Off-grid and distributed generation will ride on the continued attractiveness of India's solar industry, says Sujoy Ghosh, Country Head, First Solar, India. But, he says, the environment is too unpredictable to set manufacturing base here.
How do you see the business prospects in renewable energy sector in India, especially solar?
The Indian solar market remains an attractive destination for investors like First Solar, given the competitive levels of energy tariffs on utility scale power plants and the increasing energy deficit that the conventional fossil fuel segment is witnessing. Solar photovoltaic (PV) plays a major role in the mainstream energy mix of India. The Jawaharlal Nehru National Solar Mission (JNNSM) has created the initial momentum, and the states are now beginning to implement their own other programmes, which continue to build demand for solar PV. We still have some distance to cover up on getting an optimal evacuation infrastructure and stability of policies around applicability of open-access regulations, establishment of bidding modalities, etc., but the opportunity is very compelling.
Given that the global economic environment is quite challenging, how has First Solar planned its growth strategy?
Our strategy is to expand into sustainable solar markets in India and other parts of the world, where a combination of good radiation, sustained economic activity, high-energy deficit or dependence on importing fuels and providing strong drive penetration of solar into the energy mix is a natural economic rationale. To grow in these circumstances, we need to provide solar energy, which is affordable given the competitive market. Companies like ours need to focus on viable solutions such as a business model, which can mitigate investor risk by providing services with core technology, relentless focus on cost by better utilisation of assets and continuous investment in improving technology efficiency.
Your company has maintained a strong 20 per cent market share in India. Please elaborate more on this. In which segment do you have larger participation off-grid, on-grid or EPC?
Till date, we have over 365 MW of our CdTe thin film technology, which is installed and operating in the utility scale solar PV space in India. This works out to approximately 20 per cent of the share on installed base out of the current capacity.
Our primary focus is on utility scale grid-connected solar PV power plants, but going forward, we will actively evaluate projects in the off-grid and distributed generation space. These represent an excellent opportunity to demonstrate how solar energy is a sustainable alternate to currently used fuels like kerosene or diesel.
Do you have any plans to set up a manufacturing unit in India?
Based on industry analysis, the current market size of India is approximately 1 GW a year and is projected to grow to approximately 2 GW a year by 2016. Many global manufacturers are having a capacity of over 1.5 GW, but are running under their capacity. So it will be a challenge for us to add manufacturing capacity at new locations till the market demand becomes predictable.
Given its excellent solar resource and energy constraints, India has the potential to reach a market size of significant scale, as the cost of PV electricity becomes more affordable and the cost of fossil fuel based power continues to escalate due to fuel constraints. However, we have just begun the journey, and to create a market of significant scale, sustained and consistent policies and enforcement of RPO, a creation of T&D infrastructure and overall implementation of reforms in distribution sector needs to be demonstrated.
We are optimistic and will certainly continue to evaluate the economic rationale of adding incremental manufacturing capacity.
Industry people estimate that grid parity will be achieved in India by 2017. Do you believe this is achievable?
Grid parity is a very loosely defined term. Averaging the price of power on the grid from all sources at all given times to establish an imaginary price number is probably not the best way to look at it. Most of the utilities procure power at varying rates depending on fuel source, time of day and type of contracts (short-term or long-term procurement). Today, with the levelised price of energy that solar PV developers have to bid in India, we can establish that solar PV has achieved parity on the grid with liquid fuel and natural gas powered plants. Moreover, solar tariffs are also very close to peak power tariffs in certain regions. With the cost projections from the solar PV industry, it would be reasonable to envisage that solar power pricing will be at parity with wind and potentially with imported coal based supercritical coal power over the next 3-4 years.