India Revamps Solar Auction Supply Rules, First Solar May Benefit

Date: 26 August 2011
India revamped the rules for its second national auction of permits to build solar power plants, which could boost sales for equipment providers including First Solar Inc. (FSLR) and allow banks to lend more easily to the industry.

The government invited companies to register starting today for the auction that will award licenses to build as much as 350 megawatts of solar photovoltaic plants by 2013. New rules include changes that increase the size and amount of projects companies can win.

Indosolar Ltd. (ISLR), Moser Baer India Ltd. (MBI) and Websol Energy Systems Ltd. (WESL) rose in Mumbai trading after the new guidelines said projects using crystalline silicon technology would have to buy solar cells made domestically. The companies are India’s three largest traded makers of the cells used in solar panels.
“This is a big boon for these companies,” said Madhavan Nampoothiri, principal consultant with Chennai-based Energy Alternatives India.

First Solar, the world’s biggest maker of thin-film solar modules, and U.S. suppliers such as Abound Solar Inc. may still benefit because their technology is exempted from the local sourcing rules, Nampoothiri said. Indian project developers may import thin-film panels because they tend to be cheaper than crystalline, he said.

The government raised the maximum size of each project to 20 megawatts from 5 megawatts and said each bidder could win as much as 50 megawatts of the total capacity. That could attract more companies to participate, such as Tata Power Co., one of India’s largest private power producers, which sat out of December’s auction, citing reasons including small projects that wouldn’t be profitable enough.

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