Building a complete manufacturing eco-system in India

November 10,2011

Madhavan NampoothiriEnergy Alternatives India

“Has India missed the chance to become a PV manufacturing super-

power?”

Overview

• Global PV manufacturing - Where does India stand today?– Crystalline Silicon(Polysilicon to modules)– Thin Films– Balance of Systems(Inverters)– PV Manufacturing Equipment

• What are the challenges to become a serious player?

• Is policy support sufficient to make that happen?

Solar PV – The evolution..Annual Installations Annual production - Modules

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Source: EPIA

EU

Rest of the World

China/Taiwan

Japan

USA

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%

10%

20%

30%

40%

50%

60%

Source: EPIA

China/Taiwan

EU

Japan

USA

Rest of the World

Cumulative Global Installations(2010):Europe –30 GW (over 75%)India – About 30 MW (less than 0.1%)

Share of global PV Production capacity(2010):China – more than 50%India – Less than 5% (in modules)

Global PV Manufacturing : Charging ahead!!

C- Silicon

2010 20110

10

20

30

40

50

60

40.0

54.0

28.2

41.5

32.9

47.3

36.7

52.3

PolySilicon WaferCell Module

Capa

city

(GW

)

Thin Films

Source: iSuppli(May 2011)

India: 1.2 GW

China: 20 GW

Source: GTM Research(May 2011)

India:0.6 GW

2009 2010 20110

0.5

1

1.5

2

2.5

3

3.5

4

4.5

CdTe CIGS a- Si

Capa

city

(GW

)

60 MW (a-Si)

China: 16 GW

Moser BaerHHV

Shurjo

Global Inverters manufacturing: Not left behind..

2009 2010 20110

5

10

15

20

25

30

35

40

45

Invertor capacity(GW) Installations(GW)

SMA-40% Market Share

SMA-40% Market Share

SMA-35%

Market Share(E)

Indian Scenario

SMA

Power One

Kaco

Fronius

REFUsol

Satcon

Danfoss

Solarmax

Delta

Advanced Energy

Top Global Inverter ManufacturersInverter Production Capacity vs. Solar PV Installed Capacity

AEG (400 MW)

Delta Electronics (not online)

DB Electronics

PV Manufacturing equipment : European domination continues..

HHV in India

Rank Company Revenues ($Million)

Country

1 Applied Materials 1495 USA

2 Centrotherm Photovoltaics AG 825 Germany

3 GT Solar Incorporated 775 USA

4 Meyer Burger^ 735 Switzerland

5 Gebr.Schmid GmbH+Co 570 Germany

6 Ulvac, Inc. 380 Japan

7 Roth & Rau AG* 325 Germany

8 RENA Sondermaschinen GmbH 300 Germany

9 48th Research Institute of CETC 295 China

10 Oerlikon Solar 195 Switzerland

^ Second after acquisition of R&R

* To be acquired by Meyer BurgerR&R sold CdTe coating division to undisclosed Chinese buyer

List includes both c-Si and Thin Film capacities

Source: VLSI Research

Indian PV manufacturing – The challenges

Financial

Operational

Market

Highlights:- Commodity manufacturing(almost)- Standard off-the-shelf technology available

Key success factor:• Lead times in commissioning a unit• Utilization rates• Infrastructure(ex. electricity)

2008 2009 2010 2011(Q4) 2012(ASP Estimate)

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50 $4.25

$2.60 $2.20

$1.20 $1.00 $0.70

$0.45 $0.21

Module($/W) Cell($/W) Wafer($/W)

Polysilicon($/W)

Market Challenges – Dramatic price drops Manufacturing Operations

Investments and returns

Excess capacity

Polysilicon

Wafer

Cell

Module

45.0%

30.0%

37.0%

8.0%

26.0%

4.0%

3.0%

0.3%

17.0%

60.0%

52.0%

89.0%

10.0%

4.0%

5.0%

0.7%

Capex Depreciation Electricity MaterialsLabor Cost Others

Poly Silicon Ingot & Wafer

Cells Module

Investments/MW

Medium Medium High Low

Optimum production scale

Very High Medium Low Very Low

Margins High Medium Low Low

Cost DriversC-Si

Highlights- R&D intensive, not commodity manufacturing- Standard production technology not available - Successful CdTe manufacturing tech

proprietary Success factors• Lead times• High R&D• Sourcing of rare earth metals/raw materials

Market challenges Manufacturing Operations

Investments and returns Cost Drivers

- Narrowing gap with c-Si- Lower conversion efficiency- a-Si : limited efficiency upside- Cadmium : a carcinogen- CIGS : Not cost competitive yet

a Si

CIGS

CdTe

0 10 20 30 40 50 60 70 80 90 100Raw material and consumables Capital Depreciation & amortization Energy

Labour Research & Development Others

a- Si CdTe CIGS

Capital Investments

High Medium High

Optimum Scale of Investment

Low Low Low

Thin Films

Policy support for Manufacturing

Chinese Advantage• Low interest loans (4.8% in Jan 2011)• No principal or interest payments for

first 5 years• Scale of loans much higher (over 60% of

CAPEX funded)• Local content mandated for

manufacturing

India- Local content requirement under JNNSM-Incentives under Rajasthan policy- Duty exemptions

Ontario, Canada- Local content requirement

USA-Sunshot Initiative-- DOE loans(eg. Solyndra)

Italy- 10% higher FiT for made in EUChinese Advantage

• Low interest loans (4.8% in Jan 2011)• No principal or interest payments for first 5 years• Scale of loans much higher (over 60% of CAPEX

funded)• Local content mandated for manufacturing

Half glass full or half glass empty?

• Global PV manufacturing - Where does India stand ?o Crystalline Silicon – Negligible, but relatively bettero Thin Films - Negligibleo PV Manufacturing Equipment – Negligibleo Inverters - Negligible

• What are the challenges?o Market - Global excess capacityo Operational – Scaling up fast, continuous cost reduction, efficiency increaseso Financial – Huge capex outlays, Low cost financing

• Is policy support sufficient?o More can be done

• Silver lining – We can only get better!!

How can we get around the challenges?

• Shammy Khan, VP Strategic Markets, Flextronics - "PV manufacturing- Outsource vs. InSource"

• Dr. VS Gangadhara Rao, Lanco Solar, "PV Manufacturing Technology Options“

• Prasanth Sakhamuri, HHV Solar, "The case for equipment manufacturing in India - experience with thin film equipment & lines & the potential for cost reduction“

• Navakrishna Akkineni, Solar Semi, "Experience with Indian Manufacturers – Strategy & Opportunity"

Thank You