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Why India could become First Solar’s second-biggest market

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India’s rising electricity demand

According to the US Energy Information Administration’s (or EIA’s) “International Energy Outlook” published in 2013, India’s electricity demand should grow at 3.8% per year through 2040. India’s demand should surge from the current 1,035 terawatt hours (or TWh) per year to over 2,500 TWh in 2040. The International Energy Agency (or IEA) is even more bullish, expecting 5% annual growth up to 2035.

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Solar outlook

While coal is and will continue to be the prime fuel for electricity generation in India, the focus on renewables is growing. Coal production in India isn’t able to keep pace with domestic demand. As a result, coal imports are growing rapidly. Moreover, India doesn’t have sizable natural gas reserves. With vast untapped potential, solar energy (TAN) should play a big role in powering India.

The new government has set an ambitious target of 100 gigawatts in solar capacity by 2022 from a mere 2.2 GW at the end of 2013.

Scope for First Solar

Companies like First Solar (FSLR) and SunEdison (SUNE) have a presence in India’s solar market. In the recently concluded Renewable Energy Global Investor meeting organized by the government of India, First Solar and SunEdison committed 5 GW and 15 GW of solar capacity additions, respectively, over the next five years. The company generated $157 million in revenue from India in fiscal 2014—higher than its generation from Germany. The company is currently undergoing two projects with a combined capacity of 85 megawatts.

First Solar’s strategy differs from the China-focused strategy of Yingli Green Energy (YGE) and Trina Solar (TSL) amid the slowdown in photovoltaic cell installations in Europe and growing demand from China.

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