India Becomes Focus of Global Solar Power Market

As the global solar power market reels from a glut of solar panels due to China’s production surge and Europe’s shrinking demand, India is emerging as the world’s most promising growth market.

India has set the ambitious goal of installing 20 million kilowatts of solar power capacity by 2022 as one solution to a costly and crippling dependence on fossil fuels that has led to constant power shortages for much of the nation. As of early 2012 the nation had less than 1 gigawatt of installed capacity.

Among Indian states, the western state of Gujarat is emerging as the focal point for solar power, having set a goal of 10 million kilowatt hours of capacity by 2022 — half that of the entire nation.

Gujarat’s 60 million people are only about 5% of India’s 1.24 billion population, but the state has India’s fastest growing economy and is one of its most industrialized, with an above-average per-capita GDP. It was also the site of an April investment conference at which electric power operators from Canada, Australia, Spain and other nations praised India’s scheme for providing support for solar energy.

In April the state showed off the Gujarat Solar Park, one of Asia’s largest solar power fields, located in Charanka village in northern Gujarat. The project is the most ambitious project of its kind in the world and embodies for many the promise of India’s solar energy market.

Ironically, the same glut that is causing distress to solar panel makers around the world is helping India achieve its goals. Solar panels now cost just one-third what they did just three years ago. And overstocked suppliers are cutting prices further to tap the Indian market.

Low-priced Chinese and Taiwanese suppliers enjoy an edge, but US manufacturers are also able to bid aggressively thanks to government subsidies. Japanese makers include Sharp and Solar Frontier K.K., a wholly owned Tokyo-based subsidiary of Japanese oil firm Showa Shell Sekiyu K.K.

“There is very limited room left for Japanese companies,” said an official at a Japanese manufacturer.

Sharp is an exception. Through a tieup with a major local construction firm Sharp has managed to get its solar panels into large-scale power generation facilities. It hopes to expand sales by touting product reliability and better technical support.

Hitachi hopes to tap the market by partnering with an Indian firm to produce peripheral components like power control equipment for use in solar power generation.

Other Japanese firms have begun seeking help from the Japan External Trade Organization in penetrating the Indian market for large-scale solar-power generation facilities.

Germany has the world’s largest installed solar capacity as of 2011, with solar power producing about 3% of the nation’s total electricity.

But the world’s largest solar-power plant is the Solar Energy Generating Systems facility in California which has a total capacity of 354 megawatts. Nevada Solar One in Boulder City, Nevada has 64 MW of generating capacity.

China is the world’s biggest producer. Its 400 photovoltaic (PV) companies produce about 23% of the world’s photovoltaic products.