India is hot! You can walk around in a t-shirt in streaming sunshine in January, a period that we in Northern Europe call “winter” and during which we may be ice skating or skiing! The Indian food is hot and spicy as well. And the economy in India is “hot” - all excellent conditions which forecast a sunny future for their PV market.
Potentially one of the richest countries
During the Conference “The Solar Future: India” last week in New Delhi it became clear that India is on its way to becoming a solar super power. The question is not if, but rather when. The majority of the experts and participants present at the Conference believe India will be ranked among the major solar PV markets within 5 years.
There is of course good reason to believe this. There is abundant sunshine for at least 300 days per year. The country has much more sun than Spain. The permanent power shortage leads to power cuts, mainly during peak hours at midday, when the sun shines brightest. The economy, population and energy demand are increasing year by year. And India has no energy sources other than the sun. In a way, it is therefore one of the potentially richer countries in the world in terms of potential energy supply. What is needed to kick-start the development of India’s solar market?
Never seen a PV panel
This fundamentally comes down to one thing: education and information. There is no lack of solar entrepreneurial spirit among the Indian people and companies. Many Indian businessmen have been educated in Europe or the US and have close ties to experienced foreign companies, suppliers, EPCs eager to enter India. Indeed, this is not the most difficult part of India’s market development.
More challenging is the financial banking sector. And financing is key in the development of any PV market. Unfortunately, it is not easy to import financing from foreign (experienced) institutions. The Indian financial sector will need to be educated right from the bottom. Indian bankers who have probably never seen PV panels before are now being asked to finance grid-connected project developments costing over 10 million dollars. No wonder they have many questions and take time to evaluate their risks. The country is not familiar with project financing for renewable energy systems, and definitely not used to loans spanning more than 10 years. Basic information needs to be spread. What is solar PV? How reliable is this energy technology? What are the risks involved? Does it make sense to invest money in this energy source?
It takes 4 years to develop a market
As they say, “Seeing is believing.” More real-time monitoring of data, developers with track records, and real panels on the ground are necessary. No doubt this will happen. In a few years these Indian bankers and investors will see that solar projects probably are the most steady cash flow generators possible. It is just a matter of time before the financial sector will embrace solar PV.
As stated in a previous blog, it takes time to educate and develop a market. For most markets it takes some 3 to 4 years to develop into a market of several hundred megawatts in annual installations. Let us recall Spain; in the first year, with the world’s most generous feed-in tariff, Spain did installed “only” 13 MW of new grid-connected installations. Four years later (2008), Spain had the world’s largest market, with 2600 MW. In 2008, the PV market in the whole of India, which is larger in size than Europe with at least four times Europe’s population, installed less than 15 MW. It is expected that this figure could rise to around 500 MW in 2011. Based on the many State programs and initiatives, this figure will surge to more than 2000 MW by 2013.
Take the Indians on a European PV tour
The Indian market will be kick-started by the National Solar Mission and the Gujarat PV Program. These two initiatives alone could lead to more than 500 MW of new installed PV power in 2011. And many more Indian States will follow suit. With a global solar industry looking for larger markets besides Germany, it might be an idea to help the Indian bankers and investors - taking them on a tour of Germany, Spain or the USA; showing them the hundreds of large-scale projects already implemented; teaching them about real-time data monitoring; informing them about financing possibilities and the risks involved - in essence, showing them that solar PV is a mature technology and not rocket science, and hence building their trust. The sooner these Indian financial stakeholders are convinced, the faster the Indian PV market will grow.
Take the Indian bankers to cold Europe
There is no longer a lack of modules or investors in the global market, and there is no shortage of EPCs willing to implement projects in India jointly with local people. The main obstacle is lack of information and trust among financial stakeholders. This does not have to be the most difficult task. Let’s arrange a European large-scale PV project tour for the Indian financial executives. The costs for this will be worth the money as it will help to develop the huge new booming PV market.
Indeed, the biggest problem may well be that of rendering the tour attractive to these Indian visitors - taking them from their hot climate to one which is cold not only in terms of the below zero degrees climate but in terms of frozen economies - and to top it all, non-spicy takeaway food!
Solarplaza is ready to organize this European PV tour for Indian PV financial executives. Which of our stakeholders are willing to contribute?