Indian Economy News

China's LONGi plans solar equipment manufacturing facility in India

New Delhi: LONGi Green Energy Technology Co. Ltd may become the first Chinese company to set up a solar equipment manufacturing facility in India, according to two people aware of the development.

The plan to set up a factory in India by LONGi, the world’s largest monocrystalline solar wafer maker, comes in response to Indian government’s proposal to make it mandatory for firms to have local manufacturing capability to bid for the world’s largest solar tender of 20 gigawatts (GW).

Monocrystalline silicon is more efficient and expensive as compared to the multicrystalline silicon, widely used globally in setting up solar power projects.

It also improves the average efficiency of a solar panel, resulting in a better capacity utilization factor (CUF) of a solar project.

Solar modules account for nearly 60% of a solar power project’s cost.

Capacity utilization factor is a measure of how well a solar power plant is utilized and is the ratio of the actual electricity output from the plant to the maximum possible output during the year.

A spokesperson for the Shanghai Stock Exchange listed firm in an emailed response said, “Our company are (is) still in further discussion about investment and capacity to be built in India as well as other details. It will be disclosed in future.”

The other Chinese firms who have been looking at solar equipment manufacturing in India include; GCL-Poly Energy Holdings Ltd and Trina Solar Ltd.

India has also been conducting an anti-dumping investigation on solar equipment from China, Taiwan and Malaysia.

For China’s solar panel manufacturing industry, with an estimated capacity of around 70GW per year, the US and India are major markets. The Indian solar module market is dominated by Chinese firms, with domestic manufacturers accounting for only 10.6% market share, according to consulting firm Bridge to India.

“LONGi is planning to set up a manufacturing facility here. It will be a first for them here. It makes sense given the demand. Also, the government is planning to make it necessary for a firm to have a manufacturing facility here to be eligible to bid for the world’s largest solar tender,” said a person aware of the development requesting anonymity.

The government also proposes to award 100GW of solar and wind contracts by March 2020.

This includes a plan to invite bids for setting up 20GW solar power capacity—the world’s largest solar tender—at one go, to spur domestic manufacturing of solar power equipment.

“LONGi’s executives have been meeting Indian solar power developers to get a sense of the future demand in India,” said the second person aware of the development requesting anonymity.

There has been growing interest from companies to set up domestic manufacturing facilities here.

A case in point being yoga guru Baba Ramdev’s Patanjali Ayurved Ltd, the consumer goods products upstart, plans to diversify into solar power equipment manufacturing, Mint reported on 4 December.

India witnessed a record low solar tariffs of Rs2.44 per unit in May, which rose up to Rs2.65per kWh in an auction conducted by the Gujarat government in September. The country has set an ambitious clean energy target of 175GW by 2022. Of this, 100GW is to come from solar projects.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.