India needs to stem an influx of cheaper imports from China and ease taxes on locally made solar cells to boost domestic manufacturing, Tata Power Solar Systems? newly appointed CEO Ajay Goel told FE in a telephonic interview on Wednesday.
The government aims to turn India into a major solar power hub, targeting a 20-fold rise in sun-power generation to 20 Giga Watts (GW) by 2022. The country?s growing power needs and a shortage of coal and gas used in conventional thermal plants has highlighted the need to develop energy from alternative sources, such as sun and wind.
?There is a change in focus now for Tata Solar. Earlier we used to concentrate on exports, India wasn?t really a very viable market. But over the past two to three years, India has become one of the fastest growing solar markets. Our priority is to expand domestically,? said Goel, who has also worked for US solar wafer maker MEMC?s SunEdison unit.
Tata Power recently completed the buyout of British energy major BP?s stake in its solar JV and last week changed the division?s name to Tata Power Solar Systems from Tata BP Solar.
Indian solar panel makers, including rivals such as the country?s biggest manufacturer Moser Baer India, Surana Ventures and Indosolar, are facing stiff competition from China, where a glut of supply has prompted inventory clearances. Prices have plunged 34% in the past year, amid dwindling demand and subsidy cuts in Europe, the biggest market for the equipment.
?The current system in India discourages local manufacturers, because we can?t compete with cheaper products from China and to add to that, the government taxes locally made solar cells. It is a double-whammy,? said the industry veteran, who previously helped integrate Sun Edison into MEMC after its takeover by the company.
Tata Power Solar?s production of solar cells was 22,538 Kilo Watts (KW) in fiscal 2012, less than half its output of 54,482 KW in the year-ago period. The production of solar panels slipped to 55,977 KW in fiscal 2012 versus 75,194 KW a year earlier.
?Imposing a heavier excise duty on Chinese products may help solve one part of the problem while more incentives to local manufactures may help drive growth,? he said.
Goel pointed out that foreign-made thin-film panels have flooded the Indian market because it is exempt from a rule meant to protect the industry. Thin-film panels, which are cheaper and less efficient than indigenous crystalline silicon ones, represent only 20% of the market in the rest of the world, while nearly 80% is crystalline, whereas in India it is the reverse, he said.
The Jawaharlal Nehru National Solar Mission, which provides protection for the domestic industry to augment development of local panel and cell manufacturers, mandates the use of only indigenous crystalline silicon solar panels and solar cells.
Prime Minister Manmohan Singh?s government is looking to triple solar manufacturing capacity to 5 GW by 2020 as it looks to counter an average 9% power shortfall shaves about 1.2 percentage points off annual economic growth. Moreover, solar power, a cleaner source of fuel than thermal, earns carbon credits which are traded in international markets.
?The company, which sat out of solar auctions in the past citing reasons including the lack of profitability of small projects, is keeping a close eye on any changes the government plans to introduce in upcoming auctions,? Goel said. ?Larger projects are more attractive than small ones, but need land and resources. We will wait and see what the changes are.?
India last year revamped the rules for its second national auction of permits to build solar power plants, raising the maximum size of each project to 20 MW from 5 MW to attract interest in the projects.
The company is acquiring land in Maharashtra, Rajasthan, Gujarat and Karnataka to develop solar projects and is also evaluating development of solar project in South Africa.