per square meter. However, despite the profusion of sunlight, the installed solar capacity in the country is low. This is largely due to the high cost of solar power infrastructure, limited local production of basic silicon wafers needed to manufacture PV cells—and until recently, the lack of organized government support and incentives for non-conventional energy solutions.
Historically, the use of solar power in India has been driven by factors like non-availability of grid-power in remote and rural areas, poor power quality and reliability problems. The major applications for solar power were in defense and strategic electronics, railways, municipalities and civic agencies (street lighting, traffic signals, etc.), agriculture and rural use (powering water pump sets, rural lighting, etc.), telecom and security (fencing).
According to the federal Ministry of New and Renewable Energy (MNRE), a cumulative total of 2.125 MW of grid-interactive solar power from 33 plants was available in the country (as of March 2008), and an additional 1.45 million decentralized off-grid solar PV systems aggregating to about 125 MW capacity have been installed. This makes India a relatively minor producer and user of solar power.
Small Production, Big Plans
India currently has nine manufacturers of solar cells, and 21 manufacturers of PV modules, according to the MNRE. Arulkumar Shanmugasundram, GM Sales for Applied Materials India Pvt. Ltd., estimates that the overall annual production of solar PV cells and modules in the country is less than 150 MW—though he expects this will increase to 500 MW by 2010. He says, “The domestic market has immense potential, and the government’s new policies will fuel the growth and demand of solar electricity in India.”
According to Amol Kotwal, Industry Manager, Energy & Power, Frost and Sullivan, the recent incentives and tariffs announced by the Indian federal government for grid-interconnected solar power plants, and the new semiconductor policy, have motivated a number of companies to look at the solar PV space.
The lower investments needed for a solar fab, when compared to a semiconductor fab is also big motivation. Madhusudhan Atre, President, Applied Materials India Pvt. Ltd. points out that, “It takes more than $3.0 billion to set up a state-of-art semiconductor fab. But the capital investment needed to put up a advanced 50 MW solar fab is just $100 to $150 million.”
While many new investment proposals are in the pipeline (see box), a number of existing players have also announced extensive expansions in capacity and technology. Based on the announcements made by companies and government data, the cumulative investments in solar PV technology manufacturing in India could reach a staggering $7 billion—with the potential to rise to $15 billion by 2012. “The PV market is expanding exponentially in India and is expected to grow by more than 500 percent in the next few years,” affirms Roger G. Little, Chairman and CEO of Spire Corp., a turnkey supplier of solar factories and capital equipment.
Existing Players Expand Production
In 2007, Bangalore-based Tata BP installed a new 36 MW production line to boost its cell manufacturing capacity to 52 MW. The company has since announced a $100 million plan to boost production to 180 MW, and its plant is expected to reach its design potential of 300 MW by 2010.
Solar Semiconductor, which is already operating a fully automated line to manufacture PV modules using 156mm mono- and multi-crystalline cells, is expanding capacity to keep up with burgeoning demand. Currently, the company has two manufacturing units at Hyderabad (Kompally and Fab City)—and is adding a third one this year. This will triple the company's production capacity to 220 MW.
Ravi Surapaneni, Vice President, Solar Semiconductor Pvt. Ltd. says, “The plan is to rapidly grow and achieve 1 GW capacity in solar PV manufacturing. However, our long term perspective is to invest up to $2.8 billion over ten years, and foray into the PV value chain.” The company has said that it will be investing about $1.1 billion over the next four years in facility expansion and deploying new technologies. It has signed multi-year solar wafer agreements with Solar World, and cell supply agreements with Q-Cells, ErSol, Motech and Gintech to ensure steady material supplies.
Hyderabad-based Titan Energy Systems (TESL), which currently makes crystalline and amorphous solar PV modules, plans to put up a 500 MW manufacturing facility and a wafer line assembly plant to complement the company’s existing business. This new unit, to be located at Hyderabad's Fab City, will produce both cell line and wafer line PV modules, as well as thin film modules. The project will be implemented in phases, and will involve an investment of about $210 million according to the company. TESL is currently scaling-up module production capacity from 50 MW to 150 MW. The company also plans to manufacture polysilicon, and has entered into technology and financial agreements with an undisclosed US company for a separate $250 million project.
Rajesh Srivastava, Director at Maharishi Solar Technology Pvt. Ltd. says that his company is expanding capacity from 2.5 MW to 15 MW at its plant located in Chittor district, Andhra Pradesh. The new capacity is expected to become operational from October this year—and will use up to 7.5 million solar wafers (2 watts each) to produce 15 MW of solar cells. To keep the plant operating at full capacity the company is looking to source 2.5 million wafers from suppliers. This will supplement its own production of 10 MW. Maharishi also plans to manufacture of solar grade polysilicon, and is setting up a 100 MT/year R&D plant.
Government-owned Bharat Electronics Ltd. (BEL) which is a leading supplier of solar power plants and lighting systems also has plans to substantially enhance production. The company’s current annual production capacity for mono- and multi-crystalline PV cells from wafers is 10 MW. BEL uses these cells to manufacture modules for applications like home and street lighting systems, traffic management, etc. Another government company, Central Electronics Ltd. (CEL) which currently has 10 MW production capacity for solar cells, modules and SPV systems based on mono crystal silicon technology is also looking at capacity expansion.
New Entrants Think Big
Moser Baer India Ltd. which is headquartered in New Delhi has ambitious plans for its new solar business. Through its bouquet of wholly owned subsidiaries, the company has ventured into the manufacturing of cells and modules that straddle multiple technologies—including crystalline silicon, concentrator, nano technologies and thin films. One subsidiary, PV Technologies India Ltd. (PVTIL) has recently completed deposition trials for Gen 8.5 a-Si (amorphous silicon) thin film modules at its new 40 MW facility near New Delhi. “This is truly a major landmark for us. We are now on track for commencing commercial production," says an elated Ravi Khanna, CEO. The company intends to expand the existing thin film module manufacturing facility by an additional 565 MW by 2010.
PVTIL is also venturing into power generation by setting up a grid connected solar farm in the country’s northwestern desert state of Rajasthan at an estimated investment of US$25 million.
Moser Baer Photo Voltaic Ltd. (MBPV), another group company, has commenced commercial shipment of solar PV cells from its 80 MW fully automated horizontal in-line crystalline silicon cell manufacturing plant that can use 5- and 6-inch wafers in both mono and multi-crystalline formats. The plan is to progressively scale up this plant to a total capacity of 200 MW. The company has secured access to solar PV grade silicon wafers and ingots through a series of multi-year agreements with a number of international suppliers. Moser Baser has also made investments in a concentrator PV (CPV) module manufacturing facility in partnership with US-based Solfocus. The technology is based on gallium arsenide cells.
Signet Solar, founded by EDA veteran Prabhu Goel, has chosen to locate its second manufacturing site in India (after Dresden, Germany) because of the attractive incentives offered by the government, and the strong emerging demand for renewable energy in India. The company designs and manufactures PV modules using thin film silicon technology on large (5.7 square meter) glass substrates.
Signet has indicated that it will be investing up to $500 million in its facility near Chennai, which will produce 350 MW of solar panels. The company plans to build three plants (totaling 1 GW), and invest up to $2 billion in India over the next ten years, according to CEO Rajeeva Lahri. However, most of its initial production from the India plant is slated for export because the company has a large orders from international customers.
In a more recent development, Bangalore-based Velankani Group has said that it will set up a vertically integrated manufacturing complex to produce silicon compounds, solar cells and modules. The 150 acre facility, which is to be located in the coastal city of Visakhapatnam in Andhra Pradesh state, will be operated by Velankani Renewable Energy Company. “The proposed project will establish a state of the art fully backward and forward integrated manufacturing facility," according to Velankani Group Managing Director and CEO Kiron Shah.
Plant construction is scheduled to begin in August 2008, and is expected to take seven years to fully complete, at a cost of about $3.2 billion. At the end of this time the facility will have the capacity to produce 500 million silicon wafers, 1.5 GW of PV cells, and 1.5 GW of PV modules per year. The facility's first silicon products are expected in October 2009.
TF SolarPower and its partners, Goldstone Infratech (a solar power plant builder) and Jusung Engineering (an equipment supplier) are setting up a production unit to manufacture thin-film PV panels at Hyderabad’s Fab City. The initial capacity will be 52 MW, and will involve an investment of $140 million for the first fab. Eventually, the plant will have the capacity to produce 350 MW in phase I, and the total project cost estimate is $650 million within 4 to 5 years. The company will use Jusung’s patented 3D cell design and thin film manufacturing technology.
Another Indian company, PLG Power Ltd. has placed an order with US-based Spire Corp. for a state-of-the-art, 25 MW turnkey PV module assembly line. Spire will provide a semi-automated crystalline cell module manufacturing line, and supply the process technology and training to operate the factory. Separately, Spire is also delivering a semi-automated crystalline cell module manufacturing line capable of producing up to 15 MW of solar modules annually to New Delhi-based Alpex Exports Pvt. Ltd.
In Hyderabad, Surana Ventures Ltd. is setting up a greenfield 38 MW cell and module project at Hyderabad’s Fab City. The company has placed orders for the production lines with two Italian companies, Eco Progretti and P Energy S.R.L.
OC Oerlikon Management AG, a leading international supplier of thin-film silicon PV solutions and equipment, observes that most Indian manufacturers are looking at initial capacities in the range of 60 to 120 MW—to ensure that they are competitive in world markets—with mid-term plans to reach much larger scales (from 500 MW to 1 GW). Oerlikon is in active discussions with a number of Indian project promoters for supplying thin film PV manufacturing solutions.
Lower Costs Spur Industry
According to MNRE, the initial cost of solar energy systems is a barrier to large-scale deployment and use. Despite the fact that the price of solar PV technology has been coming down over the years, MNRE estimates that the capital cost for setting up a solar power plant is in the range of $3.75 to $4.65 million per MW, with the cost of power generation at $0.279 (INR 12) per kWh depending upon technology, efficiency, location, etc. According to Frost and Sullivan this is not only 4 to 5 times more expensive than generating power from conventional fossil fuel sources, but also non-competitive when compared to producing electricity from other renewable energy sources like wind and small hydro.
However, there is hope that the advent of next generation technologies like thin film and nanotechnology, better manufacturing techniques, improved panel efficiencies and solar concentration technology could improve the economies of power generated through solar PV.
“The capital cost for a typical silicon thin film PV plant in 2009 is around $2.25 per watt ($2.25 million/MW). Over the next 2 to 3 years this is expected to reduce below $2.00 per watt (for GW scale deployments). The ultimate goal is to reach about $1.50 per watt,” predicts Dr. Keshav Prasad, Vice President of Business Development at Signet Solar.
Lux Research, a research and advisory firm for emerging technologies, also predicts that cost reductions could bring solar to peak power grid parity prices in some places by 2012—for instance, in countries with high insolation and growing low-cost domestic production, like India. “In terms of generation cost, today we can produce power at about 32 US cents (INR 14) per kWh, but our roadmap clearly shows us a visibility to hit 10 US cents (INR 4 to 6) per kWh,” asserts Ravi Khanna, CEO of MBPV.
Until then, solar power producers will need encouragement and support from the government. IBC Solar AG, a leading distributor and integrator of solar PV systems, which is commissioning a reference system in Bangalore says, “We are very interested in the development of the Indian feed-in tariffs. With the present feed-in tariff of INR 12 plus INR 3 per kWh for 10 years, it will be difficult to get proper funding for megawatt projects in India. Together with our partners in India we are participating in discussions about an increase in these feed-in tariffs. We are confident that feasibility of the projects can be achieved, and the Indian market for feed-in projects will pick up.”
Government Boosts Support
On its part, the Indian government is placing increased emphasis on solar energy, and is undertaking a slew of measures to reduce the cost of solar energy systems by encouraging semiconductor manufacturing, supporting R&D in solar technologies, setting up test facilities, and announcing feed-in tariffs for grid-connected solar plants. In its recent National Action Plan on Climate Change, the Indian government has also proposed to make it mandatory for power grids to purchase renewable energy from producers—and has set up progressive targets to do so over the coming years.
"Now the solar sector will, primarily based on private sector investments, create 1000 MW of power generation capacity by the end of the 12th Plan period (2017)," says an optimistic V Subramanium, Secretary, MNRE. A spokesperson for IBC Solar says, “We see a trend towards mini grids and bigger off-grid systems to enable not only lighting, but also stimulate the productivity in rural areas in India. We think that PV energy is going to play a considerable part in the decentralized supply of electricity in India.”
The federal government has also formulated a plan to develop 60 cities as “Solar Cities”. The proposal envisages a minimum 10 per cent reduction in projected total demand of conventional energy at the end of five years in each of these cities through energy-efficiency measures and generation from renewable-energy installations. However, Oerlikon suggests that the federal government could do more to encourage the market for solar power. “There are no feed-in tariffs or other incentives for customers,” says a company spokesperson.
Optimistic Outlook
The booming worldwide demand for solar energy has created a critical shortage of polysilicon used to make PV cells, according to iSuppli. “Polysilicon shortages are driving prices up,” says Wicht “For companies attempting to expand their PV fabs, it is becoming very difficult to secure low-priced silicon.” The shortages and the consequent rise in costs are also forcing the PV industry to adopt more vertically-integrated structures to bring production of polysilicon under their more direct control, sign long-term agreements with suppliers, and spurring cost reductions across the entire PV system supply chain, including polysilicon, wafers, cells, modules and finished systems.
PV cell manufacturers are also hedging their bets by investing in thin film technologies. That’s because deposition of functional thin film layers for PV cells can be done on alternative, readily available substrates like glass, steel or polymer foils.
Ganesh Ramamoorthy, Principal Research Analyst at Gartner India is confident that government incentives and the target of having 10 percent of the country's total power demand by 2012 delivered by renewable energy sources will be strong drivers in attracting increased investments in this sector—and promoting local use of solar energy. But, for now, most companies in India that are expanding facilities or foraying into solar PV projects are eyeing the more lucrative EU and US markets. Of the total solar PV cells produced in the India today, more than 60 percent is exported, according to Kotwal of Frost. Assisting them in this effort is UL India Pvt. Ltd, a leading third-party product-safety testing and certification agency.
The agency is also exploring opportunities to build a centre of excellence (CoE) for solar PV technology. UL already operates CoE’s in San Jose and Suzhou, China which offer training, as well as testing and certification to global standards. “UL will not only help catalyze the growth of this vital industrial sector, but also support innovative companies that developing technologies necessary to fight global climate change,” declares Bill Colavecchio, Vice President, Global Industrial Product Sector at UL.
PV Manufacturing Attracts Big Investments Some solar PV project proposals that have been received by India’s Ministry of IT under its Special Incentive Package Scheme (SIPS) of the semiconductor policy. KSK Energy Ventures
Products: Solar panels based on thin film technology
Capacity: 50 MW, proposed to be increased to 700 MW over 10 years
Proposed investment: $746.7 million
Location: Fab City, Hyderabad Moser Baer PV Technologies India Ltd.
Products: Silicon cells, modules, thin film concentrators
Capacity: 580 MW, 540 MW and 282 MW (Total 1.3 GW)
Proposed investment: $1.39 billion
Location: Oragadam, Tamil Nadu Radiant Solar Pvt. Ltd.
Products: Crystalline cell modules
Capacity: 50 MW of modules; 20 MW cells
Proposed investment: $40 million
Location: Fab City, Hyderabad Reliance Industries Ltd.
Products: Polysilicon and multi-crystalline wafers, solar PV cells and modules
Capacity: 1 GW
Proposed investment: $2.70 billion
Location: Jamnagar SEZ, Gujarat Signet Solar Inc.
Products: Thin film solar PV and associated products
Capacity: 1 GW
Proposed investment: $2 billion
Location: Sriperembudur, Tamil Nadu and other locations in India Titan Energy System Ltd.
Products: Solar cells, semiconductor wafers, SPV modules & polysilicon
Capacity: 500 MW of cells, modules and wafers; 250 MW for polysilicon
Proposed investment: $1.37 billion
Location: Fab City, Hyderabad for Phase-I |
