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India has a lot of potential in distributed solar generation

According to reports,in a freewheeling interview with PWI, Mr Sujoy Ghosh, Country Head (India), First Solar, speaks about the company’s legacy, its leadership position in the CdTe technology and the business plans for India

What has been First Solar’s heritage? How is this heritage going to help the company in its India operations?

Founded in 1999, First Solar has become the world’s premier provider of fully integrated solar solutions, creating value-driven renewable energy projects that represent the leading edge of utility-scale solar technology and innovation.

The work on cadmium telluride (CdTe) solar cells was happening way back in the mid-80s, so the company in a sort was in operations at that time also – I would say the concept was going on from mid 80s. First Solar’s original founders probably started their commercial production of grid solar panels on CdTe in the late-90s, when Truenorth which is a VC firm picked it, backed it and formed First Solar. We listed on NASDAQ in 2006. We first set up a manufacturing unit in the US, which we later expanded to set up our facilities in Germany. Our latest manufacturing operations is in Malaysia. Today, we are the world’s biggest solar panel manufacturer in thin film. Our initial focus was to sell these panels in European market around 2002. Somewhere in 2009-10, we saw the opening up of the US market and First Solar went on to build a value chain in the region by making few acquisitions. First, we made acquisition of companies like Opti Solar, which had a development pipeline. Then we acquired Nextlight. With these two acquisitions, we acquired basically a pipeline of development assets. We acquired EPC projects for large grid connected solar. In this phase, we actually transformed from a company manufacturing modules to somebody having end-to-end PV solutions – developing, constructing, operating, maintaining and financing the assets.

The game plan we adopted for the US market was – first to build development pipelines, after which we went out for sale of power. Then utilities came out with solicitations. Then we had PPAs, we had sites with permits on them. Then we started taking guarantees and constructing the plants. With all these three boxes in check, we got into equity investments because we are the one who were really taking the risk of developing the project.

In the US, we have a culture of investor -driven entities that would own assets and earn revenue from the sale of power. So, we had the power sale agreement tied up with the utilities. We created a nice business model in the US which we are executing currently, which has given us predictability of demand. This is very important from manufacturing company’s point of view. This model has given us cost advantage today – as to be a lowest cost panel producer, you need to have efficient and continuous manufacturing facilities which are running on full capacity. That’s why we get scale and the economy of scale on our cost. Especially in CdTE, you need to have continuous demand.

In the US, we have a pipeline of 3 GW which we need to build by next year. Agua Caliente Solar Project is the largest project in desert south west in near Arizona. We have Sarnia in Canada which is single largest PV project in the world that is superseded by Agua Caliente. We have 550 MW project for GEFS.

Now we want to replicate the same model in other markets. Europe market has slowed down, while Asian markets have opened up.

Do you see an antipathy towards green power in Europe as it is embattling with problems in economic areas?

Absolutely. So, actually we really want to go into these markets and create sustainable solutions for these markets where solar for natural economic reasons is an acceptable form of grid power generation. We are targeting five geographies – Australia, South Africa, India, Saudi Arabia and Chile. In these five countries, India has by far the most developed eco-system for solar development. Second comes Australia on our priority markets.

Can you please elaborate a little on how India figures in these priority markets?

All these five countries have good solar radiations. Chile has the highest. Other common factor is these countries have high penetration of liquid fuel. Australia has a mature mining industry. So is the case with Chile and other countries. India has 15 GW of liquid fuel today. We have energy demand growing at 10% and deficit growing at a bit faster than the demand growth. So, solar could be an answer for the contemporary energy needs of the country. These could be because of security reasons or time-of-day or pure access to power, which is very important for people who can’t have access to the grid.

How do you see the distributed generation solar market of India?

Yes, India has a lot of potential in distributed solar generation. What we are trying to do is to take our experience of solar development, project construction and project finance. We have a technology with proven reliability and improve yield in hot and diffused sunlight conditions. Our technology, all these efficiencies are rated and tested at 25 degree module temperature. In India, ambient temperature is 40 degree. If you apply the coefficient of poly-crystalline modules, which degrades a 4-5 points per degree rise in temperature and ours degrades at 0.25. Typically, what we have installed in these hot deserts, it would produce 10 per cent more heat in terms of units. Our efficiency on paper is lower than poly-crystalline, but as co-efficient matters, our performance goes up. We do believe we have a technology suited for high ambient climatic conditions like India. And, it is a proven fact that thin film performs better than poly-crystalline in diffused solar irradiation. It is also appropriate for Europe as Europe too has got lot of diffused sunlight.

Do you think, will you be able to replicate the same model in India? As a developer, wouldn’t you also need the right funding partners?

Development of a solar project through EPC route is a very localized affair. Even before funding, you need to have development capability of land assets – figuring out the whole permit process and the execution of that process. And, when you put in money to create all that, in EPC – construction is a very local activity, procurement could be local or global. In EPC business, you have to be local and you have to be on scale, only then you can start hitting cost points. In this business you create certain standards in your design, you can’t go customized. India has a very large mature EPC market.

Do you not see a flux of EPC players in the Indian market – serious and non-serious EPC players contending against each other? How do you evaluate the right EPC player?

We definitely look at track record. We look at their core values as a company – the way they do business, who their partners are, how much importance they give to project management. And project planning. Some of the concepts are very dear to us. That’s how we choose our partners. We have a very through process of due diligence for choosing the right partner.

In India, we will have front-end partners for doing development. We will have partners with whom we will do the complete execution of the EPC of the plant, which gives us the ability to stand behind the asset and provide the guarantees.

As far as funding is concerned, when we do these projects, the capital we require for investment in the development phase comes from our internal accruals and balances. This development capital either comes from First Solar or a combination of First Solar and our partners. The big money comes in when you start building the land/project. Once you create infrastructure, then you bag a PPA and then you have to build a plant. If you have say, Rs 9 crore as the total cost of your plant, 1 crore would be a cost of development of infrastructure, 8 crore would be the EPC cost. Finding a funding for 1 crore won’t be a challenge, that even in the US, we do ourselves. For raising 8 crore, you need an equity partner and a PPA, then you will find a lender. We are not an equity player here. The biggest risk is predicting the energy availability.

We are a technology company. We know our technology and can guarantee the performance of our panels. We have sufficient experience in land selection. We have bankable reports prepared by our experts. We have raised 9 billion dollars of project finance in US alone. We have 6,000 MW of solar panels installed globally. We are hopeful that we will succeed by adopting a similar route in India.

One comment

  1. Good out lay and fund raising which is very specific in a great borrowing nation like USA. Even Indians wants to borrow, do we get ?? Needs an Apple to Apple Comparison vis a vis creation of large number of jobs through decentralised generation which will be very good for India………. only and a Major issue is to address the Hazardous Cadmium deployment in panels and Europe has said no to CADMIUM. How First solar wants to convince our Environment authorities, highly educated INDIANs and how media is aware of such big issues / challenges of hazardous Cadmium vis-a-vis Nuclear fuel hazard needs an honest answer. India is nascent and we should protect the health of our future generation with the real CLEAN ENERGY. Let us be clean on this aspect while promoting clean technology…..

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