Solar Industry in India sees Joint Ventures increasing as Indian Companies look to tap Foreign Expertise

India has a massive potential in Solar Energy with at least 20 GW of  Solar Power to be installed by 2022 according to the JNNSM Plan.This is a conservative target with more Solar Power in India to be installed as state government and falling prices of solar energy lead to much higher numbers.The list of solar companies in India has kept growing with a number of startups and established larger companies entering the solar industry.Foreign solar power companies too have increasingly started to set up base in India.With the larger solar markets in Europe like Germany,Italy starting to slow down,top solar panel manufacturers like First Solar are looking towards the Indian market for further growth.

However India’s Solar Energy Industry is facing initial problems such as lack of expertise amongst Indian EPC companies amongst others.With only low double digit of solar grid power capacity installed almost no Indian solar installer has decent expertise.This is being rectified with Indian solar installers,developers looking to tie up with foreign solar companies to fill this deficiency.Recently a raft of Joint Ventures has been signed between the local and foreign solar companies looking to target the massive solar power opportunity

Problems with JNNSM

India’s JNNSM Phase 1 which is targeting 1000 MW of Solar Power Capacity by 2013 is in jeopardy due to irrational bidding,financing and small size.The 150 MW Solar PV and ~500 MW of Solar Thermal Capacity which has been put to bidding is seeing massive discounts to the base price which would allow normal return.This will eventually lead to project winners abandoning these projects or delaying it inordinately,leading to a failure of the first phase.India Solar Thermal Bidding has already seen Massive Discounts from the base prices of Rs 15.31 set by CERCState Banks in India  have already cast doubts on lending finance to these solar projects which depend on debt for 70% of the capital requirements.The convoluted nature of payments which involve the financially weak Electricity Distribution Companies,the trading arm of NTPC and  Developers has made the Banks wary of lending to the new solar sector.Also in case of Solar PV,the restriction of 5 MW per Business Group has made it unattractive for some of the  multi billion large utilities from taking part in the process.

Indian investors and EPC contractors forge alliances for solar power projects

Mumbai-based PLG Power that is commissioning 40 MW of solar power project and related equipment manufacturing plants in Gujarat is in talks with Japanese and Italian companies for strategic alliances to access the proven technologies. The company, part of Rs 3,500 crore PLG Group is in talks with international investors for private equity . Earlier, L&T’s engineering construction and contracts division joined hands with Sharp of Japan for technology and equipments for its experimental solar power project.

Industry sources believe that long-term alliance might take concrete shape between the two in coming days. Commenting on the trend, Solar Energy Association of Gujarat founder chairman Pranav Mehta said, “Solar power sector is in nascent stage in India and there is lot of excitement and the project developers will need experienced hands with proven records. Also, there are no precedents for the financial institutions for funding the solar project and hence project developers will need investments from strategic investors.”

OTHERS IN LINE

Bhel signed an agreement with Spain’s Abengoa for solar power projects.

Esoft and Global Ecology Corporation to jointly develop a thermal solar energy project.

Astonfield, prmoted by NRIs in US, has tied up Belectric for technology.

Ahmedabad-based Electrotherm and Spain based Immodo Solar SA’s 51:49 venture.