According to reports, the recent takeover of the well-known German solar cell manufacturer, Q-Cells, by a less-known South Korean company, Hanwha, is symbolic of the trend that has been in evidence in the last couple of years — solar manufacturing shifting from the West to Asia. This trend has essentially been driven by Chinese companies and has had a disruptive effect on the market, causing around 40 companies in the US and Europe to shut shop.
Q-Cells is the latest. Other bankruptcies include Solyndra, Abound Solar, AQT Solar, Evergreen Solar, Spectrawatt, Energy Conversion Devices, Odersun and, more lately, Scheuco Solar. These companies could not face the competition from Chinese companies such as Suntech, Yingli and Trina. True, a number of Chinese companies have also closed down but, clearly, the Chinese are dominating manufacture.
Now, a similar shift in the other segment of the solar industry, namely, solar power generation, is slowly emerging.
Until now, the West (mainly, Germany and the US) provided the market. Germany has today an installed solar power capacity of 29,000 MW, an enviable number. It is expected to add 7,300 MW this year. The US is projected to add 3,500 MW in 2012. According to Solar Energy Industries Association, the US has 25,000 MW of solar projects under development.
Compared with this, the scale of Asian projects is small. But you see a sudden briskness in China and Japan.
China, always a module manufacturer, is now also becoming a solar power generator — consciously — to provide a domestic market to Chinese manufacturers whose exports have been hit by the recession in Europe and by the protectionist stance taken by the US. The Chinese Government has responded by raising its long-term installation target from 20 GW to 50 GW by 2020. IMS Research forecasts that 10,000 MW will be installed in China in the next two years. China’s GCL-Poly has begun construction of a 340 MW project in Dantong, which will be among the largest single-unit solar farms in the world.
Japan, after the Fukushima disaster, has begun looking at solar as an alternative. Japan, like China, had only manufacturing — companies like Sharp, Solar Frontier and Panasonic are known names in the industry — but putting up solar projects is new in the country.
Till 2011, Japan had installed solar capacity of 1,300 MW. But the country is expected to end 2012 with 4,700 MW. A major driver is the 53-cent per unit ‘‘feed in tariff’’ (FiT) announced by the Japanese government. It is expected that Japanese companies will invest $9.6 billion in solar projects.
Where is India? India, which got into solar power generation much earlier, has today a little over 1,000 MW of installed capacity. Around 650 MW of this came under Gujarat’s Government’s FiT-based programme.
The 22,000 MW Jawaharlal Nehru National Solar Mission, announced three years back, attracted global attention. So far, the total capacity of the projects completed under the Mission works out to 257 MW. Another 400 MW of additional PV capacity and 500 MW of solar thermal are expected by the middle of next year. If all these projects come up (and there are certainly doubts over the solar thermal projects), India will have a total installed capacity of 2,000 MW.
Clearly, India has ceded the leadership position in Asia. India had lost out to China in solar cell manufacturing, but there was a good opportunity to seize leadership in generation. Even a late-starter like Japan has taken a lead over India.
The reason is simply that we are not able to move fast. For instance, the Phase-II of the National Solar Mission was to have been announced in July. But till date, nothing is known. State governments, for their part, have been issuing statements of intent, but there has been very little movement on the ground.
Why? The biggest problem today is, who will pay the ‘extra’ that solar power still needs. The Government does not have money. In the first phase of the Solar Mission, they got around the problem by bundling solar power with conventional power that had not already been committed to consumers under power purchase agreements, so that the distribution company that bought solar power had to pay only negligibly more. But this option is almost exhausted now.
That leaves projects to the so-called ‘RPO market’. By imposing a ‘renewable purchase obligation’ on specified ‘obligated entities’, a market for renewable power (including a mandated slice for solar) was sought to be created. But the problem is, the biggest of the ‘obligated entities’ are the state-owned electricity distribution companies, most of which are all but bankrupt. They have not been meeting their obligation, nor is there evidence of the various electricity regulatory commissions enforcing the obligation — perhaps in consideration of the poor financial health of the distribution companies.
Thus, the Indian solar power development market has been pushed into a little niche —the diesel replacement market, the rooftops, mini grids, and the very few projects that are expected to come up to cater to private companies that either buy power because of long-term visibility of costs and stability of supply or because they are also ‘obligated entities’.
The problem is not insurmountable. If the solar industry is to be developed with an attractive FiT, as in Japan, then the issue distils to one of finding the money for it. In today’s world of enlightened green-bias, it is not so difficult to find the means for paying the higher FiT. The National Clean Energy Fund is quite rich and it ought not be difficult to get a slice of it for solar. Nor is it undoable to levy, say, a 5-paise cess per unit of electricity supplied to households, industries and commercial establishments.
In conference after conference, we boast of the unique position India has on the globe, with super solar irradiance levels round the year. For instance, at Solarcon 2012 last week, one of the topics was reaching 100,000 MW by 2030. The session ended with complete consensus that India would reach that capacity, perhaps even earlier than 2030 — in fact, a speaker said that India was “destined” to go solar. A happy thought, just before the lunch break.