Is there a case for polysilicon manufacturing in India?

Lanco Solar's Alok Nigam at Solarcon India 2010.

Lanco Solar's Alok Nigam speaking at Solarcon India 2010 in Hyderabad.

Friends, is there a case for polysilicon manufacturing in India? Would like to hear from you!

This post is based on a discussion at Solarcon India 2010 on polysilicon manufacturing in India by Alok Nigam of Lanco Solar.

The case!
According to Nigam, there is considerable polysilicon market potential in India. The inevitable dependance on other Asian countries in the absence of any sort of domestic capacity will only worsen the balance of payments (BoP) situation.

Upstream integration will help derisk business. Even in the absence of policy (JN-NSM) support, the impact on system cost will be marginal.

Now, as per the current manufacturing trends, polysilicon production remains concentrated with the top six players holding 70-80 percent of market share and new, large players emerging in China.

Technology has also enabled cost improvements across value chains — such as increasing furnace/reactor size, use of diamond wire for slicing, efficiency gain in cells, economy of scale in modules, etc. More incremental capacity is said to be coming up in Asia, which includes players such as SunPower, MEMC, First Solar, etc.

Is there potential for polysilicon tightening?
Polysilicon supply for solar is said to be growing at a CAGR of 54 percent (2009-11). Nigam said that potential undersupply is expected in 2010, and polysilicon prices are also continuing to firm over the coming months. It is expected that polysilicon supply will be worth ~19GW in 2011 and the total solar PV supply wii be at ~21GW in 2011. This implies a potential for oversupply, if the demand numbers of 2011 are to be believed.

However, keep in mind that estimates for every single year have been revised up significantly, without exception. for example, in 2008, estimate for 2009  (darkest year in a long while), was 5.2GWp. The actual demand turned out to be 7.2GWp.

There has also been demand buoyancy despite the recession in Spain. In 2008, despite the credit crisis, the market continued to grow fueled by new emerging markets, including Italy and Germany. Also, in 2010, demand in Germany and Italy had become stronger, before reset in FiT. New markets also continue to emerge.

RPPOs will be pushing the frontier further in India by 2013. The solar power purchase obigation for states start with 0.25 percent in phase 1 and goes on to 3 percent by 2022. The market size upto 2013 has been estimated at 1.6GW. There could be a polysilicon requirement of 6,000 tonnes considering that solar thermal will account for 40 percent.

The RPPOs situation will change further by 2022, RPPOs. While the solar power purchase obligation wil be the same, the installed solar capacity by 2022 at 38GW means India would have consumed more than 120,000 tonnes of polysilicon at 60 percent PV capacity.

Nigam also presented a comparison between India and China, where he showed the the total disadvantage/kilo at 2.84 percent. The difference is significant in the interest rates — — over 5 percent — in the two countries. Nigam suggested that lowering the interest rate in India would help.

Lanco is currently developing a 35MW solar PV project in Gujarat, with 5MWp likely to be commissioned by end of September 2010. It is also offering third party EPC services for developing solar PV farms. Lanco is also setting up a 1250MT polysilicon plant and 80MWp wafering facility.

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