Building a complete manufacturing ecosystem in India

November 10,2011 Madhavan Nampoothiri Energy Alternatives India

Has India missed the chance to become a PV manufacturing superpower?

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
90% 80%

Annual production - Modules

60%

50%
70% 60% 40%

Japan

EU
50%

USA Japan
30%

40% 30% 20%

EU Rest of the World China/Taiwan

20%
10% 0%

Rest of the World

10%

USA

China/Taiwan
0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: EPIA

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: EPIA

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
60 50 40
Capacity (GW) 40.0
China: 16 GW India: 0.6 GW

Thin Films
4.5 52.3 47.3 41.5 Capacity (GW) 3.5 3 2.5 2 1.5

54.0

4
Moser Baer HHV
60 MW (a-Si)

36.7 32.9

30 20 10 0

28.2

Shurjo

China: 20 GW

India: 1.2 GW

0.5
0

2010

2011

2009

2010

2011

PolySilicon
Source: iSuppli(May 2011)

Wafer

Cell

Module

CdTe

CIGS

a- Si

Source: GTM Research(May 2011)

Global Inverters manufacturing: Not left behind..

Inverter Production Capacity vs. Solar PV Installed Capacity
SMA-35% Market Share(E)

Top Global Inverter Manufacturers

SMA Power One Kaco Fronius REFUsol Satcon Danfoss Solarmax Delta Advanced Energy

45
40 35 30 25 20 15 10 5 0 2009 SMA-40% Market Share

SMA-40% Market Share

Indian Scenario
2010 Invertor capacity(GW) Installations(GW) 2011

AEG Delta Electronics (WIP) DB Electronics

PV Manufacturing equipment : European domination continues..

Rank
1 Applied Materials 2 Centrotherm Photovoltaics AG 3 GT Solar Incorporated 4 Meyer Burger^ 5 Gebr.Schmid GmbH+Co 6 Ulvac, Inc. 7 Roth & Rau AG* 8 RENA Sondermaschinen GmbH

Company

Revenues ($Million)
1495 USA 825 Germany 775 USA

Country

735 Switzerland 570 Germany 380 Japan 325 Germany 300 Germany

9 48th Research Institute of CETC

10 Oerlikon Solar ^ Second after acquisition of R&R * To be acquired by Meyer Burger R&R sold CdTe coating division to undisclosed Chinese buyer List includes both c-Si and Thin Film capacities

295 China
195 Switzerland

Source: VLSI Research

HHV in India

Indian PV manufacturing The challenges

Financial Operational Market

Market Challenges Dramatic price drops

$4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $2.60 $2.20 $4.25
Excess capacity

Manufacturing Operations

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

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

$1.00
$0.50

$1.20

$2008
Module($/W)

$1.00 $0.70 $0.45 $0.21

2009
Cell($/W)

2010

2011(Q4) 2012(ASP Estimate)

Polysilicon($/W)

Wafer($/W)

Investments and returns

Poly Silicon Ingot & Wafer Medium Cells Module

C-Si
Module 8.0% 0.3%

Cost Drivers
89.0% 0.7%

Investments/ MW Optimum production scale Margins

Medium

High

Low

Cell

37.0%

3.0%

52.0%

5.0%

Very High

Medium

Low

Very Low

Wafer

30.0%

4.0%

60.0%

4.0%

High

Medium

Low

Low

Polysilicon 0.0%

45.0% 20.0% 40.0% Electricity

26.0% 60.0% Materials

17.0% 80.0% Labor Cost

10.0% 100.0% Others

Capex Depreciation

Market challenges

Manufacturing Operations

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

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

Investments and returns

Thin Films
CIGS High
CdTe

Cost Drivers

a- Si Capital Investments Optimum Scale of Investment High

CdTe Medium

CIGS
a Si

Low

Low

Low
0 20 40 60 80 100
Raw material and consumables Energy Research & Development Capital Depreciation & amortization Labour Others

Policy support for Manufacturing

Ontario, Canada - Local content requirement Italy - 10% higher FiT for made in EU 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

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

Chinese Advantage Low interest loans (4.8% in Jan 2011) No principal or interest payments for first 5 years India Scale of loans much higher (over 60% of CAPEX - Local content requirement under JNNSM funded) -Incentives under Rajasthan policy - Duty exemptions Local content mandated for manufacturing

Half glass full or half glass empty?

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

What are the challenges?

o Market - Global excess capacity o Operational Scaling up fast, continuous cost reduction, efficiency increases o 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