Chinese imports pose challenge to Indian photovoltaic materials market, says Frost

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Greentech Lead India: Indian market for chemicals and materials used in photovoltaics is estimated to almost double during 2012-15, says a new report from Frost & Sullivan.

However the market is facing stiff competition from Chinese manufacturers who enjoy huge subsidy from Chinese government.

The research says the market for chemicals and materials used to manufacture solar cells (polysilicon, metal paste and wet process chemicals) and solar modules (frontsheet, backsheet and encapsulants) was worth $1.05 billion in 2012 and estimates this to reach $2.05 billion in 2015.

The demand for chemicals and materials used in solar cells and modules is estimated to grow at a CAGR of 22.2 percent till 2015, with the growth for module components estimated at over 25 percent CAGR for the same time period.

The market for photovoltaic in India is driven by government’s aggressive solar implementations through Jawaharlal Nehru National Solar Mission (JNNSM). This will drive growth in related upstream chemicals and materials markets.

India is turning to solar energy to beat the rising crude oil price, coal shortage, high peak power deficit, and uncertainty of nuclear power.

“New opportunities to explore in the market for chemicals and materials used in solar cells and modules are presented with the JNNSM mandating indigenization of solar cells and modules,” says Frost & Sullivan.

JNNSM aims to develop 20,000 MW of grid-connected solar power by 2022. Additionally, plans to promote India as a manufacturing hub for solar products with mandatory indigenization of solar cells and modules are being implemented.

The scheme offers new opportunities to invest in the market for chemicals and materials used in the manufacture of solar products in India, the report said.

With government mandates on indigenization and benefits such as competitive price and quicker lead times, there is a strong case supporting local manufacture of chemicals and materials used in solar photovoltaic products.

A key challenge facing solar PV materials market in India is the low-cost imports of finished cells and modules from China. Several Chinese manufacturers have already opened manufacturing facilities, supported by the state-sponsored loans by the Chinese government.

Chinese companies are also at advantage because they have the monopolized access to certain critical raw materials, such as fluorspar that is used in the manufacture of backsheets, Frost analysts noted.

“Investment in products, such as encapsulants that benefit from smaller lead times, backed by government support through JNNSM will aid in overcoming competition from China,” said Frost analyst. “Continuous innovation to reduce costs and upgrade efficiency will further sustain market expansion.”

Also read: Solar imports impact Indian makers: Renewable Energy minister

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