The sorry state of PV manufacturing in India

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A battle continues to rage in India over whether imposing anti-dumping duties on PV modules manufactured in China, US, Malaysia and Taiwan would support PV manufacturers in the country. At the same time, questions are growing over whether local content rules designed to support the local industry, but now being disputed by the likes of the US, have actually done any good.

A recent survey carried out by India’s Ministry of Commerce & Industry points to the current sorry state of PV manufacturing in India when comparing nameplate capacity to actual capacity in operation.

A top down analysis of the survey highlights that nameplate capacity of solar cells is around 1,383MW and PV module nameplate capacity stands at around 2,756MW.

In existence, according to the survey are approximately 15 companies with cell manufacturing equipment and 48 with module equipment. Those from the survey that had both types of equipment totalled 12. In total 53 PV manufacturers were said to have existed in India.

Six of the 15 companies with cell equipment had completely idled production, while 14 companies with module equipment had idled production.

Companies that had no current production of either cells or modules totalled 15.

The most disturbing figures from the survey relate to the larger and better known PV manufacturers in India, such as Moser Baer, IndoSolar, Tata Solar, Vikram Solar, Warree Energy and XL Energy.

XL Energy, with cell nameplate capacity of 80MW and 210MW of nameplate module capacity is in production of neither product. The same is true of Warree, which although it does not have cell equipment has a large, 250MW of module equipment capacity that is currently idled.

In respect to Vikram Solar, the company declared no cell equipment but had a nameplate module capacity of 150MW and only 75MW “under operation,” according to the survey description. This suggests that module production utilisation rates are no more than 50%, at best.

Things are slightly better for industry veteran, Tata Solar which had 70MW of solar cell production in operation and nameplate capacity of 180MW, indicating a cell utilisation rate of around 38.8%.

However, in respect to module capacity “under operation,” the company had 200MW, basically 100% utilisation.

The two scariest of situations from the major players rests with Moser Baer and IndoSolar.

Moser Baer has solar cell nameplate capacity of 200MW but the production lines are idled and only 80MW of module production is in operation out of 230MW, resulting in a maximum utilisation rate of 34.7%.

Solar cell producer, IndoSolar has 450MW of modern, automated nameplate capacity, care of Schmid. Yet the capacity in operation is only 80MW, resulting in its utilisation rate being only 17.7%. Indeed, according to financial statements from IndoSolar for 2013, all production lines had been idled.

Smaller (sub-100MW) module manufacturer’s, would seem to be relatively better off than the larger players. Companies such as Gautum Solar, Modern Solar, Shan Solar, Sova Power, Topsun Energy and Photon Energy Systems are all running at relatively high utilisation rates (above 80%) with several at full capacity.

An obvious observation would be that when comparing module production (1,300MW approx) with India’s domestic PV end market demand of a similar figure, significant overcapacity exists and therefore the sector is in need of consolidation.

The fact that only around 300MW of cell production is taking place suggests significant outside purchasing of cells is being undertaken and unless domestic cell producers upgrade and expand capacity with a new round of capital investments that sector is virtually doomed.

Of course many Indian PV manufacturers have made strides in recent years to expand business opportunities outside the country but the utilisation rates indicate that success is far from guaranteed.

Policies outside protectionism, such as R&D incentives, lower cost of finance could potentially provide better support for a sector clearly on its knees. 

A top down analysis of the survey highlights that nameplate capacity of solar cells is around 1,383MW and PV module nameplate capacity stands at around 2,756MW.
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