There is an opportunity in over supply of PV modules

A vast excess of capacity and consequent over-supply has forced manufacturers to cut prices of their modules. India, however, continues to sleep as the opportunity to promote the use of much-needed solar energy at cheaper prices, passes us by

Despite the fact that most leading photovoltaic (PV) module manufacturers have been operating at a loss, established capacity globally was expected to grow at 22 per cent in 2012 and a further 18 per cent in 2013!

The average industry-wide PV module prices for PV applications were forecast to drop 52 per cent in 2012, while the idle capacity was expected to decline just 14 per cent from a huge 77 per cent in 2011 to 63 per cent in 2012.

The last thing the PV industry needs right now is more capacity. Strangely, some global (Chinese) producers are adding capacity with the hope of lowering their costs through economies of scale. Some are improving capacity productivity, while others are upgrading manufacturing technology, such as adopting hydro-chlorination, to reduce power consumption and increase scale.

Total polysilicon wafer capacity is estimated to exceed 385,000 tonnes in 2012. Seventy per cent of it is used by a small number of top producers. Thus, they alone can satisfy all polysilicon demand

What is more important for India?

The solar panel glut in China has forced its manufacturers to slash the prices of their PV modules. In this situation, should we be protecting our weak PV module industry or focus on expanding the use of much-needed solar energy by promoting ‘distributed’ town-level plants and roof-top off-grid solar plants—making use of cheaper high-quality PV modules from large Chinese producers at throwaway prices? What makes greater sense?

There is a chance to scrap subsidies and plug the associated loopholes. At 50 US cents a watt or lower, the cost of solar power today is below Rs 6 per kWh based on depreciating investment over 15 years. With that, India can scrap the subsidies.

Chinese gloom, but India could be smiling

Unless there’s an unexpected dramatic increase in polysilicon requirements, many of the 57 tier II and tier III producers globally are likely to exit the industry within the next 18 months. Indeed, even a few of the less-experienced tier I makers may not survive over the next couple of years.

Average polysilicon prices are forecast to start to stabilise in 2013 at around US$ 21/kg, as the remaining players rationalise utilisation rates in line with end market requirements while ensuring that selling prices remain above their cash costs, which is indeed below 50 US cents!

States’ Solar  Power Targets
State	Target	Year
Rajasthan	10,000 MW	2023
Tamil Nadu	3000 MW	2015
Andhra Pradesh	1000 MW	2017
Chhattisgarh	1000 MW	2017
Gujarat	500 MW	2014
Karnataka	200 MW	2016
Uttar Pradesh*	500 MW	2017
*Draft policy; Source: Reconnect