Indian solar market lures global players

India is becoming an attractive solar market and firms such as Moser Baer and US-based Signet Solar are confident of the growth in this market. The recent semiconductor policy sops – that cover solar cells and photovoltaics (PVs) – and the government policy for "off-grid" electrification are added incentives.

Moser Baer's $880 million (around Rs 3,500 crore (Rs 35 billion)) eight-year sourcing tie-up with Norway-based REC Group, for instance, simply furthers this line of thinking.

The deal could get Moser Baer Photo Voltaic around $1 billion in revenues over the period of the contract. A company spokesperson, however, declined to put any figure to the deal.

The confidence in the market can be gauged when Moser Baer group CFO Yogesh Mathur notes: "We are even exploring the market for assembly of solar cell units too. We would like to help in developing this market too."

Signet Solar too is exploring moves to establish an industry-leading solar photovoltaic module manufacturing cost structure for India. The company is expected to spend $150 million in the first phase of developing three photovoltaic module manufacturing facilities in India.

Signet is said to be targeting large solar farms and commercial installations in Europe and rural electrification, water irrigation and integrated power back-up facilities in the rural areas.

The global photovoltaic market is on a high growth curve – sales are expected to grow over six times to $40 billion by 2010.

MBPV recently announced the shipment of its photovoltaic cells and claims to have orders and MoUs exceeding $100 million (around Rs 410 crore (Rs 4.1 billion)). It also has plans to set up a unit in Andhra Pradesh and is reportedly in talks with other state governments for its expansion plans.

Photovoltaics are the creation of electricity from a light source, sunlight for instance. A basic photovoltaic, also known as a solar cell, is made by materials such as silicon and thin-filaments, commonly used in the micro-electronics industry. These are capital-intensive projects.

On the other hand, photovoltaic modules - which connect many solar cells together and mount them on a frame or platform - are low value-adds and the margins are better.

Moser Baer makes solar cells as well as modules. The best commercial silicon solar cells, according to a recent JP Morgan report, can cover 22 per cent of the sunlight that hits them into electricity.

The report notes that several research labs across the globe are trying to increase the conversion percentage, and conversion levels of 40 per cent have been achieved in labs.

MPBV works with polysilicon chips to make solar cells, which are in short supply, owing to a boom in the semiconductor industry (which explains the tie-up with REC).

Over 90 per cent of the worldwide solar cells are made with this technology. The company, however, is also working on the thin-film technology to make solar cells.

It announced it would invest $250 million (around Rs 1,110 crore (Rs billion)) over three years to set up the largest thin-film solar fabrication (fab) facility in the world. Thin-film solar modules are ideal for energy farms, rural applications and building integrated photovoltaic markets.

According to market estimates, thin film-based solar modules would see large emerging applications and a robust demand that is expected to grow ten-fold from 250 mw currently to 2 gw with a market size of $5 billion by 2010.