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In solar manufacturing, you need scale to survive: James Abraham, Sunborne Energy

According to reports, the solar power business has been hit badly due to government backed Chinese manufacturers who have flooded the market with cheap solar photovoltaic cells. The way out for Indian companies could be to either scale up manufacturing or focus on setting up solar power generation units instead. ETspoke to James Abraham, MD & CEO, Sunborne Energy Technologies to discuss the issue. Sunborne focuses on solar power generation rather than manufacturing. Edited excerpts:

How is the market for solar power products?

The market is bad. In the next one – two months we will get a sense of demand from Europe (mainly Italy, Germany, which are adopting solar power in a big way). Last year there was an inventory (solar cells) of six to eight months that companies were trying to get rid of.

In India 300 MW worth of projects were given out in November 2011. But for these the government said you cannot import either the cells or the modules and the industry was cushioned as these were thin film projects while Chinese makers have focused on crystalline silicon. We believe the imbalance between supply and demand will continue.

Does technology give a manufacturer an edge in solar business?

In solar, technology is widely available. You need scale to survive. Companies based in India have built solar photovoltaic manufacturing plants but the Chinese built 10 times bigger and that created the problem (globally there was a glut in solar cells and prices crashed to unviable levels in three years). There has been a 50% drop in prices due to the Chinese manufacturing.

Can a focus on setting up power plants rather than in manufacturing PV cells insulate companies from problems of the solar industry?

We had an installed capacity of 18 MW and for our needs we imported as Indian makers were expensive and could not extend credit lines – they wanted cash upfront, while in China you get 90-180 days credit lines.

Manufacturers have been hit by a double whammy as prices have crashed and solar is now Rs 8 per unit and not Rs 17 as it was earlier. In two years it will be Rs 7 per unit. To survive in this market you need scale, more localization and larger plants – none of this is happening in India at present.

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