India's $100 bln solar push draws foreign firms as locals take backseat

Indosolar

02/07/2015 08:05

* India wants 33-fold rise in solar output, new jobs 
    * SunEdison, Trina to manufacture panels in India 
    * Local manufacturers struggle to compete 
 
    By Tommy Wilkes and Aman Shah 
    NEW DELHI/MUMBAI, July 2 (Reuters) - India's $100 billion 
push into solar energy over the next decade will be driven by 
foreign players as uncompetitive local manufacturers fall by the 
wayside, no longer protected by government restrictions on the 
sector.  
    The money pouring into India's solar industry is likely to 
be soaked up by foreign-organised projects such as one run by 
China's Trina Solar  TSL.N  - not the country's own solar panel 
manufacturers.  
    Last week, Softbank  9984.T  became the latest foreign 
player to enter India's solar market, leading an investment of 
up to $20 billion. The Japanese firm said it would consider 
making solar panels locally, but with Taiwan's Foxconn  2354.TW  
rather than a local manufacturer.  ID:nL8N0Z828J  
    Many Indian solar panel producers have benefited over the 
past six months from a surge in demand for panels not yet 
fulfilled by foreign companies. But their small scale and 
outdated technology will quickly make itself felt when the 
global players arrive. 
    "The smaller manufacturers of India, especially the cell 
manufacturers, will be adversely hit because they are unable to 
compete both on technology and even on price structures," said 
Jasmeet Khurana at solar consultancy Bridge To India.  
    India's solar panel makers can no longer turn to the Indian 
government for help. The government is more concerned about 
creating jobs quickly and ensuring plentiful power supply in a 
country known for its many blackouts.  
    India, in contrast to Chinese and German efforts to protect 
local producers, has scrapped most restrictions on where 
equipment that turns sunshine into energy is bought. Last year, 
it dropped an anti-dumping duty on panel import.  
    Foreign players making panels in India are expected to 
compete with local manufacturers to fulfil so-called domestic 
content requirements for government projects.  
    Trina  TSL.N  has unveiled plans for a $500 million plant 
and U.S.-based SunEdison  SUNE.N  is investing up to $4 billion 
in a manufacturing facility. Both are tying up with Indian power 
firms to build the plants.   
     
    SOLAR TARGETS 
    India has said it expects peak power demand to double over 
the next five years from around 140,000 megawatts today. To help 
meet that demand, 100,000 MW of new capacity is to come from 
solar panels, and of that it wants at least 8,000 MW to come 
from locally-made cells.  
    Foreign players manufacturing in India will probably win the 
bulk of those orders. 
    Indian rivals like Indosolar  INDL.NS  and Moser Baer 
 MOSR.NS  produce panels, but they cost 8 to 10 percent more 
than foreign producers, Khurana said. 
    It is not yet clear which foreign firms will emerge as the 
winners, with most of the facilities years away from being built 
and the big tenders for huge solar parks touted by the 
government still to be awarded. 
    But those who can quickly build scale will be the most able 
to compete on cost.  
    "The lowest cost in manufacturing will only come from scale 
and integrated facilities," said Sujoy Ghosh, India Country Head 
at U.S.-based First Solar  FSLR.O . 
    First Solar is to build 5,000 MW of solar power before 2020, 
but will rely on imported panels for now because it is cheaper 
to buy component parts internationally where they are more 
readily available.      
    As for some of India's small panel makers, they are looking 
to complement the efforts of foreign players instead of trying 
to derail them.  
    Maharishi Solar, a small manufacturer based in Delhi, is 
looking to tie up with a foreign company, the company's head 
Ajay Prakash Shrivastava told Reuters. 
    It stopped producing solar panels a few years back as it 
could not compete with foreign manufacturers, primarily Chinese. 
Shrivastava said import panels are as much as 45 percent cheaper 
thanks to subsidies in their home countries and lower borrowing 
costs.  
    "The Indian manufacturers do have a disadvantage," he said. 
"We are trying to find a partner who can bring in the latest 
technology." 
 
 (Editing by Ryan Woo) 
 ((thomas.wilkes@thomsonreuters.com; +91 114 178 1030; Reuters 
Messaging: thomas.wilkes.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA SOLAR/