On the Road Reading, April 24: The US and China’s Thin-Film PV Firms’ Impact on India’s Solar Industry; India solar manufacturers face “bankruptcy, loan restructuring and pleas to the government.”

On the Road Reading, April 24: The US and China’s Thin-Film PV Firms’ Impact on India’s Solar Industry; India solar manufacturers face “bankruptcy, loan restructuring and pleas to the government.”

Herman K. Trabish, September 7, 2012 (Greentech Media)

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There is new information illuminating earlier charges reported by GTM that the U.S. is using “its pervert advantage,” according to an India think tank, and “ruining the Indian domestic solar photovoltaic (PV) manufacturing industry.”

According to the Center for Science and Environment (CSE) Renewable Energy head Kushal Yadav, one production line at Indosolar, the country’s biggest polysilicon-based photovoltaic (PV) cell manufacturer, stopped making cells in January 2011.

The other was shut down in September. Currently, 80 percent of India’s solar manufacturing capacity is shuttered.

This is despite the fact that a power-hungry India is, Yadav and co-author Jonas Hamberg noted, "in the midst of implementing its most ambitious and arguably the world’s quickestsolar energy mission.” India’s Jawaharlal Nehru National Solar Mission (JNNSM) aims to build 22,000 megawatts of installed solar generation capacity by 2022. It kick-started the nation’s solar manufacturing industry in 2010. Today, India’s 50 module makers have a 2,000-megawatt manufacturing capacity and its nineteen cell makers have a 900-megawatt capability, according to Ministry of New and Renewable Energy (MNRE) statistics reported by Yadav.

“It should have been a heyday for Indian manufacturers,” Indosolar founder Rahul Gupta told Yadav. “Instead, there is bankruptcy, loan restructuring and pleas to the government for support against international competition.”

Part of India’s problem is global solar panel oversupply, which some reports put at twice global demand. But another factor has created a loophole in the JNNSM. In its first phase, India’s solar mission required silicon-based PV modules to be sourced in India. In the second phase, the requirement was extended to both modules and cells.

But MNRE did not institute a domestic sourcing requirement for thin-film solar modules,because Moser Baer was India’s only thin-film module producer.

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Thin-film solar can cost less but is less efficient. Yet nearly 60 percent of India’s projects have chosen thin film, while it has been the choice for only 14 percent of projects worldwide.

Developers have found they can get very low-cost thin-film modules with proven reliability from China and the U.S. and very low interest loans from the U.S., neither of which could be matched in India.

“Anywhere in the world, the production cost of solar cells and modules stands between $0.95 cents and $1.00 per watt-peak,” Yadav asserted. “But foreign firms, mostly from the U.S. and China, sell the cells and modules in India between $0.65 and $0.80 per watt-peak.”

Yadav reported MEMC, Suntech Power and CSun modules from the U.S. and China were used at the 214-megawatt Charanka Solar Park in Gujarat. The Moser Baer plants, he added, use LDK, Trina and other Chinese materials, and the 40-megawatt Reliance Power project in Rajasthan chose U.S.-based First Solar's modules.

At Indosolar, Maharishi Solar, Tata BP and other India plants, inactivity and layoffs followed and India’s solar manufacturing industry, according to Yadav, “is on the verge of collapse.”

Developers are importing, Yadav reported, for different reasons. China solar makers are allegedly selling below cost in India, as they are alleged to be doing in markets elsewhere around the world.

India’s developers are choosing First Solar and other U.S. companies, Yadav charged, because the U.S. Export-Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC), as part of a $30 billion Fast Start Financing program to stimulate U.S. manufacturers’ exports, provide them with low-interest loans. India developers got $248.3 million in loans through the program in 2010 and 2011 and $57.3 million this year, Yadav reported.

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The low-interest loans are attached, CSE deputy director general Chandra Bhushan claimed, to "the mandatory condition that they buy the equipment, solar panels and cells from U.S. companies.” This, Bhushan charged, “has distorted the market completely in favor of U.S. companies."

“The charges are not based in fact,” was the response of Ex-Im spokesperson Phil Cogan. “They seem to attach some devious motives to the fact that when we make a loan, the loan can only be made for the acquisition of U.S. goods and services. But that’s what the U.S. Congress requires of us. We exist in order to support the export of goods and services by companies in the United States to foreign buyers. If it doesn’t involve U.S. workers either providing services or providing goods, we are not allowed to finance it.”

The 3.18 percent loans are, however, extremely seductive to India developers who have to pay 14 percent or more to their own banks.

The Solar Manufacturer Association of India recently filed a federal anti-dumping case alleging that China, Taiwan, Malaysia and the U.S. dump solar equipment in the country; the group is seeking anti-dumping duties on imports. It is also pushing for new domestic sourcing requirements for thin film materials. Indian project developers are resisting.

“Developers want to import at zero duty, which they say will lead to large solar installations, which, in turn, will lead to quick development of the sector,” Yadav reported, “while manufacturers demand a level-playing field with the global industry.”

A policy aimed at building “a robust domestic manufacturing base,” he added, is “the logical choice.”

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