India... Moving to the Next Level

As renewable energy technologies move to the forefront, the energy sphere in the 21st century is set for a major overhaul. Worldwide, studies predict that solar and wind energy will address more than 60% of the future energy needs. Countries, including India, are taking concrete steps to ensure a stable and secure future in energy generation; renewables such as solar, wind, biomass and geothermal energy are the key to this. Of all, solar energy is the most widely available renewable energy source in the world. It is clean and it integrates high technology manufacturing into electronics and other aspects of BoS (balance-of-systems) into the value chain.

Indian Rural Residents Checking Out Installed Solar Panels in their Neighbourhood

The government has launched the Jawaharlal Nehru National Solar Mission (JNNSM) to tap the country's solar energy resources. However, in the Indian solar market, only a few companies manufacture solar PV cells or modules, since the field involves hi-tech processes. Most players are focused on developing end products and appliances like solar lanterns, street lights and water heaters. Such manufacturing installations are most often supported through government or NGO financial assistance, and fall under the off-grid sector.

However, interest in grid-connected installations has picked up in the last years, primarily due to the JNNSM. The SIPS (Special Incentive Package Scheme also known as the ‘Semicon Policy’) has helped promote both semiconductor and solar manufacturing.

There are various points in the solar value chain where an entry can be made, starting from poly-silicon generation through wafers, cells, modules, electronics and BoS to end-products (utilities, systems, etc). The complexity of manufacturing technology, investment and capex cost are very high in the early stages of the value chain. It is easier for the entrepreneurs (especially small/medium scale) to enter where the technology of manufacturing is not very complex (e.g. BoS). We have already witnessed many entrepreneurs entering the heating and lights space, and can expect more to venture into the grid connected systems (EPC) sector, as well as in offerings related to monitoring, tracking, diagnostics, etc.

Eco-efficient products such as crystalline silicon, thin film, and flexible photovoltaic (PV) solar solutions serve to promote energy sustainability and reduce pollution. Each of these products today has the capability to produce enough energy to meet the country’s needs. However, energy—and eco-efficiency standards have to be set for these products. Dedicated trained resources and ongoing testing are also important.

High initial capex investment accompanied by return on investment over a relatively long period has been a deterrent for investors in the clean technology and solar sectors. Investments in alternative energy companies, including new investments through equity/debt and financing by PE/VC firms, reported a decrease in deal value and in the number of deals in Q4 2010 over Q3. Slippages in projected returns have led to a decline in solar energy investments over the past few years. However, by no means does this indicate that interest in the sector is waning. The majority of new investments recorded in Q4 2010 were in solar energy, followed by wind energy.

The goals set by the JNNSM, while aggressive, will act as a catalyst for the Indian solar sector. It has the potential to drive engineering, R&D, manufacturing, export of products and technology, as well as establish India as key driver of the global renewable energy industry. Collaboration amongst key enablers from the industry, academia, government and financial institutions is pivotal to achieving these goals.

Written by Madhusudan V Atre

The writer is president & managing director, Applied Materials India

Source: www.financialexpress.com