Prime Minister Dr Manmohan Singh's recent announcement of a credible energy plan for India goes way beyond the hullabaloo Indo–US nuclear deal. By far the most welcome component of the six-point plan is the declaration to develop India's capacity to tap the power of the sun in order to increase sustainable sources of energy. The PM memorably said: 'In this strategy, the sun occupies centre stage, as it should, being literally the original source of all energy. We will pool all our scientific, technical and managerial talents with financial sources to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people and change the face of India.' To help achieve this, the Indian government has launched a National Mission on Solar Energy.
According to US marketing company, Development Counsellors International (DCI), India is the second best country after China for business investment. DCI cites India's labour, including its supply, skills level and cost, as the main reason for this positive perception.
In March 2007 the Indian government announced a semiconductor policy under its Special Incentive Package Scheme (SIPS). According to this policy, the government or its agencies will provide 20% of the capital expenditure during the first 10 years for semiconductor industries, including manufacturing activities related to solar PV technology located in Special Economic Zones (SEZ) and 25% for industries not located in an SEZ. However, non-SEZ units would be exempt from countervailing duty (CVD) — an additional customs duty equal to the excise duty charged on similar domestic products. Table 1, below, summarizes the incentives available.
The policy has attracted a tremendous response, so far receiving nine proposals pertaining to solar PV related manufacturing worth US$18 billion. Table 2, below, lists companies that have applied under SIPS and Figure 1, overleaf, shows their relative investments in US dollars.
FabCity, Hyderabad
Inspired by the semiconductor policy, the state government of Andhra Pradesh has set up 'FabCity' in the capital, Hyderabad, at an estimated cost of Rs135 billion (US$3.18 billion). Spread over 1200 acres (486 ha), FabCity will house semiconductor manufacturing companies working to meet the needs of the electronic hardware sector and fabrication units for solar PV.
A company called FabCity SPV (India) Private Limited has been set up to implement the project. The Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the government's industrial development agency, will have a 89% stake in this company. SemIndia Inc. will participate in the development of FabCity as an anchor industry with an 11% stake.
To date, FabCity has seen nearly a dozen investments from the solar PV industry worth over $7 billion and, according to APIIC, another 40 applicants have submitted proposals.
FabCity is the largest investment ever made in India in the technology sector. It marks the first step towards India becoming a $33.6 billion semiconductor market employing some 3.6 million people by the year 2015 as projected by consultants Frost & Sullivan. Table 3 gives an overview of the investments made in FabCity.
Another southern Indian city and 'the silicon valley of India', Bengaluru will also witness intense activity in solar PV manufacturing following a recent announcement on semiconductor policy by the government of the state, Karnataka. The state is examining the various semiconductor policies announced so far and wants to draft a policy which overcomes the ambiguities in some other state policies.
Individual company news
Along with government-backed developments a number of individual companies are also making efforts to develop PV capacities in India. Reliance Industries leads the field with the highest volume of investment, although a company spokesman explained its plans are still being finalized. Reliance has, however, submitted an application for a 5 MW grid-connected solar PV project in West Bengal.
India's Moser Baer Photovoltaic Ltd (MBPVL) currently has an annual manufacturing capacity of 80 MW for crystalline cells, 50 MW of thin-film modules and 10 MW of concentrator modules. It is aiming for more than 600 MW of thin-film single and tandem junction and 500 MW of crystalline and concentrator modules by 2010. MBPVL will invest Rs 200 billion ($5 million) in a PV and nanotechnology factory in Tamil Nadu. When operational, it is expected to generate annual sales approaching $100 million largely through exports.
Meanwhile, US-based Signet Solar has signed a memorandum of understanding with the government of Tamil Nadu to manufacture 300 MW of thin-film PV modules in a project worth an estimated $500 million. The plant will be located in the Sriperumbudur SEZ. It will initially export most of its production, but will serve the Indian market as domestic demand picks up. The first shipments from the plant are expected in 2010. Signet Solar plans to build three plants (1 GW) in India over the next 10 years at multiple locations.
Solar Semiconductor has an order book of $1.5–2 billion to be delivered in the next 2–3 years. It has orders to supply PV modules to leading players in the global solar market including Q Cells AG, IBC Solar and ersol Solar Energy of Germany and Motech Industries of Taiwan. Solar Semiconductor's supply contract with Q-Cells is worth $170 million, for example. The company already has two operating facilities with an installed capacity of 60–70 MW on the outskirts of Hyderabad. According to its director, S. Prasad, it will have the lead in FabCity as the first company to commence manufacturing by the third quarter of 2008. This will be its third unit. 'By end of 2008, we will have a capacity of 210–220 MW', said Prasad.
Mola Solaire Produktions GmbH, a manufacturer of multi-crystalline and mono-crystalline solar wafers, has signed a five-year contract to supply 125 MW of multi-crystalline solar wafers to XL Telecom & Energy Ltd between 2008 and 2013.
Sharp, the global leader in solar PV technology, recently made a foray into solar energy in India with its Sharp Business Systems India Ltd subsidiary. According to a company spokesman, it will focus its activities on supplying large-scale grid-connected systems and targets 8 MW installed by 2010.
Centrotherm Photovoltaics AG of Germany plans to set up a 5000 tonne capacity (expandable to 10,000 tonnes) polysilicon processing factory at Haldia in the state of West Bengal in eastern India at an investment of Rs.400 billion ($3.18 billion). This is a joint venture with SREI Infrastructure Finance Ltd, Environ Energy Deck Services and US-based Perseus. The factory is likely to be the first such plant in India and the state government has already allotted a quarter of the land needed for the 790 acres (320 ha) project. The factory will produce both electronic and solar grade silicon and will be equipped with a 100 MW captive power plant. SREI and Environ Energy together will have a 50% stake in the project, while Centrotherm is likely to pick up a 15% stake in the venture. In addition, the IBM Thomas J Watson Research Centre (the headquarters for IBM Research in the country) has also expressed a desire to participate in solar energy and silicon research in West Bengal.
It is not just foreign interests that are exploring the possibility of expanding solar PV capacities in India. Tata BP Solar, a joint venture between the giant Tata Group of India and BP Solar of the UK (and one of the oldest semiconductor manufacturers in India) is in the advanced stages of a $100 million investment in a 128 MW solar cell manufacturing plant close to its existing facility near Bangalore, which will eventually be scaled up to 180 MW. Tata BP Solar recently announced that it has signed an agreement with Calyon Bank (Credit Agricole CIB) and BNP Paribas to raise $78 million to fund further development. Tata BP Solar currently has a module manufacturing capacity of 85 MW.
Other national initiatives
Most urban and industrial centres in India are experiencing peak electricity shortages of over 15%. Drawing on similar efforts being implemented in London, Tokyo, New York and Adelaide, the government of India has come up with a plan to develop 60 cities as 'solar cities.' The proposal envisages a minimum 10% reduction in total demand of conventional energy after five years in each of these cities through efficiency and renewable energy measures. Solar energy will have a prominent role to play since India, as a tropical country, is blessed with abundant resources. If these solar cities go ahead, India will become a role model for solar cities worldwide.
To keep pace with the global trend of exercising feed-in-tariff solar power, the Ministry of New and Renewable Energy has produced a set of initiatives aimed at bolstering solar generation. Solar PV projects up to a maximum capacity of 50 MW are to be supported by financial incentives of a maximum of Rs 12/kWh (28 US cents) for PV projects and Rs 10/kWh (24 US cents) for solar thermal power projects for a period of 10 years. With investors rushing to set up solar power projects and adding up to 2500 MW of capacity, the Ministry has asked the Planning Commission and the Indian Cabinet to expand the 11th Plan solar power programme beyond 50 MW.
Gaining momentum in Solar development
The solar energy industry in India has undoubtedly gained momentum and should be able to keep pace with the government's aim of achieving 10% of the country's total electricity requirements by 2012. India already possesses a balanced eco-system for the PV industry, a high-tech manufacturing base and skilled labour sufficient to make it a booming industry. Annual PV production has already reached over 300 MW, with about 85% being exported.
India receives solar energy equivalent to over five trillion MWh a year, far more than its total energy consumption, and should therefore benefit from economies of scale that are unavailable to smaller countries. However, it is necessary to address the availability and management of a strong infrastructure and the need to consider a long-term solar energy policy (20–25 years).
Rajesh Bhat, director and country manager for Sun Technics, says that: 'The government of India should consider feed-in-tariff schemes in excess of 1000 MW per year against the present 50 MW, since the need of the hour is to support PV programmes which are cost-prohibitive in comparison to other renewable technologies. This would further encourage local companies to consider investing in solar PV projects and can help in their economics. India currently has to depend largely on imports of raw materials and the rising currency rates make manufacturing a burden.'
With government support for PV growing, ample solar resources and both the labour and the market potential to exploit these resources India is set to become a major force in the future PV world.
Jaideep Malaviya is a consultant and freelance journalist based in India.
e-mail: rew@pennwell.com
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