Indian Solar Industry – Cautiously Optimistic


Highlights from SOLARCON India 2010

Mercom Communications India, Pvt. Ltd., a subsidiary of Mercom Capital Group, a clean energy communications and consulting firm, attended the SOLARCON India 2010 conference held in Hyderabad last week. Having also attended 2009 SOLARCON, the difference in the mood was evident, with a rush of participant interest and enthusiasm. In 2009, the participants were unsure of what the future of the sector had in store for them and relied on speculation about the future of the industry, whereas this year the conversation centered on achieving targets set by the ambitious Jawaharlal Nehru National Solar Mission (JNNSM).

The Indian Solar industry is trying to figure out the finer points in the recently released guidelines for selection of new grid-connected solar power projects. Private investors were looking for the right vertical in which to invest, be it module manufacturing, developing solar farms or aligning with companies which have already found its place in the sector. Foreign companies appear to be evaluating their positions as the JNNSM mandates the purchase of crystalline silicon modules manufactured in India for FY 2010-11 and both cells and modules in India.

There was also concern among some suppliers regarding the pricing that they are able to obtain in the India market. Suppliers see the margins in India to be wafer thin when compared to the US or European markets, making scale and potential size of the Indian solar market vital before large investment decisions are made. Among EPCs, the most common concern was new market entrants with a lack of experience, which could result in poorly executed projects, which in turn will slow down industry progress all together and may ruin the reputation of legitimate EPCs.

The biggest cause of concern for all industry stakeholders has been the scale of the projects. Most of the projects announced are of 5-10 MW scale and this is not attractive enough for large developers, foreign companies, EPCs or module suppliers as it will not result in optimal project economics.

On the state level, one observer commented that although many states have announced aggressive plans for solar installation, Karnataka is the only state which has successfully commissioned two projects of 3 MW each.

On the whole the mood at the conference was upbeat with a dose of cautious optimism.

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