Busy period ahead for Indian semicon, solar!

Yes, looks like it!

First, on August 31, the India Semiconductor Association and the UK-TI would be signing an MoU. The next day, September 1, there is a presentation by Ministry of New and Renewable Energy and key officials on the government of India’s policies to the industry!

Next, on September 4, the DIT Secretary, R. Chandrasekhar, and the Additional Secretary, will be interacting with semiconductor companies in Bangalore.

Further on, September 16 is the day when the Union Minister for New and Renewable Energy, Dr Farooq Abdullah, will be interacting with a small group of industry leaders at a solar PV conclave in Hyderabad!

That’s quite a lot, within a span of 15-odd days! Must say, this augurs well for the Indian semicon and solar/photovoltaics industry.

Interestingly, a lot of the big events are focusing on solar. So, my hunch is that the Indian solar industry may have some serious announcements to make in the coming weeks. Should that happen, I hope to bring those to you, time permitting.

P.S.: I am tempted to add -- Google permitting! It's been a tough week, where my main blog has disappeared, and well, the solar/PV, telecom and semiconductor blogs were first blocked and released -- these following a similar experience with my electronics blog. Now, Google has blocked the blog on electronic components. Hope the order will get restored soon!

Why solar/PV is good for India? An ISA perspective!

Recently, the India Semiconductor Association (ISA) held an educative briefing session on the potential of the solar PV market in India, which was conducted by Rajiv Jain, Director, Government Relations, ISA.

This meeting was held well before iSuppli issued a warning that there could be global solar sunburn in 2009! I am sincerely hoping that most of the points mentioned by ISA's Jain still hold good in the coming year, and that India really does well and takes off in solar photovoltaics.

The ISA's vision: To help make India an attractive global destination for PV manufacturing and a world leader in solar energy.

Starting with the basics of photovoltaics, he said that it is a package of solar cells used to convert energy from sun to electricity. In simpler words, photons from sunlight knock electrons into higher state of energy, thus creating electricity. The electricity can be used to power equipment or recharge a battery. A typical PV system mainly consists of a PV module, battery, inverter, controller and junction box.

Focusing on the technological landscape, he touched upon the two key technologies for solar: crystalline and thin film.

Crystalline silicon is said to be the most mature Si wafer technology, with the largest market share. Though, high on cost, it has a typical efficieny of 14-18 percent. Crystalline silicon is said to suitable for rooftop applications.

Thin film is nothing but thin layers of photosensitive materials on glass. It is currently on high growth due to silicon shortage, and very low on cost due to low material consumption. The efficiency is about 6.5-8 percent.

A third technology, nanotechnology, is the future technology for cost reduction. It is more in the R&D space as of now.

Present scenario for solar
So what's the present scenario? In 2007, of $71 billion invested in new renewable energy (RE) capacity globally, 30 percent was in solar PV. It is the fastest growing area in the energy sector, with a CAGR of 47 percent over the last five years.

Grid-connected solar PV has been high growth market segment in 2007 (50 percent increase). Also, 86 percent of the PV installations are largely in four countries, with Germany at 47 percent being the outright leader.

Market drivers are said to be attractive feed-in tariffs, national PV market development and acceptance, RE obligations through solar PV, access to cheaper mode of finance, manufacturing incentives as well as strong R&D.

Why solar for India
I have addressed this in an earlier blog post. Here's what Jain had to say, and it is mostly in line with the earlier discussions.

First, India has among the highest solar irradiance globally. It also has the best quality reserves of silica in Orissa and Andhra Pradesh. India has also established itself low cost producer and assembler of solar PV cells and modules.

The major challenges include attaining scale and integration for cost reduction, and, R&D for development of the industry.

Solar insolation in India
To start with, the daily average solar energy incident varies from 4-7kWh per m2. Next, we have multiple sites with solar irradiation >2000 hours per year. In contrast, Germany has 900-1,200 hours per year. Further, most parts of India have 300-300 sunny days in a year translating into a potential of 600GW. Also, potential in some states like Rajasthan is 35-40 MW per m2.

It is well known that the Indian semiconductor policy of 2007 has triggered off the now well publicized efforts in solar initiatives. The government of India has received 16 applications with investments envisaged at app Rs. 1,55,000 crores.

The investments in solar PV manufacturing exceed Rs 1,25,000 crores. Generation based incentives (GBI) are going to be key.

Potential market segments in India
There are quite a few, actually. In rural electrification, the government of India's target is to achieve 'Electricity for all by 2012'. About 18,000 remote villages will likely be electrified through RE. About ~25 percent of the remote villages, i.e., 4,500 villages, form a very viable market.

Next comes telecom back-up power! PV is a cost effective alternative to diesel generators (DG) for back up power for shorter duration, as DG based systems suffer from several disadvantages.

Another key market could be grid connected solar PV based generation. Current tariffs do not provide attractive IRR to developers. Decreasing system prices are however, likely to improve the economics.

Finally, roof based BIPV is said to be an alternative to reduce the cost of power procured by commercial buildings.

ISA's recommendations
The ISA has also made salient recommendations via its report on the industry. These include areas such as manufacturing: with an aim to encourage companies investing in 'Scale and integration', provision of capital subsidy to larger number of units, availability of funds at a cheaper rate, and an emphasis on R&D.

Also, the ISA has recommended that GBI be given for a tenure of 20 years, with the present period being 10 years. Further, it has suggested an accelerated depreciation along with the GBI scheme, and the availability of GBI for an unlimited capacity for a period of five years. The ISA has recommended an enactment of the RE Law requiring utilities to progressively increase power purchase from RE.

On its part, the ISA has been working with the government of India and various state governments as well. It has a sound rapport with concerned ministries - MNRE, DIT and NMCC.

The ISA has also assisted in the technical evaluation of solar PV proposals received in Fab City, Hyderabad. It has also drafted a semiconductor policy for the government of Karnataka, which should be out early next year, hopefully. The ISA is also working with several other state governments to promote the industry in their states.

The second ISA Solar PV Conclave is scheduled for November 2009 at Hyderabad.

Very good intentions, all of these! Now, for the Indian industry and the government to deliver, and walk hand in hand!!

Solar/PV is just right for India

There have been significant investments in the solar/photovoltaic space in India in the recent past, and that does not look like ending any time soon.

Given the ongoing global financial crisis, and the state of the global semiconductor industry, it appears that India has bet quite successfully on the solar/PV segment. In fact, it seems that solar/PV is just right for India! In fact, it may just kick off the kind manufacturing activity India really needs.

Poornima Shenoy, president, India Semiconductor Association (ISA), says that solar/PV is right for India for a variety of reasons.

Firstly, India has among the highest solar irradiance, globally. Secondly, it is established as a low-cost producer and assembler of solar PV cells and modules. And thirdly, India has among the best quality reserves of silica in the states of Orissa and Andhra Pradesh.

She adds: "At present, solar PV may not seem to be an attractive option, primarily due to high generation costs. However, in the coming years, with increases in fossil fuel prices, rising environmental concerns, and a reduction in the cost of solar PV technology, it is likely to become a major source of energy."

The ISA expects 2015 to be an important year for the solar/PV industry. Around this time, the product cost of the Indian solar PV industry is likely to match the semi grid parity (peak power) globally, and also to match the grid parity within India.

The four major segments offering maximum potential in the coming years for solar PV in India are: rural electrification -- decentralized distributed generation (DDG); grid interactive solar PV power plants; backup power for telecom (base transceiver stations); and roof-based solar PV systems.

ISA-NMCC report on solar/PV
The ISA recently released a report on the solar PV market in New Delhi with NMCC (National Manufacturing Competitiveness Council).

According to the ISA-NMCC study, of the US$71 billion invested in new, renewable energy capacity globally in 2007, 30 percent of was in solar PV. Solar PV is the fastest growing area in the energy sector, with a CAGR of 47 percent over the last five years. The grid-connected solar PV segment saw 50 percent growth in 2007.

As per the report, the solar PV industry is likely to grow four-fold by 2011. However, there are various uncertainties in the short- to medium-term on both the supply and the demand side.

On the supply side, the main constraint is the lack of available polysilicon. The demand side is limited by the quantum of incentives for solar PV.

Gradually, there will likely be improvements in technology. The decreasing cost of manufacturing could drive the preferential tariffs lower, and ongoing demand for PV products could also attract significant investment.

As for the global solar PV supply chain. Thin-film production is one of the fastest growing segments in solar. The lack of available polysilicon is limiting growth, and this has led to the emergence of thin-film technology. This technology has enjoyed substantial growth since 2005: 80 percent in 2006 and over 100 percent in 2007.

India's semicon policy takes off

Close on the heels of the historic Indian semicon policy announced earlier this year comes the news that Hindustan Semiconductor Manufacturing Corporation (HSMC) would be setting up a semicon foundry in India partnering with Infineon Technologies for CMOS licences. It's no surprise to see Infineon among the early movers as Infineon has been present in India for quite a while now.

This is excellent news as far as the Indian semiconductor industry is concerned. I remember the day the India Semiconductor Association (ISA) was formed in Bangalore in early November 2004. The ISA is a very young industry body and all kudos to it for having taken forward the Indian industry so very well.

Congratulations are also due to Honourable minister, Dayanidhi Maran for having the foresight and for believing in the semiconductor industry.

Not only would the semicon industry boost India's GDP in the coming years, the policy should also see India emerging as a destination of choice for manufacturing of high-tech products in the future.

This January, while attending the VLSI conference in Bangalore, I had the pleasure of learning about the various incentives some of the state governments, such as those of Karnataka, Kerala, Tamil Nadu and West Bengal have to offer to investors.

Other state governments should come forward as well and make India's dream of becoming a semicon giant a success and help the semicon policy really take off.

Following HSMC's announcement, we have now come to expect more such announcements in the near future. All of this really augurs well for India. It will also change the global perception that India is the destination for software and outsourcing.

We can do it. Time to show the world. Well done ISA. Well done Minister. And well done HSMC and Infineon