Mr. Kai Bollhorn is responsible for research on supply trends and upstream industry as part of the Market Intelligenceteam at BRIDGE TO INDIA.
In the last quarter (July – September 2012), Indian manufacturers continued to struggle with the crash in global module prices. With little policy support and dwindling company finances, there is little or no room for investments into upgrading manufacturing capabilities.
- Contract manufacturing for international module suppliers is proving to be a source of revenue for domestic manufacturers
- Downward integration to engineering, procurement and construction (EPC) is working for some manufacturers in the industry
In the current adapt-or perish market scenario, a few Indian module manufacturers have adapted to the conditions in the market in the following ways: downward integration to project development and/or EPC tie up with international module suppliers for contract manufacturing and/or shift in focus to capture opportunities in niche markets in India.
In August, Tata BP Solar India formally announced its name change to Tata Power Solar Systems. This is a part of a previously announced restructuring. Tata Power Solar Systems is now a wholly owned subsidiary of Tata Power. Tata BP Solar is a pioneer with module manufacturing in India since the early 1990′s and has a track record in building projects, especially off-grid. This restructuring is expected to bring about a shift in the company’s focus to project development and execution.
Contract manufacturing for international module suppliers is proving to be another source of revenue for the domestic manufacturing industry. Some Indian manufacturers partly or fully lease their manufacturing facilities to international module suppliers. Such a contractual agreement provides international companies access to the market under the Domestic Content Requirement (DCR) [for cells and modules]. This also provides module suppliers an opportunity to capture an initial market share. An initial market share can provide companies strong early visibility and proof of performance in the Indian market. This can provide a significant first mover advantage. International module suppliers have existing contracts for procurement of raw materials for their modules. They can channelize a part of the raw material delivery to India. Placing large orders for raw materials to meet the demand for their global operations gives them a purchasing advantage in terms of cost. They also have streamlined processes that they have developed internationally with years of experience. This allows them to retain their competitiveness for India. Several international module manufacturers are looking to set up contract manufacturing to supply to projects under phase two of the National Solar Mission (NSM) starting 2013. BRIDGE TO INDIA’s industry conversations find that at least two European module manufacturers, a European power major and a Chinese module manufacturer (names cannot be disclosed) have either set up or are in the process of setting up contract manufacturing in India. From the information available on a few such contracts, typical yearly contracted production capacities in India are around 30-50MW. Indian manufacturers that have tied up for such contracts might become financially more stable and improve their production processes with the expertise of their international contractor.
Downward integration to EPC has worked to some extent for module manufacturers like Vikram Solar. It has obtained contracts under batch two of phase one of the NSM in this quarter and the Gujarat Solar Policy previously. The current projects under the NSM give Vikram Solar a pipeline of 40MW for module supply and EPC. Lanco Solar, that is providing EPC for Gas Authority of India Ltd. (GAIL), is expected to use its own modules. Enfield Infrastructure is developing a 10MW project under the batch two of phase one of the NSM and is expected to use its own modules that are being manufactured under the name of Sonthalia Group.
Downward integration to EPC has worked to some extent for module manufacturers like Vikram Solar. It has obtained contracts under batch two of phase one of the NSM in this quarter and the Gujarat Solar Policy previously. The current projects under the NSM give Vikram Solar a pipeline of 40MW for module supply and EPC. Lanco Solar, that is providing EPC for Gas Authority of India Ltd. (GAIL), is expected to use its own modules. Enfield Infrastructure is developing a 10MW project under the batch two of phase one of the NSM and is expected to use its own modules that are being manufactured under the name of Sonthalia Group.
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