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Potential of Solar Power in India

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  • Full Name Full Name Comment goes here.
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  • Dear Mr. Jauhari:
    Our group is interested to explore investment opportunities in Solar Power Plants in India.
    Please forward your e mail address, so we may communicate directly.
    Thanks and regard
    Sabir Saleem
    sabirsaleem@totalcare.us.com
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  • Hey,
    I find your posts very interesting and informative.
    What do you do for a living, I am an entrepreneur for solar projects and building strengthening solutions.
    Give me your mail address I would like to exchange some information with you.
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  • 1. Potential for Industries related to Solar Power in India and
    M&A opportunities in C-Si module Segment
    Institute of Management Technology Ghaziabad
    Akash Jauhari IMT Ghaziabad
  • 2. Background: Solar Power
    Solar Power Value Chain
    Related Business: Production, Technology Providers, Power Plants, Finance, Consultancy, Engineering & Architect
    Indian Perspective: Role of MNRE, IREDA, CERC, JNNSM
    Companies present in India
    Akash Jauhari IMT Ghaziabad
  • 3. Key Finding
    • JNNSM puts thrusts on grid connected system. Also incentives like PPA’s, tax benefit and financing, make power project most promising segment.
    • 4. Annual revenues from solar power in India to grow from $ 107 million in 2013 to $ 2300 million in 2022 with a CAGR of 36%.
    • 5. India’s cumulative PV installations to be around 19.5 GW by 2015, making it among top 8 solar power producing countries.
    • 6. Exports continue to drive production for another 3-4 years, before domestic demand getting substantial
    Akash Jauhari IMT Ghaziabad
  • 7. Key Findings
    • Annual revenues from C-Si module market in India to expected to grow from $ 611 million to $ 3030 million between 2013-2022, with a CAGR of 18%.
    • 8. Thin film to remain competitive to C-Si technology in India, as cheaper and better suited to Indian climate. Cumulative domestic demand for thin film module to over 3.5 GW between 2013-2022. Target price should be $1/W.
    • 9. Rather than setting up a C-Si module manufacturing plant in India, it will be financially more viable to acquire a existing firm and expand according to requirements.
    • 10. Polysilicon and Wafer & Ingot segment, which are currently non existent in India, are expected to be $ 2300 million and $ 1500 million respectively
    Akash Jauhari IMT Ghaziabad
  • 11. Recommendations
    Existing module manufacturers in India should invest in forward integration, mainly in inverters, power project and project financing. – margin get higher
    Indian Players should focus on identifying customers in hot markets of Italy, Japan and US. They need to invest in improving their supply chain and sales channel in order to competitive.
    Global leaders with core competencies in polysilicon and Wafer & ingot production should invest in India, as technology is not available. – Hemlock semiconductor & REC.
    It is better to invest in thin film power plant rather than C-Si in India, due to cost & performance issues. Expected to break even in 10 years, while CERC PPA’s available for 25 years at Rs 15.3 per KW hr.
    Akash Jauhari IMT Ghaziabad
  • 12. Recommendations
    For foreign companies & investors:
    Explore opportunities to work with Indian firms like joint projects, collaborations and M&A. This will help to access domestic market faster and capture domestic market easier.
    In C-Si Module segment, prospect target companies are –
    Websol Energy Ltd. Kolkata
    PV Power tech Mumbai
    Akash Jauhari IMT Ghaziabad
  • 13. About Research
    Objective
    • To find the potential of industries related to solar power value chain in India based on plans and policies of Central Government.
    • 14. To find M&A Opportunity in existing C-Si module segment.
    Data Sources
    • Secondary data source : Deloitte Resource, Garter, The Economist
    MNRE, CERC, IREDA.
    Research Design
    • Time frame for projections – 2013-2022, based on current data
    • 15. Field Study
    • 16. Exploratory in Nature
    • 17. Financial data, quantitative in Nature
    Akash Jauhari IMT Ghaziabad
  • 18. Solar PV Value Chain
    Source: Nor Sun Corp.
    Akash Jauhari IMT Ghaziabad
  • 19. Jawaharlal Nehru National Solar Mission
    • Launched in Jan 2010 with a objective to make India a global leader in Solar Power by creating policy condition for its diffusion.
    Mission document, JNNSM
    • Equal Weight age for PV and CSP for grid power target.
    • 20. Soft finance facility available through IREDA, Govt. of India.
    • 21. SEZ like policies – zero import duty, exempt from excise duty, priority sector lending, SIP etc
    Akash Jauhari IMT Ghaziabad
  • 22. Projections for Solar PV power in India
    Data Required for the task
    • Total Capacity to be installed
    • 23. JNNSM
    (assuming linear interpolation)
    • Capacity Utilization Factor (CUF): 18% 2011
    to above 20% by 2022
    – Performance of Solar Power Plants in India,
    CERC, Sept. 2011
    • Pre Purchase Agreement(PPA) : Rs 15.3/K Whr (PV) Solar thin film power plant
    - CERC Tariff Regulation, Sept 2010
    • Required Rate of Return = COC + Risk associated + profit = 14% (assumed)
    • 24. Research study by Energy Bulletin Group.
    • 25. Adjusting targets: As of 2011, total installed capacity is only 300 MW. Thus scenario with adjusted capacity may be employed, ex 75% of JNNSM.
    Akash Jauhari IMT Ghaziabad
  • 26. Projections for Solar PV power in India
    Akash Jauhari IMT Ghaziabad
  • 27. Projection for Solar Thermal in India
    Akash Jauhari IMT Ghaziabad
  • 28. Estimate for Module domestic market in India.
    • C-Si module and thin film capture almost entire market in India.
    • 29. Current market of C-Si is about 90%, rest being Thin film.
    • 30. We expect thin film to gain market share in India:
    • 31. Newer technology with lower polysilicon requirement
    • 32. Lower cost compared to C-Si
    • 33. Better suited to Indian condition of high temperature
    • 34. New plants being set up in India. Ex. Moser Bear
    • 35. Market share of thin film to grow at an average of 10% between 2012-22
    C-Si module
    V/S
    Thin Film
    Akash Jauhari IMT Ghaziabad
  • 36. Estimate for Module domestic market in India.
    • Price trends of C-Si and thin film modules:
    • 37. Benchmark cost of C-Si and thin film for 2012 are $ 1.75/Watt and $ 1.4/Watt
    - CERC publication Sept 2010.
    • Prices of module are predicted to fall 25%,
    40% and 60% between 2010 and 2013, 2015 and 2020.
    - EAI Research on price trends in solar PV module
    • Considering liner interpolation between
    marked years.
    • Required Rate of Return = 14%
    C-Si Cost & Price 2007-2010
    source: Display Bank,2010
    Akash Jauhari IMT Ghaziabad
  • 38. Estimate for Module domestic market in India.
    Akash Jauhari IMT Ghaziabad
  • 39. Setting up a Thin Film Power Plant Project
    Project Appraisal and financing.
    • IREDA Guidelines for solar energy lays the Financing options for the project.
    Max. Loan up to 70%, Rated ranging from 11.25 – 11.9 %
    • Initial Cost as taken as given by CERC in benchmark cost for solar projects, 2011-12
    • 40. Estimating Cash flows for a 10 MW project, assuming 50% debt taken at 11.5% 20 years.
    • 41. Total Initial cost comprising of land, civil works, modules etc comes out to be 27.13 million. Straight line depreciation for 20 years. Tax = 35%
    Akash Jauhari IMT Ghaziabad
  • 42. Setting up a Thin Film Power Plant in India
    Akash Jauhari IMT Ghaziabad
  • 43. Solar P.V Value Stack
    Source: Green Rhino Energy
    Akash Jauhari IMT Ghaziabad
  • 44. Cell & Module Production in India
    Annual Production of Cell & Module in India & total Import and export related to solar industry
    ( Source: MNRE annual presentation, Sept 2010)
    Akash Jauhari IMT Ghaziabad
  • 45. C-Si module Manufacturers in India
    Source: Company websites
    Akash Jauhari IMT Ghaziabad
  • 46. Cell & Module Production in India
    Rather than setting up a new C-Si plant, its better to Acquire an existing production facility. This will help to access the market faster and hence higher Market Share in course.
    • Short listing criteria from MNRE list of registered companies
    • 47. Core competency of the firm to be PV module manufacturing. Manufacturing capacity to be 25MW or more.
     
    • Companies which are subsidiaries of National/International heavyweight groups have been excluded, as the purpose of this document is prospective acquisition.
     
    • Government companies have been excluded for the same above reason.
     
    • Companies which are considerably into services like installations or maintenance along with manufacturing have been avoided.
    Akash Jauhari IMT Ghaziabad
  • 48. Criteria for Selecting prospect Target
    • Market Valuation and Book Value of firm (Listed companies)
    and Financial Valuation for Non listed.
    • Production Capacity
    • 49. Scope for Expansion – Financial & Technological
    • 50. Supply chain network (Domestic & International)
    • 51. Business Group/ Family Background
    • 52. Core Competency of Group
    • 53. Match with Business Portfolio
    Akash Jauhari IMT Ghaziabad
  • 54. Prospect Target : Websol Energy Kolkata
    Stock Performance
    Acquisition Scenario
    Akash Jauhari IMT Ghaziabad
  • 55. Prospect Target : PV power tech Mumbai
    Group of Companies under Sun Pharma:
    Caraco Pharmaceutical Laboratories
    Sun Pharmaceutical Industries Inc.
    Sun Pharmaceutical (Bangladesh)
    Alkaloida Chemical Company Exclusive Group Ltd.
    Chattem Chemicals
    Taro Pharmaceutical Industries Ltd.
    Owner : Mr. Dilipsanghvi
    Board Members MEMBERSHIPS*
    Chairman of the Board and Chairman of Sun Pharma
    Taro Pharmaceutical Industries Ltd.
     
    • Company has good international networks in Europe –Germany , Belgium
    • 56. International certification
    • 57. Core Competency – Module Manufacturing
    • 58. Scope to Expand
    • 59. Mumbai –SEZ : Export & Domestic distribution advantage
    Akash Jauhari IMT Ghaziabad