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First Solar has about 260 megawatts (MW) of solar projects in India.
First Solar has about 260 megawatts (MW) of solar projects in India.

First Solar says investments in India not justified at low tariffs

First Solar has been bidding at reverse auctions for capacity under government-approved solar parks, but has not won any

Mumbai: First Solar Inc., a US-based photovoltaic (PV) panel maker and one of the first overseas companies to enter India’s solar energy market, is looking to bid for newer solar projects under the Jawaharlal Nehru National Solar Mission to retain a 15-20% market share in the highly competitive solar energy market, said country head Sujoy Ghosh in an interview to Mint.

But aggressively low tariffs remain a hurdle for the company to win projects, he said. “We will not be able to justify equity investment at those tariffs (below 5 a unit)."

First Solar has been bidding at reverse auctions for capacity under government-approved solar parks, but has not won any, given that a large number of domestic and overseas companies have been bidding at tariffs below 5 per kilowatt-hour. The company has bid for tariffs above 5 a unit.

For First Solar, which in 2012 started selling panels to other solar project developers, India is the second-largest market after the US in terms of its total panel shipments, Gosh said.

The solar panel maker has so far shipped PV panels totaling capacity of 1 gigawatt (GW) in India. Of this, 80% was through sale of modules or panels to other power producers and 20% for its own project development. The company supplies modules to independent power producers, including Welspun Renewables Energy Ltd, ReNew Power Ventures Pvt. Ltd, Azure Power and Adani Power Ltd.

“Our goal in India is to have 15-20% market share overall in megawatts, either by selling modules or putting our capital for projects. It also depends on our ability to win projects," Ghosh said.

First Solar has about 260 megawatts (MW) of solar projects in India, which it won at state auctions in Telangana, Andhra Pradesh and Karnataka. Of this, about 115 MW is operational and the balance will come up by June 2017. To be sure, bids in state projects have been above 5 levels, while those at solar parks have been more aggressive as these parks provide ready infrastructure, transmission facilities and land for developers to build projects, reducing risks and helping bring the cost of energy down.

Last year, First Solar inked a 20-year power purchase agreement (PPA) to sell power to utility Southern Power Distribution Corp. of Telangana at a tariff of 6.49 per kilowatt-hour. For the Karnataka project, it will sign a PPA at 5.49 per unit.

US-based SunEdison Inc. and Japan’s SoftBank Group won solar projects at an aggressively bid tariff of 4.63 in November and December, respectively, while Finnish utility Fortum Oyj won a project at a record-low tariff of 4.34 in January.

India has crossed 5GW in total solar capacity in fiscal 2016. The government has raised its solar energy capacity target by five-fold to 100GW by 2022, making the country one of the most preferred destinations for renewable energy firms.

“India for us is one of the most important markets outside of the US. Solar demand in India is very subsidy free; it is being driven by fundamental need for power. And that’s very unique about India compared to a lot of large markets, where solar demand is propped up by tariff subsidies," Ghosh said.

In India, which holds reverse auctions for tendering solar projects, the role of the buyer and seller is reversed and a business bid is won by quoting prices downwards.

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