US-based solar technology company, First Solar, has announced plans to establish a photovoltaic (PV) thin-film solar-module manufacturing facility in the state of Tamil Nadu, India. With a projected manufacturing capacity of 3.3 gigawatts (GW), the fully vertically integrated site represents an investment of $684m and is set to begin operations in 2023.
The project also aligns with India’s clean energy agenda, which involves commitments on behalf of the government to install 175GW of renewable capacity by 2022 and to have renewables constitute 40% of the country’s energy consumption by 2030.
“We have many long-standing customers in the country that will be pleased to have access to an advanced PV module that is made in India, for India,” Mark Widmar, chief executive officer at First Solar, said in a statement following the announcement.
First Solar’s expansion into India, along with an ongoing expansion of its US operations, is projected to double the company’s nameplate manufacturing capacity to 16GW by 2024. In June, the company announced an almost equivalent investment of $680m into the expansion of its manufacturing operations in Lake Township, Ohio, which is likewise expected to commence operations in 2023.
Since 2003, First Solar has announced a total of 46 investment projects worth $9.42bn, according to fDi Markets. In 2020 alone, the company announced investments worth an estimated $1.43bn towards projects expanding its US operations.
Moreover, First Solar is the only firm among the world’s 10 largest solar companies that has US-based headquarters and does not manufacture in China.
Joining the race
First Solar already features as one of the largest foreign investors in the Indian renewable energy sector, according to fDi Markets.
“India is an attractive market for First Solar, and not simply because our technology is advantaged in its hot, humid climate,” said Mr Widmar. “It is an inherently sustainable market, underpinned by a growing economy and appetite for energy.”
fDi Markets data reveals that the number of renewable foreign investment projects announced in India peaked at 28 projects in 2015, coinciding with the government’s pledge to install 175GW of renewable energy by 2022. Since then, however, green energy projects have gradually tapered, with only four announced in 2020.
Given the slump, analysts suggest that achieving the 2022 target is improbable: “The latest announcement from the Ministry of New and Renewable Energy suggests that India has now crossed 100GW of renewable installed capacity,” Rohit Patel, vice president of renewables at Rystad Energy, tells fDi. “Therefore, India will need another 75GW installation in the next 16 months to reach its targets, which looks unrealistic.”
Mr Patel cites issues related to “land acquisition, evacuation infrastructure, lack of consistent state policies, payment delays by distribution companies and availability of financing” as all having hindered India’s installation of renewable capacity.
Aditi Mittal, Asia analyst at risk intelligence company Verisk Maplecroft, agrees that prospects for the targets are bleak, emphasising the role foreign investment could play in installing renewable capacity. “As domestic sources continue to reel under the pandemic-induced economic contraction, foreign investments would be key in financing this capacity,” she says. “However, the trajectory of foreign direct investment (FDI) in India’s renewable sector has been tepid.”
Despite these setbacks to the country’s renewable ambitions, Mr Patel argues that India is nonetheless in a good position to attract foreign investment into the sector, citing the removal of tariff caps for solar and wind projects and the foreign investment policy which allows 100% of FDI in the sector through the automatic route, as being major draws for investment.
“Being the fastest-growing major economy, the demand growth in the power sector presents enormous opportunities for foreign investors.”
This article first appeared in the October/November print edition of fDi Intelligence. View a digital edition of the magazine here.