New Delhi: China’s largest solar equipment maker GCL-Poly Energy Holdings Ltd plans to invest in India, attracted by the nation’s emerging green economy.
As part of its India entry plan, GCL-Poly Energy Holdings Ltd is in talks with Subhash Chandra’s Essel Group to set up a solar module manufacturing facility. The Hong Kong-listed firm, which acquired bankrupt SunEdison’s solar material business last year, also plans to develop solar power projects in India.
“GCL-Poly plans to set up a solar power project platform in India. They are also in talks with Essel Group for setting up a module manufacturing facility. It makes sense as one would be able to control costs,” a person aware of the matter said on condition of anonymity.
India is working on a plan to make local manufacturing of solar power generation equipment competitive, attracting foreign investments. Solar power tariffs have declined sharply because of plunging prices of solar modules.
Modules account for nearly 60% of a solar power project’s total cost and their prices fell by about 26% in 2016 alone.
Essel Group has been in talks with the Chinese firm, confirmed another person, who also declined to be named.
Most solar power developers in India have been sourcing solar modules and equipment from countries such as China where they are cheaper. Domestic module makers include Waaree Energies Ltd, Tata Power Solar Systems Pvt. Ltd, Vikram Solar Pvt. Ltd and Adani Group.
New York-listed Trina Solar Ltd is the other Chinese firm that had evinced interest in setting up a solar equipment manufacturing plant in India.
Essel Infraprojects Ltd, an Essel Group firm, has a presence across sectors such as green energy, transportation, electricity transmission and distribution, and urban infrastructure.
Module prices are expected to extend their decline in 2017 as global supply exceeds demand.
“As the largest supplier and installer of solar modules, China will continue to drive global pricing. The country’s demand is expected to be up to 20% lower than in 2016—as against a record 34GW of installations in 2016, it is expected to add only about 28GW in 2017—putting downward pressure on prices,” consultancy Bridge to India wrote in a report earlier this month.
India’s solar power generation capacity has more than tripled to 10,000MW from 2,650MW as of 26 May 2014. Of the installed power generation capacity of 314,642MW, green energy accounts for 16%, or 50,018MW.
“I am in continuous dialogue with the manufacturers of solar equipment in India and I am happy to share with you that there is now quite a significant interest to set up solar manufacturing in India,” Piyush Goyal, Union minister for power, coal, mines and new and renewable energy, said last month.
India, the world’s third-largest energy consumer after the US and China, plans to set up 175GW of renewable energy capacity by 2022 as part of its global climate change commitments. Of this, 100GW is to come from solar.
Queries emailed to GCL-Poly Energy Holding on Monday evening remained unanswered. An Essel Infra spokesperson declined to comment in an emailed response.
Overseas investors such as Japan’s Mitsui Group, CDC Group Plc, France’s Total SA, State General Reserve Fund of Oman, UK Green Investment Bank Plc and Investment Corp. of Dubai have been looking to invest in India’s green energy sector.
India’s demand for renewable energy is expected to grow sevenfold by 2035, according to the latest edition of BP Energy Outlook. This means the share of renewable energy in the country’s fuel mix will increase from 2% to 8% by 2035.