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India’s top three solar module suppliers on the future of Mono

While India’s solar market is still heavily weighted on the lowest possible costs, the price difference between monocrystalline and polycrystalline PV module technologies is beginning to fade. PV Tech caught up with major module suppliers at the REI Expo in Greater Noida, India, to discuss the future of Mono in this heavyweight global market.

Speaking to PV Tech, Anmol Singh Jaggi, co-founder of India-based solar advisory, EPC and O&M firm Gensol Group, which has provided services on multiple gigawatts of projects across India, estimated that technology choices for Indian projects in 2017 came out at 95% Poly and 5% Mono. But in 2018 it has been closer to 85% Poly and 15% Mono. Furthermore, he predicts 2019 to draw 65-70% Poly and as much as 30-35% Mono.

Singh Jaggi said: “The reasons are very clear. Today the non-safeguard price is 25 cents on the module. Earlier the Mono guys were charging 3-4 cents as premium. Now the premium has come down to 1 cent – even as good as no difference on the Mono versus Poly price, but Mono helps me a lot on my balance of system. The same module, whether it’s 325Wp or 345Wp, reduces my Balance of System (BOS) by 8%, which is extremely interesting to save costs. So Mono is the future because we don’t see any difference in the Mono versus Poly pricing now.”

He went on to explain how higher wattage helps EPCs reduce cable, rail, and structure costs to name just a few pieces of equipment, as well the reduction on cost of installation and time. The market is changing very fast and Mono is starting to make an impact on India, particularly in the rooftop space, he added.

Describing an Indian market that is in difficulties with safeguard duties, rising interest rates, a depreciating rupee against the dollar and a Goods and Service Tax (GST) of 18% rather than 5%, Singh Jaggi added: “When we are in the market of only bread and butter (no cheese or jam), every price counts.”

What the top three suppliers forecast

According to consultancy firm Bridge to India’s ‘India RE Map’ the top three PV  module suppliers to India in FY 2017/18 were China-based manufacturers Canadian Solar, JA Solar and Trina Solar.

JA Solar

Victor Liang, sales manager, JA Solar, said that polysilicon modules still dominate the Indian market with the firm’s sales last year and the first half of 2018, coming out at 99.9% in Poly technology. This is because customers still feel that the cost to efficiency ratio remains best with Poly, said Liang. However, he said new specifications are becoming more popular and while JA Solar has been actively promoting Mono-PERC modules globally, which it sees as the future of the mass market, it is also now promoting this technology in India.

“[Indian customers] were thinking Mono-PERC is too expensive to make the financial model work, but now the price gap is very very small,” he added.

Liang also noted that Mono-PERC has been proven already in markets like China, America and Asia Pacific. As a result, he believes that Mono-PERC will start to take some shares of the Indian market from Poly starting from this year onwards.

Canadian Solar

Yan Zhuang, president and COO, Module and System Solutions, Canadian Solar, the top supplier to India last year, said that the Indian market has traditionally been very price driven and less technology-sensitive.

“In past years manufacturers have been shipping the low-end products and offering the lowest price, and today the price pressure is even harder. The PPA price is coming down and together with the safeguard duty which adds pressure on capex and cash flow,” he said.

However, Zhuang is beginning to see PV players focus on higher performance technology with increasing costs, with some players as early as 2016 looking at LCOE when procuring modules. Indeed, he forecasted that if not this year, then by 2020 at the latest, project developers will have to look towards new technology to save costs rather than focusing on low-end products for the lowest price. He cited bifacial module technology as a key mover in this regard.

Zhuang also claimed that once grid parity is reached at a mass scale, this will iron out some of the major annual market fluctuations caused by subsidy support curtailment, and then cost structures will be stabilised, the market will become more predictable and customers will be able to plan in more detail and therefore focus on better technology.

Nonetheless, Zhuang also claimed that there is much chat about the Mono versus Poly debate, with bold statements such as ‘Mono will replace Poly’, for example. However, as only a few players represent the majority of the Mono wafer capacity, that market is open to speculative pricing in a way that the open Poly market is not, he claimed. This can keep the Mono prices high at times when the Poly price dives and therefore project economics will keep the Poly products alive. Ultimately the prices of Mono and Poly wafers will be the key differentiators.

“The Mono market share will grow, but poly will still be there,” he said.

He also suggested that Mono players are on the offensive and may become more aggressive in their pricing, but this cannot be sustained for too long.

“In the end people have to make money, at a certain point they have to stop and Indian price is already very low – you can’t go any lower – so in today’s industry we all know that silicon is at the RMB80 per kg [US$11.68] and in wafer and cell and module no-one is making money. The entire supply chain is losing money and today the only driver for cost reduction is RMB currency depreciation.” 

The only other factor that could change costs for next year, said Zhuang, is technology innovation, but technology does not change prices dramatically in the space of one year.

Remarking on the 2.44 rupee tariff discovery in Gujarat’s 500MW solar auction earlier this week, Zhuang said: “I think it can be managed at that price and the project can be built.”

This was assuming a market price of 23 to 24 cents per Watt for Poly modules from tier 2 suppliers (excluding shipping), he said.

However, Zhuang again highlighted bifacial technology as an unavoidable technology of the future: “Moving forward at a certain point they have to think about using bifacial technology. The investors, the banks would have to accept that. It would dramatically increase the yield of the project by around 10%. Indian conditions are suitable for that – flat and barren land with hard ground.”

Trina Solar

Gaurav Mather, sales director, India, Trina Solar, said that Poly is dominating the market, however, all players will start having to look at Mono-PERC as the price starts to be comparable with Poly.

“We estimate that that second half of 2019, the gap between the Mono and the Mono-PERC and the Poly will be very minimal,” he said.

However, Mather expects Poly to continue as mainstream in India because of the focus on low tariffs and aggressive pricing. Mono-PERC will however appeal to certain developers looking at LCOE.

“So far we have supplied very small systems of Mono-PERC to India and Mono also for rooftop, but primarily all the bigger projects we have supplied they are all Poly,” he added.

In terms of N-Type module technology, Mather believes it will take a long-time to take hold in India because of the pricing, however, he – like others – sees bifacial as a major future prospect, particularly in the floating PV sector, which is beginning to flourish in India.

Changing opinions

In a testament to the rise of Mono technology in the country, Bridge to India’s Solar Compass for Q2 2018 tabbed Mono specialist Longi, followed by thin-film specialist First Solar and Chinese firm Yingli as the top three module suppliers for projects commissioned in the quarter.

Jason Chow, marketing manager at Mono specialist LONGi Solar said the company had a very successful 2018 in India, but it has historically been hard in this region to promote its PERC technology due to the higher costs in such a price-sensitive market. The company has been striving to change customers’ attitudes to concentrate on performance over cost.

Pranav Mehta, chairman, National Solar Energy Federation of India (NSEFI), said: “I’m happy that Mono is picking up globally and making some inroads in India. LONGi and Trina, now GCL will also have to follow through. Everybody has to now [look at] Mono PERC. That percentage of Poly is going down – 99% to 90% let us say, but there’s still miles to go.”

Borrowing the sun when it should be free

Let’s agree that the limited reserves of fossil fuel and its growing impact leading to environmental degradation highlights a very costly, dangerous, and unsatisfactory future for our world. It is easy to understand that as the fossil fuel reserves near depletion, the cost of fossil fuels will rise, depriving even more people of energy (currently more than 1 billion people live without electricity in the world). On the other hand, solar energy offers an opportunity to get out of the tightening binds of depleting fossil fuel reserve, while offering power to all. So, there are no doubts that we are in the middle of a transition period, but how can developing countries benefit from this transition?

Solar offers overall growth

We must highlight that, energy and economy are interconnected components. Thus, growth in solar within a country (which promises to solve energy scarcity) signifies new overall development and construction of a progressive economy. Let us see how:

  1. Focusing on solarisation can reduce fossil fuel import cost and offer better energy access to developing countries.
  2. A fraction of money saved on fossil fuel imports can be used to expand renewable energy production by building industry. This will allow countries to access export market and kick back profit within industry development.
  3. Industry growth will lead to job creation, skill development, and empower citizens to become earning and contributing members of the country’s economy.
  4. With industry development and manpower creation, production will increase leading to technological innovation.
  5. And ultimately, better products will create demand in and outside the country, bringing more profits, aiding in industrial, social, and economic growth.

As the above stated points reveal, it is a cycle; one empowering another, leading to the development of a country’s economy and diversifying its sources of energy and income.

Global acceptance is at hand

Understanding the potential of green energy transition through solar, developing countries like Brazil, Philippines, Egypt, Mexico, Turkey, Chile, Africa, and India are investing in solar. As a result, renewable energy investment (US$286 billion) surpassed investment in coal and gas (US$130 billion) in 2015-16 and reached to US$333 billion in 2017-18. Solar investment globally amounted to US$160.8 billion in 2017, up 18% on the previous year despite these cost reductions. Additionally, solar PV project auctions in emerging markets rose by 4.5 times within 2013-17. So, it is apparent that global demand and acceptance for renewable energy (especially solar) is on the rise.

We shouldn’t buy the sun from others!

We have already explained how a green energy transition through solar can not only offer power to all but support and lead socio-economic growth of a country. However, that totally depends on building industry and manufacturing capacities. Unfortunately, countries, especially developing countries are losing their chance of building a better future through enhancing manufacturing capacities, as countries with vast manufacturing scale are flooding their market with solar components priced at much lower than market cost. Low priced solar modules and components may appear as a great deal for developing countries, but it is actually robbing them of the opportunity to build manufacturing capacity and speed up the overall growth of their country.

Countries like China becoming a world supplier of solar components will centralize the solar industry in foreign countries, further strengthening their capability to control the industry and put the dream of becoming a solar power on unstable grounds. Centralising the solar industry to a handful of countries will also introduce a decline in technological improvement, since those countries will most certainly invest most of their time and money on expanding their supply chain (to meet growing global demand) rather in R&D. There shouldn’t be limitations on global manufacturing or monopoly on the sun.

Protecting domestic manufacturing sector Is a necessity

The US has taken measures to protect its domestic manufacturing industry. The US Department of Commerce imposed up to 165.04% on PV solar imports from China and Taiwan in 2014 and in 2018 the country imposed 30% tariff on solar imports.

Although, developing countries like India have shown intent towards rapid solarisation, in most cases this growth has been depended on solar imports (especially in case of India). India spent $3.1 billion in solar equipment imports, which is about 35 times its solar equipment export. In FY 17-18 the expenditure stood at $3.8 billion. This massive import figure helps only achieving short-term goals of the country without having a sharp precognition on the global future energy control map. Growing expenditure in import blocks the country from investing in domestic manufacturing, and gives control of Indian solar future to foreign suppliers (Chinese suppliers already hold ~80% share in solar market in India).

Here, it is important to underline that spending billions on imports doesn’t really create jobs but only increases forex outflow, which could have been spent towards industrial growth.

Following the leaders

Dominant solar countries like China have aggressively expanded their domestic manufacturing capacity, which has helped them to control the price of the modules, while creating jobs, and claiming the export market. Developing countries like India should follow these tried and tested business tactics and focus on domestic solar manufacturing to establish its position in the global export market. In case of India, we should say “re-establish” as the country used to have a strong export base, catering to the rising demand in Asian and European markets during 2000-2010.

Initiatives like International Solar Alliance (ISA) offer financial support, technology exchange options, and a collaborative platform, which developing countries like India can use to build manufacturing scale within and sore high. However, Governments should look towards solving the internal issues as well. For example, Indian domestic solar manufacturing is going through issues like added 18% GST towards solar project development, 25% safeguard duty imposition on SEZ based solar manufacturers, increase of tender cancellation etc.

Domestic solar manufacturing has to be prioritized and these issues have to be solved to support the growing solar industry within India. Solar should be considered as the best possible opportunity a country has, to grow out of the fossil fuel binds and become energy self-reliant, creating jobs, trade relations, and economic stability. And since building manufacturing scale is the only way to achieve that goal, we all should work towards supporting this target and position India on the supply of the global future energy map.

This week, PV Tech gathered views from various players – both foreign and domestic – about what steps need to be taken to support local manufacturing in India, while at the REI Expo 2018 exhibition in Greater Noida, India.

What it takes to ‘Make Solar in India’

India’s government has made clear its intentions to cultivate a solar PV manufacturing base at home, but interest from foreign players has yet to be translated into major capacity expansions. PV Tech gathered views from various players – both foreign and domestic – about what steps need to be taken, while at the REI Expo 2018 exhibition in Greater Noida, India.

Jeffrey Liu, managing director at state-run Chinese firm CETC, one of the only foreign firms to date to actively set up PV manufacturing in India, told PV Tech that the company is willing to achieve only low profits at an early stage given the enormous potential that the Indian market has for the future. So great is CETC’s faith in the market that it was seriously considering setting up its cell capacity in India well before any discussions of a safeguard or anti-dumping duty came into the public domain.

Liu said China’s ‘One Belt Road’ initiative complements the Indian government’s ‘Make in India’ programme. He also believes that government will protect any manufacturer who sets up within India. However, cell capacity requires a huge amount of investment, so CETC’s 200MW fab is seen as a trial and depending on demand from local module assembly players for its product, it could expand to 600MW or 1GW in 2019 or 2020. The key here is that the firm has not decided to invest in multi-gigawatt factories straight away but prefers to test the water before making a big play investment.

Many early stage announcements of foreign PV manufacturers looking at India have cited the state of Andhra Pradesh as a strong location. Liu said that the economic zone Sri City offers various incentives and amenities related to electricity supply and water treatment among other benefits.

Evolvement step by step

Yan Zhuang, president and COO, Module and System Solutions, at Chinese firm Canadian Solar, the most successful module supplier to India in the year 2017/18 according to Bridge to India, told PV Tech that domestic solar production in India is a “valid proposal” and his company is “seriously considering” this option.

However, Zhuang stressed that this decision would not be majorly affected by any safeguard duty or the Indian government’s attempts to tender out manufacturing capacity. The plan is for a more organic approach based on long-term sustainability of the local manufacturing market.

He said: “It will not be fast. It’s not going to be a revolutionary decision. It’s going to be evolvement step by step.”

Instead Zhuang highlighted the major steps that he believes the government should take to encourage PV manufacturing in India:

  • Finding a way to reduce the costs of production in India;
  • Relieving import duties on materials equipment;
  • Offering training;
  • Reducing electricity prices;
  • Reducing the barrier for foreign investors.

For Zhuang, Indian manufacturing will need long-term support and not just the two years provided by the safeguard duty on imports from China, Malaysia and developed countries. By the time a factory is built in India, the safeguard duty will be at its tail end, while public tendering also gives players little control of the price. He said the only real control focus should be on making sure the Indian-made costs can compete with the Chinese-made costs.

“Right now it’s [around] 10-12% cost difference. Can we make it 6% difference – only 1 cent or maximum 2 cents?” he questioned.

Ramesh Nair, CEO at major Indian developer and manufacturer, Adani Solar, also said that the safeguard duty would fall short at two years, but it will also give a “lease of life” to domestic suppliers and protect against large-scale dumping from China.

“China has already come down to ridiculous prices,” he added.

Echoing CETC’s Liu, Nair said that the Indian solar market is very buoyant with the support of the prime minister and lower prices are back again with the 2.44 rupee per unit discovery this earlier this week.

“The safeguard duty is not hurting the market at all, as module prices have also corrected,” he said.

For Nair the most important method of supporting manufacturing will be to expedite the dispersal of M-SIPS sops that are available to electronics manufacturers. The government should also come out with more manufacturing tenders.

Pranav Mehta, chairman of the National Solar Federation of India (NSEFI) as well as the new chairman of the Global Solar Council, said: “No Indian worth his salt can be against manufacturing of solar panels in India, but safeguard duty, anti-dumping duty is not in the interest of the country. Instead what we should do is create a win-win situation. By this I mean that we should attract technology and investment to produce globally competitive product in terms of price and quality to go to scale.

“For that, one thing that definitely government can provide is interest subvention. In India we pay 10.5-12% interest for the borrowed capital whereas China is paying 3%, Japan is paying 3%.”

Mehta said the government does have the funds available to alleviate this problem including the National Clean Energy Fund among others.

Does India need manufacturing?

At the REI Expo conference session on ‘Make in India’ held by consultancy firm Bridge to India, Vinay Rustagi, the consultancy’s managing director, asked panellists whether India really needs PV manufacturing and what needs to be done to support it.

In the panel, Rakesh Tiwary, CFO Adani Solar, said that reliance on imports is creating a ‘rent economy’ and is using up India’s forex reserves. He said that India needs to create a manufacturing skillset in order to support this base and it needs multi-year visibility of demand for domestically-made PV products.

Arul Shanmugasundram, chief business development, CTO, at Tata Power Solar, said that domestic supply gives assurance that players can get modules at a certain price as there are less variables in procurement, giving “comfort to both parties”, but he also noted that high cost of capital in India is a major issue. With that the challenge for Indian manufacturing is to “keep it alive and sustain”.

“It’s slow growth, I don’t see radical changes,” he added.

Daniel Liu, GM South Asia, at Chinese manufacturer JinkoSolar, said the number one most important thing in attracting players to ‘Make in India’ is policy certainty. The 3GW manufacturing tender parameters have been played with, while the safeguard duty saga dragging on did not give confidence about stability and certainty around policy in the future in India.

“It’s a little bit distracting,” he added.

Noting India’s plan for fully integrated manufacturing that includes wafers and ingots, he said that this requires huge investment and therefore a thorough investigation that takes longer than just two years is necessary. He also suggested that China’s TopRunner policy that prioritises new technology and efficiency over price should set a strong example to India, which is too focused on low tariffs.

Jerome Baco, COO of C&I solar firm Cleantech Solar, representing the downstream sector in the panel, said that even though Cleantech imports almost all of its modules and inverters to India, the company would much rather source locally in order to avoid three import risks:

  1. Foreign exchange rate fluctuation – i.e. the risk of buying in Dollars and selling in Rupees
  2. Difficult logistics of import
  3. Regulatory framework changes such as the safeguard duty which is “freezing the market”

Ultimately, however, Baco agreed with JinkoSolar’s Liu that uncertainty was the biggest factor.

He added: “We would need a dynamic manufacturing market with 2-3-4 more sufficient suppliers to ensure right capacity and to ensure bargaining power. We don’t want to put all the eggs in one basket.”

IHS Markit reveals 2017’s global solar EPC rankings

After ranking the 2017 PV solar Engineering, Procurement, and Construction (EPC) companies and confirming the final numbers at least twice, IHS Markit has determined the 30 largest EPC providers installed 20 GW of non-residential PV representing 24% of the total market. Declining from 30% in 2016, the EPC landscape reversed a consolidation trend because of increased fragmentation in the booming Chinese market. Per the inset chart, the top 10 EPCs installed 13% of non-residential PV demand.

Combining both in-house development and third-party EPC services, TBEA Sunoasis maintained its position as the largest EPC provider with 2% global market share in terms of installed PV capacity. In addition to TBEA Sunoasis (1), Chinese EPCs dominated the top 10 with Sungrow (3), PowerChina (4), Beijing Enterprises Clean Energy Group (6), EDRI 11th Institute (7), and Xinyi Solar (8).

Meanwhile, Sterling and Wilson climbed to second position by doubling its annual installations as a third-party EPC contractor, driven by India and the Middle East. The 42% year-on-year growth in India’s PV market has benefitted a concentrated group of local EPCs with the combined market share of the five largest EPC companies growing from 46% in 2016 to 52% in 2017. India’s Tata Power Company (9) and the Greenko Group (10) also joined Sterling and Wilson (2) in the top 10 EPCs.

Headquartered in Spain, Prodiel was the only European EPC to land in the top 10 at fifth position.

By the way, US solar EPCs just missed the top 10 global list with Cypress Creek Renewables and Swinerton Renewable Energy placing eleventh and twelfth respectively.

Based on announced PV project installations in 2018 and 2019, IHS Markit expects the 10 largest EPC companies will together install more than 10GW over two years. Sterling and Wilson will lead the group as a result of securing contracts in the Middle East, Africa, and Latin America.

Josefin Berg, IHS Markit Research & Analysis Manager for the Solar & Energy Storage research group, said:

“The EPC landscape is still evolving, and the ranking will change in tune with how PV demand develops in different markets.

“There are two parallel trends: We are both seeing further consolidation in the major utility-scale PV markets, and a rise of new, local EPC providers in early-stage markets.”

The full IHS Markit ranking and analysis of global solar EPCs including installed PV capacities and market shares are discussed in the Solar EPC and O&M Provider Tracker report for IHS Markit Solar Service subscribers.

Safeguard duties on solar cells: A blessing or a mirage?

The imposition of a safeguard duty on solar cells originating from China and Malaysia has, seemingly, stirred up the hornets’ nest with an unflagging clamor gaining traction against it each passing day. On the other hand, in common with any such protectionist move, reactions vary between the affected parties bemoaning loss of competitiveness, profitability and jobs and those of consumers and producers that were benefiting from the lower priced imports.

Acme, a major independent power producer (IPP), has blazed a trail of law suits against this safeguard measure in the High Court of Odisha which had stayed the implementation of this duty at least till 21 August 2018. Unfazed by the Court order, the central government seems to have made its stand clear by publishing a notification to this effect on 30 July 2018.

While this move by the government might seem to be affording relief to the local manufacturers, it still would call for an analysis of its impact on the sectoral economics. How this will impact a country like India that is focused on renewable energy as a means of decarbonising its current and future GDP growth is a moot point. Some experts maintain that it would lead to economic harm by shrinking markets and excluding efficient producers, thereby raising prices for consumers.

However, we subscribe to a different view; we are inclined to believe that the harm might not be too pronounced nor too long-lived. This is keeping in mind that solar manufacturing across the world, including India, vis-a-vis production in Chinese facilities indicates that the price advantage of Chinese solar cells emanates from cost efficiency of vertical integration, economies of scale, and negotiated discounts from vendors of intermediate inputs, as well as machinery and equipment. These are in addition to the advantages from lower Chinese labour costs and cheap trade credit availability. As a result, the temporary rise in prices caused by these duties would be nullified by systemic efficiencies in China that, by all probabilities, will get better with time. Interestingly, another factor that will drive down the prices of Chinese solar modules is a recent policy shift by the Chinese government, restricting new solar installations that require a national subsidy, a move that will lead to a drop in deployment in China this year. The impending overcapacity will further hammer down the prices of modules.

Another view is that India might benefit as these duties on Chinese and Malaysian manufacturers could make India an alternative manufacturing destination for companies. But this prognosis is a little far-fetched, as these duties will be phased out in two years. Moreover, India’s ability to capture vacated Chinese manufacturing space is a function of ease of doing business in the country, physical infrastructure necessary for manufacturing and domestic policy environment (other than the much disputed labour laws), all of which are not yet amenable for large-scale manufacturing processes and units as in China.

While this move has not gone down well with the projects developers, we are inclined to believe that it is a window of opportunity for the domestic manufacturing industry. Although India does not have much of a domestic manufacturing capacity to bolster, this two-year period can be a good catalyst for the desi (domestic) manufacturers to metamorphose into efficient production centres. This is something that should have happened through its natural course in an ecosystem of free market economy.  

As far as commercial impact of the duty goes, our analysis shows that there would be a 30-35 paisa increase in tariff bids in the future solar auctions for comparable returns on equity. This should not be a problem since a provision of pass through has been clearly enshrined in the guidelines recently unveiled by the government for procurement of power through competitive bidding from solar PV projects. Pertinently, a more recent clarification issued by the government says that the term ‘Change in Law’ in Clause 5.7.2 of these Guidelines includes any “change in rates of taxes, duties and cess” which have a direct effect on the project.

Notwithstanding this, a fact which merits consideration is that distribution companies (Discoms), who are debilitated by financial weakness, were attracted to solar due to its rapidly changing economics and might now lose some interest, as tariffs change their course.

Only time will tell whether these safeguard actions will actually prove to be a window of opportunity or only a mirage for the domestic solar manufacturing in India?

China’s new energy policy: And what India needs to do to protect solar

China’s National Energy Administration, the National Development and Reform Commission and the Ministry of Finance have recently released new guidelines for the country’s renewable energy targets. In this directive, China has terminated approvals for new subsidized utility-scale PV power stations. Since China is the leading force in global solar industry (in 2017, China accounted for 54% of global PV installations) and the biggest supplier of solar equipment in the world, this new renewable energy policy has created a stir in the global industry and posed negative implications for developing countries with budding solar growth, like India. 

Current scenario and its implications

Within this new directive, China has highlighted that the country will cap distributed project size from 19GW to 10GW, reduce its feed-in tariff for projects by RMB 0.05/kWh (US$0.0074), and start auctions to set power prices of utility scale projects. Additionally, past 1 June 2018, projects connecting to the grid in China will not receive feed-in tariffs. It is suspected that this new policy move will show most probably the first contraction in global PV demand since the year 2000, impacting nascent solar industries like India.

The reason behind this policy change is to contain China’s growing subsidy cost, which amounted to about US$15.6 billion in 2016. China has failed to pay out these sums and predictions show subsidy costs reaching up to about $39 billion by 2020. Therefore, it is apparent that this new policy that will reduce renewable energy capacity expansion in China is actually a measure to protect the nation from severe financial crises. However, reduced solar energy demand within China will lead to an urge for oversupply within the global market. Huge volumes of solar modules that were manufactured to satisfy Chinese market will now flood the global market, thus reducing the market price of solar modules even further.

It is estimated that this issue will push prices down 32% to 36%, which is a significant price drop from 2016 when prices dropped 28%. If China continues to block new projects and cut financial support to developers, solar PV modules will see further 10-15% fall in price in following years. Although PV price fall may sound like a good news for developers in other countries, we have to consider that this price crash will push other solar manufacturers out of the scene destabilizing nascent solar industries in other countries. Additionally, this global equipment supply glut will come to an end bring forth unavailability of PV modules (as domestic manufacturers will be out of business and Chinese manufacturers will not be able to sell PV modules at previously lowered prices).

How it will affect India

Since India is one of the biggest customers of Chinese solar equipment, China’s recent policy shift will flood the Indian solar market with cheap solar modules. Indian solar manufacturing sector is already in an unfair fight against Chinese module suppliers who are practically dumping solar modules at a lower cost (Chinese modules cost $0.33-$0.36 cents/Wp, while Indian modules are priced at $0.35-$0.40 cents/Wp).

Approximately 161.5 million solar panels were imported in India in FY 2014–15 amounting to almost $821 million. In FY 15-16, the expenditure jumped to $1.3 billion and within FY16-17, India spent $3.1 billion in solar equipment imports, which is about 35 times its solar equipment export. In FY 17-18 the expenditure stood at $3.8 billion, promising to rise in later years. It is important to highlight that spending billions on imports doesn’t really translates into self-reliance, which Indian solar sector aspired to achieve. In this scenario, pushing prices down 32% to 36% due to China’s new energy policy will certainly push domestic manufacturers of India out of the industry.

The only path towards sustainability and progress

Government of India should focus on protecting domestic industry through creating demand for domestically manufactured modules.

Why only modules and not cells? The reason behind this selective action can be made clear by checking current cell and module capacities in India. The current operational cell capacity is 3,000MW whereas the total installed solar module capacity is more than 9,000MW. The numbers clearly illustrate that current module capacity far outpaces the cell capacity. Therefore, using low cost foreign solar cells and creating demand for domestically manufactured modules would lead to better capacity utilization in the industry.

Additionally, there is a dire need for conducive policies. Recently, the Ministry of Finance in India has issued a notification on Safeguard Duty on imported solar cells and modules. Although, the intent of safeguard duty was to protect domestic solar industry, unfortunately, there has not been any exemption for Special Economic Zones (SEZ) in India, which hosts India’s 40% of solar module manufacturing units and 60% of solar cells manufacturing units. It is certain that if SEZ units are not exempted from the Safeguard duty, it will lead to huge job losses and harm the manufacturing ecosystem in India, which is already bleeding.

Therefore, the best course of action would be to exempt SEZ to Domestic Tariff Area clearance of solar cells and modules and offer exemption to projects, which have already been auctioned out from the ambit of duties of Safeguard.

Taking decisions in favour of domestic manufacturing

Strengthening domestic manufacturing eco-system is the only option for India to realize set targets and achieve solar reliance. However, as explained, our country still lacks the required cell manufacturing capacity to work in sync with the module manufacturing pace. Therefore, careful manoeuvring is needed to stop imported module from flooding in, while protecting domestic manufacturing industry from safeguard duties.

Domestic manufacturing can make India the third largest economy in the world by improving social, industrial, and economic infrastructure. From creating jobs to reducing import expenses, domestic manufacturing comes with an array of benefits that can boost national uplift. Domestic solar growth has already created more than 416,000 new jobs (2015) and 1,017,800 jobs are expected be created within 2022, offering a solution for India’s employment scarcity.

The right decisions to protect the domestic solar manufacturing industry will certainly initiate the socio-economic reformation in the country, leading India to great heights.

Rice, rays and recharge: How an Indian village got 24/7 clean energy

In April of this year, the Indian Prime Minister, Narendra Modi, drew scorn when he announced that every village across India had access to electricity. The reality that ‘electrification’ in government terminology meant that a mere 10% of households in any one village had power, was not made clear in the initial announcements.

What Modi lacked in specifics in April, his government has not lacked in ambition. During the final implementation of ‘DDUGJY’, a scheme to connect every village to the grid, he launched the ‘Saubhagya Yojna’ programme in September 2017, aiming to achieve complete household electrification by installing solar energy, battery storage, LED lighting, a fan and a plug socket in every willing house, whether urban or rural by December 2018. This would concentrate on the 30 million below poverty line households not covered by other ongoing electrification schemes.

However, it is also important to remember that power connections in India do not guarantee regular and reliable electricity. Indeed this aspect is often overlooked in the mainstream, overshadowed by the sheer number of people still left in the dark.

Uttar Pradesh, the most populous state in India, dominated by agriculture on the plains of the Ganges, and its neighbours Bihar and Jharkhand, have a combined population of 400 million people (at a crude estimate) of which around half have little or no access to electricity.

Nonetheless, even with electricity, a fledgling rural business will always be stifled if it has no power for 6 to 8 hours on any given day, with frequent and unpredictable blackouts. For total electrification to be of most value, it requires a three-pronged attack: First, to bring grid infrastructure to villages; secondly, to connect each individual household; and lastly, to make the power supplied, both reliable and affordable.

Power at the last mile

This is why PV Tech visited a village in the heart of the North Indian plains where Uttar Pradesh borders Bihar, to see how a bold mix of biomass, solar and energy storage technologies is transforming local businesses by providing round-the-clock clean energy at prices cheaper than those of the main grid – all the while helping to solve India’s long struggle with power theft.

Heading east past the town of Kushinagar, a Buddhist pilgrimage site, lies the village of Tamkuhi Raj. The terrain is flat in all directions, with cornfields, brick kilns and a buzz of agricultural activity dictating.

It is here that a hybrid mini-grid has been installed by Husk Power Systems, one company in particular that has seen the value in adding reliable decentralised power systems to locations at the furthest reach of the grid. The Indian firm started out in 2008 by deploying biomass gasification systems, particularly using waste rice husks as a fuel, before branching out into the hybrid space.

Manoj Sinha, the co-founder and CEO of Husk, has a vision of electrifying his homeland, and though his company is focussed on the northern plains, given the vast number of people with poor quality power access, it is also active in parts of Africa. Sinha, grew up in Uttar Pradesh and experienced a lack of power first hand, so after moving to the US, he returned to India to help improve the situation.

Husk did originally evaluate the potential for solar energy, but that was back when the firm was created in 2008 and PV technology was prohibitively expensive, with prices of around US$5-6 per Watt versus the biomass systems’ cost of US$1.20 per Watt. However, while the rice-husk-fuelled biomass option provided attractive costs, it was limited by maintenance and feedstock requirements. One could technically run it throughout the day, but given the number of moving parts, the systems would come to their end-of-life very quickly.

The complete solution developed when global price points on solar technology followed a dramatic downward curve, making the combination of biomass, solar and energy storage feasible. Husk struck up a strategic partnership with First Solar, the US-based thin-film PV manufacturer and project developer. First Solar’s thin-film technology is particularly suited to India’s humid climate, due to the way the semiconductor used in its modules responds to changes in temperature, humidity in atmosphere and low light quality, delivering 5-9% higher energy yield, it claims. Unlike most market players who use polycrystalline silicon as the semi-conductor, First Solar employs Cadmium-Telluride as the semi-conductor material for its modules. The manufacturing process is very different and the company claims that it uses 98% less semi-conductor material to make the same capacity as compared to the polysilicon technology, with a significantly lower carbon footprint as compared to any other manufacturer.

Further explaining why Husk’s mini-grid at Tamkuhi Raj adds value, the local regional manager at Husk, Sanjay Singh, says: “Due to India’s heavily subsidised power industry, some believed that the end consumer, particularly in marginalised India, had little desire to pay for additional, more reliable sources of power. But, when certain businesses are curtailed, and some cannot run at all, or shops can’t be kept operational in the evenings for those local workers who can only shop at night, these people will actually pay for quality power and that’s again based on the data we see.”

Food and power

In the village, solar power provides electricity to the customers during the day, while simultaneously charging the batteries. The batteries are then utilised at night. The biomass gasification system is only used as a backup, if there is poor weather during the day, which does not allow the batteries to sufficiently be charged up. If the load is particularly high, that can also impact the ability of the battery to supply enough power. The biomass system can seamlessly address this through a five-minute transfer via a manual lever. Once the rice husks are fed into the gasification system, it takes 15-20 minutes to combust. Impurities are then removed before progressing into the gasifier. For the system to generate power for an hour, it requires around three bags of rice husk – a fuel source that is in plentiful supply in the region.

Shopkeeper Dinesh Gupta didn’t even have a shop before the Husk mini-grid system started operating in the village. A reliable source of power allowed him to start selling a range of cosmetics like soaps and creams along with basic clothing items at a nearby market. He uses the power mainly for lighting at night, secure in the knowledge that it can be tapped 24 hours-a-day.

Munna Yadab, who runs a confectionery, has completely cut his power supply from the main grid to get 24/7 supply from Husk. For the first time he can use refrigerators to sell cold drinks and other chilled items that were a struggle during the power cuts of the past. Cumulatively, he is now paying slightly more for this power, but this is because now he can run power round-the-clock, and the additional price is more than offset by the ability to expand the scope of his business.

Susant Gupta used to run a printing and copying service shop in town with a diesel generator at a cost of 300-400 rupees per day. Having adopted power from Husk and First Solar’s mini-grid, he can now run the shop at 1,200-1,500 rupees per month with zero power interruption. He’s cut off the main grid supply to only use Husk power and with the confidence of reliable power behind him, he has been able to secure a loan to expand his business.

Gupta says he stood in a line to be one of the first customers to get his power. The local market has benefitted and particularly households that weren’t getting any power previously. The biggest benefit is not having to wait for electricity to come in order to run a business, he adds, as power is now 24/7. In the past if they had no electricity for four hours in the morning, then the shop and others like his just sat idle. Husk also runs a water purification service using power from the mini-grid, which Gupta takes advantage of to purchase unbranded and clean bottled water for his home.

These are just a few stories from the market, but spread across multiple entrepreneurs, businesses and educational facilities, you have significant benefit to the community at large, even if the Husk system for now can only supply power to roughly 110 people in this particular village.

Across their various sites, based on a survey by Husk of over 250 commercial customers, over two thirds were able to increase their revenue by around 200% by getting access to 24/7 power. Even Husk was not expecting such positive results.

This is partly because the locals no longer have to worry about the reliability of electricity.

“Now they can build a life round something that is omnipresent and always available,” adds Sinha. “They can buy a freezer and they can keep perishable products that they could not before. They can purchase ice cream making machines and make ice cream and other additional products, which is the powerful result of providing 24/7 power – bringing real changes to commercial customers’ revenue and profitability.”

First Solar’s Sujoy Ghosh also notes that in Husk’s experience, the load growth has been at 25% y-o-y on their mini-grids as opposed to a national average of 5% y-o-y as projected in the Indian government think tank Niti Aayog’s reports for rural energy growth.

“We think there is a lot of unmet demand in India which is not in the grid and as you start to deploy energy in a more distributed manner into areas which have challenges of access, you are going to see a lot more demand come up,” he adds – noting that mini-grids are also a way to help reduce the vast number of polluting diesel gensets that are still running all over India.

Biomass Gasification

Energy Storage

The batteries used lithium-ion, with a 2V 135h capacity and an output of 400V. A total of 24 batteries are connected in a series 42/48V, purely to provide backup services. It takes between 4 to 6 hours of sunlight for the First Solar modules to charge the battery set.

To maintain the mini-grid, the modules have to be cleaned every two days over a one-hour period since the region is very dusty. This is a simple process compared to the biomass gasification system, which requires trained technicians to carry out a different maintenance schedule every three days.

Making power affordable

Husk’s ability to be customer-centric will always stand apart from Indian Discoms (utilities) and the centralised grids, which are simply too large, but regulations do allow for these decentralised mini-grids to integrate with the main grid and Husk is already working with Discoms in Uttar Pradesh to run a pilot. It’s not one-way traffic in favour of the decentralised system either, since one of Husk’s competencies is being able to collect money from the customer, which has typically been a problematic and bottomless task for the average Indian Discom.

Husk already offers flexible tariff schemes that change depending on what time of the day the power is being used. This is measured using a sophisticated net metering platform, that can be managed from anywhere in the world. It offers discounted electricity prices between 10am and 4pm when generation from solar is at its peak. It also offers discounts to customers using 1kW or more, as this is classed as productive power that is being used for income generation by the consumer, like running a business for example.

“We promote those kinds of activities because it just generates more economic activity in the village. They are happy, their business grows, our business grows so that’s a category of customers that we can easily identify through the pre-paid meter and we can devise the perfect category of tariff for them,” says Sinha.

Husk also estimates that customers save around 20-30% on energy costs, while also benefitting from the uninterrupted round-the-clock power. There is also a service level agreement wherein if anything goes wrong with the project, Husk will fix it within four hours.

Using a pre-paid meter also means customers are not conscripted into paying for energy supply. When PV Tech visited the site, out of 110 customers, 90 had opted in for the month, while the remaining 20 had temporarily opted out, either due to being hard up on cash, or being away from home at that particular point in time. Customers have the flexibility to opt back in at anytime.

On the left in the picture above, a shopkeeper’s energy usage shows a peak during the daytime and parts of the night, whereas on the right a household charges a mobile phone briefly during the day and then has peak usage at night for lighting. Husk can tailor tariffs to meet the needs of each customer in this way.


Looking ahead, Husk will retain its focus on Uttar Pradesh and Bihar, but will also enter Jharkhand, with a goal to add between 250 and 300 new sites or power plants by 2021.

The company’s plans in Tanzania are to expand to roughly 35 new sites over the same period of time and if more capital resources are secured, it plans to go to West Africa as well.

Sujoy Ghosh says that given the small, kilowatt-scale of most of these projects, it’s easy to gloss over their significance, but if you start aggregating them all it becomes clear that this is a “huge opportunity”.

By late March 2018, India had sanctioned 4,375 decentralized distributed generation (DDG) solar energy-based projects covering 3,377 villages, of which 2,321 projects across 1,446 villages had already been commissioned.

Reflecting on the benefits of the mini-grid in Uttar Pradesh, clearly it would be prudent for India to concentrate on this third aspect of decentralised regular and reliable power just as much as on total electrification.

Today, Narendra Modi is due to be filmed talking live to the beneficiaries of his various electrification schemes, focusing on those receiving power for the first time, even though the household electrification plan still has a long way to go. One can imagine at some point in the future, Modi talking to the beneficiaries of Husk’s decentralised mini-grid at Tamkuhi Raj once the national focus naturally shifts towards quality power.

Unravelling India’s 2.44 rupee solar tariff: Refined sensibility or a churlish audacity?

Indian solar tariffs have matched their lowest ever in the most recent 2GW and 3GW auctions for Interstate Transmission System (ISTS)-connected projects, hitting INR2.44/kWh (US$0.036) for the first time since May 2017. Prima facie, this might seem to be churlish, but it is certainly emblematic of some refined sensibility of the Indian solar and financial markets.

Is there a way to decipher such a bafflingly low tariff? Absolutely yes; in fact, there is a very rudimentary method to unearthing this mystery – it is called levelized cost of energy or LCOE, in short.

LCOE is similar to the concept of the payback, but instead of measuring how much cash flow is needed to recoup the initial investment, it determines how much money must be made per unit of electricity. A simple way to look at LCOE is that it is a measure of the cost of electrical energy that you generate.

Structurally, LCOE includes the initial capital investment, operation costs, energy generation and a discount rate, which is used to calculate a present value of the total cost of building and operating a power plant over an assumed lifetime for each unit of electricity generated. In sum, there are four parameters that need to be worked upon to derive LCOE of an energy project:

  1. Initial investment
  2. Operation and maintenance costs
  3. Estimated generation
  4. Discount rate

Before delving deeper into these parameters, it is important to understand that every investor has different return expectations on his investment. Particularly in India, the investors demand an equity internal-rate-of-return (IRR) in the range of 14-18%, which can be assumed to be the cost of equity. Then again, our experience of over 2GW as Independent Lender’s Engineer (LIE) shows that large IPPs can raise debts with an interest rate less than 10%, typically around 9.75% for a term of 12 years. Keeping in mind that sun is a stable source of fuel (sunlight) in case of solar projects, we can safely assume the lower end of the range for the cost of equity as 14%. Considering a tax rate of 30% and a normative debt equity ratio of 70:30, the weighted average cost of capital (WACC) turns out to be around less than 9% (8.77% to be precise).

As a simple rule of project economics, one can invest in a project if it yields a return over and above this. Keeping this in mind, we need to hit an LCOE of 2.23/kWh (in relation to the L1 tariff of 2.44/kWh) for the solar project to be worth investing.

Let us sink our teeth deeper into the other parameters to ascertain whether the target LCOE can be crossed as things stand today.

Initial investment: A year back a tariff of 2.44/kWh certainly looked like a balderdash prediction of the future at best; however, things seemed to have turned for the better recently, thanks to the policy shifts in China. Importantly, this recent clampdown by the Chinese government on its solar PV programme is set to cause an impending surfeit of Chinese PV production capacity. This reduced policy support for PV deployment in China will hammer down the multicrystalline solar module prices in China to around US$0.24/watt by the end of this year, predicts Bloomberg New Energy Finance (BNEF). Considering the ongoing US$/INR exchange rate of INR 69 per US$, the price of modules translates into INR 16.56 per watt peak. The balance of system (BoS) pricing for big ticket projects can be easily achieved at INR 12 per watt peak, which takes the project cost to INR 28.6 per watt peak.

Operation and maintenance costs: Our experience of managing O&M for around 2GW solar assets says that big ticket projects can be operated and maintained with a spotless quality for price of around INR 350,000/MWp.

Estimated generation: Our analysis shows that in place like Rajasthan, which receives the best radiation in India, we can clock a specific generation of 1,750 kWh/kWp/year with tier 1 modules, best inverters in the industry, a DC overloading of 25% and seasonal tilt project configuration. This translates into AC and DC capacity utilisation factors (CUF) of 25% and 20%, respectively.

Discount rate: We can consider WACC as the discount rate for estimating the present value of the project’s construction and operational costs.

Plugging these numbers in our simple LCOE calculation excel sheet yields a magic number of INR 2.15/kWh, which is well below our targeted figure of 2.23/kWh. While this is the cost of generating each unit of electricity over a period of 25 years, the L1 tariff of 2.44 has a profit margin of INR 0.29 per unit of electricity in comparison to 2.15/kWh, which is equivalent to some 13.7%.
While running sensitivity analysis for a 5% deviation in these parameters, it turns out that the profit margin goes below the WACC only in the case of a dip in the energy generation (8.48%). On the other hand, it remains healthily over the WACC in case of increase in initial investment (9.38%), O&M costs (13.08%), interest rate (11.02%).

It is unlikely that a well-engineered, properly constructed and maintained project will throw deviations to the tune of 5%, pushing us to a shocking conclusion that sub-3 tariffs are indeed a possibility, provided everything goes as per plan.

But only time will tell as to who will get the better of whom – a refined sensibility or churlish audacity?

Article updated: O&M for big projects at price of around INR 350,000/MWp.

Enticing big players to India’s 5GW solar manufacturing tender

India’s unusual tender for 5GW of PV manufacturing capacity linked with 10GW of solar projects has been called many things, ranging from pioneering to fanciful, but the earliest stages have seen some of the global industry’s biggest names toss their hat in the ring.

A total of 45 companies registered their interest with the procurer, Solar Energy Corporation of India (SECI), out of which 13 submissions came from heavyweight international firms.

Speaking to PV Tech at an Intersolar Europe forum in Munich last week, Jatindra Nath Swain, SECI’s managing director, said that among the potential tender participants were China-based Trina Solar, GCL, and LONGi, as well as Indian conglomerate Adani.

PV Tech is also aware that China’s Risen, Japan’s Softbank as well as India’s ReNew Power, Vikram Solar and Waaree Energies are also among those that got involved.

The tender stipulates that players must bid for a minimum of 1GW manufacturing capacity combined with 2GW of PV projects, which means that many companies, that may only have an expertise in one of the upstream or downstream segments, will have to form a joint venture to balance out their capabilities to suit the tender.

The China effect

When asked if China’s recent solar policy overhaul, which dramatically curtailed solar deployment quotas within China, would negatively impact interest in the 5GW Indian manufacturing tender, Nath Swain said that in the short-term, global module prices will come down, but the news will also see Chinese companies opening their eyes even more to opportunities abroad. In fact the president of LONGi Solar told PV Tech last week that Chinese companies “must” look away from the domestic market and find new opportunities overseas as a new era of consolidation in China’s manufacturing space looms.

Nath Swain also said that foreign companies that supply modules to India will still be considering the threat of the Indian government potentially bringing in a safeguard or anti-dumping duty against solar cell imports and that will continue to encourage these manufacturers to set up shop within India.

He also confidently described “increasing mobility” in the international solar industry, perhaps setting the tone for more manufacturers to take seriously the idea of domestic manufacturing in India. His comments come after a range of such announcements, including ground breaking on a 200MW cell manufacturing facility in Andhra Pradesh from Chinese firm CETC.

How serious?

Nath Swain noted that the expression of interest (EoI) stage of SECI’s 5GW manufacturing tender is only preliminary and that the true seriousness of players will likely come out in the pre-bid meeting. One such meeting was due to take place last week, but following requests, SECI has scheduled a second pre-bid meeting for 2 July in New Delhi.

Some had doubts that the tender could ever go ahead and many are convinced that there will be a delay in the process, but the secretary of the Ministry of New and Renewable Energy (MNRE) Anand Kumar also told PV Tech that the tender will be opened in July.

Consultancy firm Bridge to India has already expressed its views on the barriers to entry for this tender:

“We believe that few players have the willingness and capacity to participate in a tender of this scale/complexity. Combined capital cost of a 1GW manufacturing line and 2GW projects is estimated in excess of INR110 billion (US$1.6 billion). Minimum net worth requirement for bidders is INR20.4 billion (US$300 million). Our list of potential candidates is limited to ReNew, Adani, Softbank and Tata Power.”

Manufacturers’ views

Ryan Wang, marketing and sales director at GCL System Integration Technology, told PV Tech that GCL is in discussions with several local Indian firms and other international firms about the potential of setting up a joint venture to bid into the tender.

Back in April, it was announced that Softbank Vision Fund (SBVF) and GCL Group holding company had signed a memorandum of understanding (MoU) to launch a US$930 million joint venture in the Indian state of Andhra Pradesh, primarily to manufacture PV ingots, wafers, solar cells and modules.

Wang said the Indian government has been “aggressively” trying to promote domestic PV manufacturing via its ‘Make in India’ programme as a long-term strategy.

Even if no safeguard or anti-dumping duty was brought in by the Indian authorities, Wang said that India would still be an attractive location to set up manufacturing. He also cited the 5GW/10GW tender parameters that allow the project developers to use any module – not just those produced in India – as a bonus. For example, modules produced domestically by the new fabs could be exported to the likes of Europe and the US, he said.

Power minister R.K. Singh also this week reportedly announced plans for all future renewable energy project bids to have at least a 50% component of manufacturing. The Ministry of New and Renewable Energy (MNRE) is also playing with the idea of a 100GW solar project tender to be linked with manufacturing – another announcement that has baffled analysts.

All the signs are clear that the Indian government means business for domestic manufacturing. However, Bridge to India has again put out a cautious note following the policy makers’ flurry of massive Gigawatt-level announcements of late:

“MNRE has been under persistent pressure over the last year due to a series of issues including tender slowdown, GST, customs duties and safeguard duties. We can only speculate that the new MNRE administration is trying to deflect attention from these problems to shore up confidence and raise optimism in the sector.”

Changing mind-sets

Sunil Rathi, director, sales and marketing at Indian module manufacturer Waaree Energies, said foreign investors have shown a lot of interest in forming JVs for the tender, but he expects some delay in proceedings.

Remarking on the effect of China’s solar cuts on module ASPs, he added: “There is a down trade in the prices but I think this may be a short time. […] It’s likely to stabilise in probably 3-6 months’ time. But yes, currently there is a lot of distress happening.”

While noting that India’s domestic manufacturers receive few incentives apart from M-SIPS, a form of government sop for electronics manufacturing, Rathi did claim that Waaree is seeing change in the mind-set of developers who are willing to use domestic panels as long as they are competitive. Bridge to India’s latest Solar Map, however, reported that Indian players accounted for a paltry 11.42% market share for module supply in the Indian solar market during FY17/18.

Rathi suggested that the size of the new manufacturing tender would bring economies of scale and the ensuing cost reductions would help the business case for module supply within India.

Japanese giant Softbank, for its part, has been widely reported to have multi-billion dollar investment plans for both upstream and downstream projects in India and is in talks with the Indian government and the likes of GCL. The company has made wildly ambitious announcements in the past, but has certainly made its mark on the Indian industry already – regardless of its original investment targets back in 2015.

Back then, there were several huge announcements from Chinese solar firms, such as JA Solar and Trina Solar, planning to set up manufacturing in India, but of these memorandums of understanding only that of Indian conglomerate Adani came to fruition.

Some claim that the ease of doing business – or lack of – in India could also be a drawback.

For example, Gyanesh Chaudhary, MD and CEO, of Indian PV manufacturer Vikram Solar, warned: “The way it’s challenging for global companies to set up shop in China and survive, the same way it’s challenging for Chinese companies to set up shop in India and survive. It’s a very cultural thing. It’s more about how business is done. Nothing wrong China way or India way, but it’s just different.”

Meanwhile, Frank Wang, CEO, of major China-based PV module manufacturer Risen Energy, which entered PV Tech’s Top 10 module manufacturer’s rankings for the first time in 2017, said that without a safeguard duty in India, using Indian-made modules will force projects to have higher tariffs in their power purchase agreements (PPAs) than if they used Chinese-made panels.

Higher tariffs will be a concern in such a cost-sensitive industry and geography, particularly given the tendency of Indian state Distribution Companies (Discoms) to throw tantrums when lower solar tariffs are discovered in other states.

A better eco-system

For the 10GW of solar projects in the tender, there will be a maximum tariff of INR2.93/kWh for 25 years.

All major raw materials, other than polysilicon, for manufacturing have to be sourced locally. There will also be stiff final and intermediate deadlines for the various project completions.

Mudit Jain, consultant at Bridge to India, said: “In all probability, developers will find it hard to use their own manufactured product for these [solar] projects. The gestation time for setting up such manufacturing facilities including land and activity will take [a] minimum of two years plus.

“We have been saying it for quite some time that for developing manufacturing, we need a better eco-system rather than the protectionist measures, but this policy overall is meant in the direction of creating an eco-system despite not providing the sufficient infrastructure from the government side.”

Jain said the 10GW of PV projects would have been tendered anyway even without the manufacturing link, so a “point to ponder” is where these manufacturers of new module capacity will sell their product once the 10GW of projects have been fulfilled.

With all the factors above in mind, nobody can doubt India’s desire for a holistic PV industry. But there is a long way to go with this tender before one can be sure the pull factors are strong enough for genuine progress. China’s current ability to produce modules at significantly lower cost than most product coming out of India will remain a key thorn in the side of the ‘Make in India’ dream.

Agro-centric mini-grids and solar trolleys could transform Indian farming

A group of private companies is pioneering a new approach to powering the agricultural industry in rural India that could significantly increase productivity of small-holder farmers, by combining mobile and stationary solar-powered mini-grids and linking them to a range of agricultural services, beginning with irrigation.

Claro Energy is at the center of the new initiative, piloting an “irrigation-as-a-service” business model in Bihar state that is already being used by dozens of farmers, according to the company’s head of Institutional Business, Sonal Adlakha. Claro, in collaboration with Smart Power India (SPI), an initiative established by The Rockefeller Foundation, is also working with private utilities at about 10 mini-grid sites, including Husk Power Systems and other SPI partner developers, and is experimenting with how irrigation can serve as an “anchor load” for existing or new mini-grids.

Many of India’s small-holder farmers grow crops on less than an acre of land, often on plots that are not connected to one another. In addition, they have traditionally rented expensive diesel pumps for their irrigation needs, reducing profitability and productivity.

Irrigation is just the start for Claro, which has installed or maintains over 8,000 systems in India. The new model is focused on powering a wide range of income-generating uses of electricity in agriculture, such as cold storage, honey processing, milk chilling, oil expelling, rice hulling, water treatment and spice grinding. By delivering reliable, stable power, rural communities can get a much needed boost for micro-enterprises, fostering socio-economic growth in the form of income generation and job creation.

Apart from integrating irrigation and other agro-processing into stationary mini-grids (which have capacity ranging from 17 to 40 kW), Claro has also pioneered a mobile irrigation service, retrofitting e-rickshaws with solar panels that can get to remote villages and provide irrigation on a pay-per-use basis.

Using ‘pay-as-you-go’ RFID cards, cash or micro-finance, the mobile solar trolley is offering affordable, on-demand irrigation without requiring capital investment. In turn, farmers save up to 50% of irrigation costs by displacing diesel, Adlakha said.

“One of the biggest roadblocks to sustainable agriculture in India, especially in the northern belt of India, is poor agriculture yield for farmers. Heavy reliance on diesel for irrigation and small farmer landholding are the primary cause for this,” says Samit Mitra, director, Demand and Innovation, Smart Power India. “This spurred Smart Power India’s Innovation team along with Claro to explore how irrigation can serve as an ‘anchor load’ for mini-grids to provide reliable irrigation to farmers at 30% less cost than diesel-based pumping.”

“It has been a rewarding experience to be able to successfully harness the power from renewable energy-based mini-grids to provide irrigation service to farmers. This has enabled them to increase their irrigation intensity, adopt multi-cropping and substantially drive their income levels. Driven by mini-grids, the irrigation-as-a-service model has the potential to change the irrigation landscape in India,” he adds.

Claro’s IoT and power electronics also allow for remote monitoring of the mini-grids and trolleys, and the company has developed a mobile app allowing farmers to schedule and pay for irrigation from their smartphones. It also provides a toll-free number for farmers for extending continued assistance in booking and using this service.

Besides the new technology and service platform, Claro is also working at the grassroots level to help farmers adopt better practices, and efficiently utilize the electricity generated from solar panels to uncover further opportunities. For example, Claro is advising farmers to incorporate a third crop to their normal rotation of two crops, during previously fallow months. In an emerging economy such as India’s that is largely comprised of rural areas, and heavily dependent on the agricultural sector, such interventions could pave the way to improved livelihoods.

According to a 2017 Bloomberg New Energy Finance report, a total capital expenditure of US$60 billion is required to replace the 20 million currently installed power and diesel irrigation pumps in India with solar. The report also said that annual consumption of diesel by 8 million diesel pumps in India each year was worth US$11 billion.

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