It’s been nearly two years since First Solar announced its first solar panel deal in India, and India has proven to be one emerging market that the company has found some success in. Now the company on Monday said it will sell 50 MW of its solar panels to developers Kiran Energy Solar Power and Mahindra Solar One for two projects in the Indian state of Rajasthan.
First Solar has won many solar panel sales contracts in India thanks to India’s national solar policy that calls for installing 20 GW of grid-connected solar energy generation projects by 2022. The policy aims to promote domestic manufacturing by requiring project developers to use silicon solar cells made in India. Silicon is the most common material used for making solar cells. That requirement has inadvertently benefited First Solar, which uses cadmium-telluride instead for converting sunlight into electricity.
The Export-Import Bank of the United States, with its mandate to promote the export of U.S. goods and services, also has helped First Solar along by loaning money to Indian project developers that use First Solar’s products. First Solar isn’t content being just a seller of solar panels in India, however, it also is helping develop solar projects in the region.
Kiran and Mahindra are co-developing the two projects with First Solar and the companies plan to start building the two projects, at 20MW and 30MW, by the end of this year. They expect to complete the projects in the first quarter of 2013. Kiran is a startup project developer based in Mumbai, and its chairman, Alan Rosling, outlined the company’s ambitious plan to be a major player in India in an interview with us last year.
First Solar has steadily announced sales contracts in India since December 2010, the year when its executives began to talk about India as the new frontier. Up until then, Germany had been the company’s largest market. But government incentives in Germany were declining quickly, prompting First Solar to step up its effort to open up new markets. India, China, Saudi Arabia and Australia all fall into the “emerging market” bucket for First Solar.
The company appeared to be making progress in China when it announced in 2009 it’d be part of a plan to build 2 GW of solar power plants in Inner Mongolia. But that project has faced delays, and it’s unclear when and whether the project will ever materialize to benefit First Solar as the company expected initially. The Chinese market is supposed to grow quickly, but it also is home to some of the world’s largest solar panel makers that currently have way too much production capacities.
First Solar isn’t content to be just a solar panel supplier in India. It’s built up a solar power plant development business in the United States and Canada by gobbling up a series of project pipelines under development. That business is more lucrative – the company can make money from developing, building and operating solar power plants (for owners it sells the power plants to) that use its own solar panels.
First Solar wants to do the same in other parts of the world. Back in August, its CEO, James Hughes, talked about its desire to partner with Indian developers on power plant development. The company announced in May this year the hiring of Sujoy Gosh as the head of business development in India.
India alone isn’t enough to help First Solar continue its long-term business growth, however. Emerging markets often take a while to penetrate. As much as First Solar would like to move away from markets that rely heavily on government subsidies, the fact is the fastest growing solar markets still come with lots of government help.
China and Japan are two good examples, and First Solar isn’t moving as quickly in those markets, noted Vishal Shah of Deutsche Bank in a research note last week. Japan’s solar market has heated up thanks to the nuclear disaster last year that prompted the government – and the public – to look for alternatives to nuclear for its source of electricity.