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PV Market India

WEBINAR "PV MARKET INDIA"

You were not able to attend our webinar on "PV Market India" or you want to watch it again? Feel free to do so:
Watch now!

Date

October 11, 2012

Time

2:00pm CET (Central European Time)
8:00am EST (Eastern Standard Time)
5:30pm IST (Indian Standard Time)

Speakers

 
  • Dr. Tobias Engelmeier (Presenter)
  • Mr. David Bregazzi (Moderator)
 

Presentation Slides

Here you can download the slides of Dr. Tobias Engelmeier:

Download Presentation Slides (PDF 858 KB)


If you are also interested in receiving the slides of our last webinar on electricity storage, please send an email with your contact data to:

webinar(at)solarpromotion.com

FOLLOW-UP INTERVIEW

Unfortunately, we were not able to get through all the questions being asked during our webinar with Dr. Tobias Engelmeier. However, he was so kind to answer further questions:


What are the main challenges of solar manufacturers in India?


Indian manufacturers face challenges on two levels – the global and the national. On the global level, have the same trouble that everyone in the industry has: Great oversupply and, as a result, crippling prices. On the national level, Indian manufacturers have three challenges: price, (perceived) quality and innovation. They are not large enough (50-200MW) to compete on scale with Taiwanese or Chinese competitors. They are also not vertically integrated and thus not able to shift margins between different sections of the value chain. In the recent blog post “Status of PV Manufacturing in India”) we explain this further. On quality, they are often better than their reputation and many Chinese competitors. However, their branding is not strong. Innovation – making modules that suit India-like conditions (dust, humidity, low-tech construction, little water for cleaning, etc.) could be an asset, but at the moment there is almost no innovation happening. Like elsewhere, we will see a strong consolidation from the 20-odd manufacturers to two to five (if that). Hopes are currently placed in protective government measures. We discuss that in more detail in our India Solar Compass, which can be downloaded for free.


How does the product distribution work in rural areas?


There is no single solution for product distribution in rural areas. India consists of very diverse states and regions. The idiosyncrasies become very important when dealing directly with end customers and especially rural ones. There are hardly any established distribution channels (such as e.g. rural supermarkets). I would think, we are currently in the “exploration” phase with respect to rural markets. There are many large and small companies that work here. They have in many cases moved beyond pilots and are beginning to scale. However, they still only reach a small segment of the rural population. And then, there is the payment question. Rural households have a – in pockets surprisingly high, but on average very low – disposable income. For this reason a number of sales channels are linked to microfinance.


What makes solar power development more sustainable and competitive compared to wind energy?


Wind and solar bother have an important place in the Indian energy landscape. Wind power is, of course, cheaper per kWh than solar power by a factor of two. Wind also often comes in big ticket sizes (10-100MW plants) and can draw on 20 years of experience in India and the execution capabilities of large Indian and international companies. That makes it much more bankable. Solar is the newcomer and rising fast. It will be the preferred choice wherever the wind resource is insufficient and wherever smaller, de-central solutions are needed (2MW or less). Solar also has two important long-term advantages: the resource is more abundantly available in India and its generation can be better planned than wind, thus reducing the grid challenges. In the past year, the cost of solar PV has come down so rapidly that it shook up many energy calculations. Much will depend on whether that will continue. At the same time, India has not yet tapped into off-shore wind and is just starting to explore the options. Please have a look at the upcoming “Renewable Energy in India: An Overview” report written for the Indo-German Energy Forum and available on our website for further information.


What do you think about grid instability? Don't you think that, until this is cleared, is not that easy to develop on-grid PV? Don't you think off-grid PV is likely more promising at the moment?


I agree. Grid instability works in two ways: It will make large, unscheduled power generation feeding into the grid difficult especially in areas with much renewable power generation in bundled (Gujarat and Rajasthan for solar, Tamil Nadu for wind). We already see first local, significant grid bottlenecks. At the same time, the instability of the grid (remember the July 2012 power cut) makes power consumers very keen to increase their supply security. At the moment, they do so with diesel gen-sets. This is very expensive. In future, renewables (especially PV) will likely play a more important role, replacing diesel and also grid power. “Off-grid” is a slightly more complex market. There are, broadly speaking, two types of customers: Firstly, economically strong customers that tend to have infrequent power demand (e.g. food processing) or such significant power demand that they build large fossil power plants (e.g. aluminium, steel). Secondly, there are the rural off-grid households. See answer above for details. If you want to know more, have a look at our blog post on “Making unsubsidized PV work in India” on our website.


What is the potential for Concentrating Solar Power (CSP) in India?


There was great initial enthusiasm at the beginning of the National Solar Mission, when India auctioned 500MW. Since then, the road has been rocky: site selection was often less than ideal, the learning curve in construction has been high, indigenization of parts has been slow, etc. Since the projects involve the who-is-who of Indian industry (Lanco, Reliance…), they will likely be built. Whether the projects will be profitable is doubtful. As elsewhere, CSP has felt the competition from PV due to falling PV module costs. While the CSP share under the NSM Phase I was as high as 50%, it will be significantly lower for phase II. Nevertheless, CSP continues to be valued as a technology for the potential for indigenization and the storage options. The MNRE has recently initiated a number of large pilots to test different applications of CSP technology (low/high heat, hybridization, etc.). Please read the article on the status of CSP in India we have written for the October 2012 issue of Sun & Wind Energy.


Has the REC scheme taken off? If so, which are the states where this is attractive? Are the developers able to achieve the financial closure for REC projects?


The REC market has a solar and a non-solar component. The non-solar component has taken-off and significant volumes are traded at stable prices. The solar REC market is still at the very beginning. The Central Electricity Regulatory Commission (CERC) is very serious about getting the solar REC market to move. Much will depend on the penalization of Renewable Purchase Obligations (the demand side). While private utilities and captive consumers have been penalized, the large government-run utilities (around 80% of the market) have not. Enforcement will need to happen at the state level. Everyone is waiting and watching. To learn more about the REC market, please visit our blog or download our free Solar Decision Brief on the REC market.

Summary

A 12.8 GW opportunity till 2016 - the Indian solar market is a key future growth market for PV


India’s installed capacity, 1.03 GW as of September 2012, is still negligible as compared to more mature markets such as Germany. However, the first two quarters of 2012 alone have seen additions of 657.22 MW to Indian PV installed capacity, growth showing the deepening of the market. The market is currently mostly driven by FiTs. By introducing the solar Renewable Purchase Obligations (RPOs) and the solar Renewable Energy Certificate (REC) mechanism, the government has created a further market instrument to advance solar power in India.

The year will see some movement and interest by market players to explore new business models/segments within the solar industry in India. Further, the falling cost of solar will lead to new projects in the captive commercial space as solar tariffs become competitive with commercial and industrial grid prices in various parts of the country.

The Intersolar Webinar is intended to provide an overview of the Indian solar market and it's developments.

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