American businesses eye India's lucrative solar components market
K. R. Balasubramanyam November 26, 2011The United States is turning the heat on India to change the way India is building grid-connected solar plants under the Jawaharlal Nehru National Solar Mission. The central government-run mission aims to generate 20,000 MW from sunlight by 2022, up from 46 MW today. Its guidelines require photovoltaic project developers to mandatorily source cells and modules locally. Those deploying advanced solar power systems must buy at least 30 per cent from domestic manufacturers. Since most solar project developers depend on hefty subsidies - Rs 18.44 for a unit of electricity generated for projects selected last year for a 25-year period - under the mission, the bulk of procurement is being channelled to India-based manufacturers.
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Setting up a megawatt of solar capacity costs Rs 12.5 crore, of which modules alone cost about Rs 8 crore. The NTPC Vidyut Vyapar Nigam, which is overseeing the mission implementation, has so far selected projects totalling 625 MW under the mission.
At the core of the Indian policy is an ambition to make it big in solar cells and panels. The country missed the semiconductor manufacturing bus in the 1970s and 1980s with large capacity being set up in Taiwan, Japan, China and Korea. The capitalintensive nature of chip manufacturing crowded out the possibility of fresh factory lines being set up elsewhere. Indian mandarins hope the country will have a headstart in solar panel capacity globally.
Foreign solar module makers could still hope to sell to Indian developers not covered by the solar mission. For instance, states like Karnataka, Gujarat or Rajasthan are trying to evolve a reasonable mix of conventional and renewable energy. "Our own solar mission targets 200 MW by 2016, with a feed-in tariff of Rs 14.50 per unit. The developers are free to decide where they want to buy from," says S.Ramesh, Chief Engineer, Renewable Energy, Karnataka Power Corporation.
With sunlight available for a minimum of 300 days a year, India is seen the next big global solar energy market. The lobbying, then, is just beginning.