First Solar might invest $500 million to build a Thin Film Solar Factory near Chennai,India – Preempt Domestic Content Requirements

Solar Energy in India is poised to be the biggest Energy opportunity in the 21st century and nobody realizes it better than top solar companies in the world.First Solar which is the biggest thin film company in the world and the most valuable solar manufacturer might be close to investing $500 million to build a solar factory in India.First Solar is the largest producer of solar panels in the world using its proprietary thin film technology.The company is also one of the biggest utility solar system developer in the world focusing mainly on the North American Market.The company has built and sold the world’s largest solar farms in Sarnia,Ontario.The company has beefed up its solar installation business by buying a number of solar developers like Optisolar,Turner etc.

First Solar may invest $500 million in Tamil Nadu,India

According to the Financial Express, a top US Thin Film Based module manufacturer is exploring the possibility of setting up a facility in Tamil Nadu with an investment of $500 million (about R2,255 crore) in the coming months.Note the sources have not revealed the name of the company but it is clear from the investment amount,solar technology that the company is First Solar.A a top level team from the company is expected to visit sometime early next week to initiate discussions with the state government officials.Note First Solar has emphasized the importance of India for its growth aiming to supply 100 MW of solar panels in 2011 itself which would make it a leader in the Indian solar industry.Other top solar panel companies like Suntech and Trina too have invested heavily in selling their solar panels in India through partnerships with local companies.

First Solar not getting too much success in China,so it may be putting redirecting its investment dollars to India

First Solar has been facing massive hurdles in getting solar projects in China which is home to most of the top solar panel producing companies in the world.Its 2 GW Ordos project has been delayed a number of times forcing First Solar to tie up with one of the Big Five utilities in China.Note foreign companies in China routinely face discrimination and the Chinese protectionism and discrimination issue has been raised by government as well as top companies like Siemens.On the other hand India does not have such a policy though it has put in a domestic content requirement for solar projects under JNNSM.This does not apply to thin film technology yet but First Solar may be looking to preempt this by building a solar factory in India.

USA opposed India’s domestic content requirements in Solar Energy (in vain )

USA has opposed India’s Local Content Requirements for the Federal Solar Energy JNNSM program.Note according to the JNNSM rules,solar panels will have to be produced in India for the first year and solar cells will also have to produced from the second year.There is also a proposal that the local content requirements may be extended beyond 2013 and will also include solar inverters.US administration is opposed to these rules as it will lead to export hurdles for its solar companies Sunpower and First Solar.India installers and developers have also opposed the move as it will lead to lesser choice amongst suppliers and probably higher costs.

Note India solar cell/module manufacturers are heavily in favor of the domestic content rules as it will be difficult for them to compete with much larger and lower cost Chinese companies.Note China has not protested against these moves as it promoted its Domestic Wind Energy Industry in 2006 through this policy.Ontario,Canada too is following the same policy and has been take to the WTO by Japan.Note USA has not been a party to the Japanese move,as its companies have won large contracts in the region.There are both pros and cons to the domestic content policy for solar energy but one thing is for sure if free imports are allowed,Indian companies are not in a position to compete with the foreign ones on cost.

First Solar Manufacturing Sites

First Solar major production site is in Malaysia where it has a 15 year tax holiday.Its first solar plant was built in USA while the second one was built in Germany.The company was also planning to build a solar factory in partnership with EDF however the French ambiguity in solar subsidies has made it cancel those plans.The company was also planning to build a factory in China but with the Ordos project facing implicit government hurdles that plan to seems dead.

First Solar Technology and Costs

First Solar,the US based Cadmium Tellurium (Cd-Te) is the lowest cost panel producer in the world today if you don’t include any penalty for low solar panel efficiency.Even if you penalize the Cd-Te Technology for its lower efficiency vis-a-vis the higher efficiency crystalline technology,First Solar is clearly the leader with a core cost of 74c/watt.The company has a roadmap of  reducing the cost to 52c/watt by 2014 and given its track record it seems quite achievable.In Cd-Te,some new competitors have claimed even lower costs than First Solar but they have yet to prove it in large scale production.General Electric,Abound Solar are some of the other Cd-Te players which are planning commercial production in a year or two.But with around 2 GW of capacity,they will have a lot of catching up to do.