Saturday, February 14, 2009

Moser Baer PhotoVoltaic Pursues Aggressive Growth Strategy

New Delhi/Leslie D'Monte & Kirtika Suneja/February 15, 2009

Rajiv Arya
recently took over as the CEO of Moser Baer PhotoVoltaic (MBPV) after having been its chief operating officer (COO) since September 2007. Prior to this, he was the Chief Technology Officer (CTO) of California-based OptiSolar Inc and launched Arya International — a solar technology and business consulting firm. Having worked in the US for 28 years, he feels it is easier to set up manufacturing units in India, as the gestation period is 18 months here compared to 24 months on foreign shores. In a chat with Leslie D’Monte and Kirtika Suneja, he explains how he plans to make MBPV feature among the top five solar firms in the world. Excerpts:.

What are your immediate plans for the solar division?
We want to make Moser Baer Photovoltaic an over $1 billion unit by the end of calendar year 2010 and the capacity will be one-gigawatt. At $1 per watt of power, we would be a billion dollar company, when we reach a gigawatt capacity. Our current capacity is 120 mw, and year-to-date revenue around Rs 350 crore. This will go up to 300 mw by the end of 2009 across different technology verticals.

The investment into raising our current capacity will come from a mix of resources, including cash flow of the business, private or public markets and debt. We have already raised Rs 815 crore through private equity and are in the process of raising debt. We are in talks with banks for this and they are also forthcoming as solar is perceived as a low-risk business.

So will you hive off the PV business like the entertainment business? Besides, at $1 billion, the PV business would become much bigger than the parent company. How do you explain that?
That question requires me to make a prediction and I wouldn’t want to do that. However, I will say that right now our focus is on growing the business to achieve the milestones that we have set for ourselves. As we go along, we will decide the best way for unlocking the value of the business for shareholders. As for the PV business becoming much bigger, that’s fine.

The two businesses are different and each has its own growth rate. Solar photovoltaic is in a current phase of high growth, while the optical media business has recently gone through a difficult phase but is now well on the road to recovery. The PV business has benefited immensely from the parent company’s eco-system but as the new business grows and stabilises it makes sense to wean it away from the parent and make it self-sustaining. But it is too early to talk about precisely when that will happen.

Your company is setting up grid connected solar farms. How does it benefit the end user?
The end user benefits as he gets power from the grid more efficiently and he does not have to pay anything more. We are currently in the process of setting up two such farms — one in Rajasthan and the other in Punjab, each with 5 mw capacity. It takes about three to six months to obtain land and start the project. These farms will produce power of 1 mw in five phases taking the total to 5 mw.

The government recognises the need to put a solar-specific subsidy programme in place. The government currently subsidises the cost differential between the generation cost and the cost at which the State Electricity Board (SEB) buys it. Moreover, the maintenance cost is negligible because we are dealing with solid state devices, not moving parts. At the most, dust accumulation can lead to a power loss of one per cent. The lifespan of a solar farm is 25 years. The solar market is highly price elastic and the cost goes down with volume increase. Both projects are on track and we plan to start work on the solar farms very soon.

After the rooftop installation in Surat, are you in talks with other state governments for similar installations?
We have ambitious plans for residential, institutional and highway applications. So far, we have done rooftop installations in two malls in the NCR region and there are more than 25 installations in the pipeline with one to 10 Kilowatt-Peak (kWp) of installed capacity. The contract from Roads and Buildings Department of Gujarat was to set up one of India’s largest roof-top solar photovoltaic (SPV) installations in Surat. The SPV system, of approximately 135 Kilowatt-Peak (kWp) installed capacity, will run a 40-kw load for 10 hours every day and will charge a battery bank of 6,000 ampere hours. We are also talking to ten more state governments for these installations and four such big installations are in the pipeline.

The 2010 Commonwealth Games are round the corner. Any plans to light up the Games with solar power?
We have proposed some ideas to the government and conversations are on. We are seriously considering how to use the solar modules in the NCR region for the Games.

How do you see the future of the solar business?
With almost 300 days of solar insolation in India, we can leverage on solar energy as it not only gives energy security but also it reduces our dependence on importing other sources of energy. The solar business has a bright future with both the off-grid and hybrid markets growing faster than the on-grid market.

The on-grid market is growing slowly because of the current market conditions. Introduction of new concepts like net metering wherein the end consumer can actually sell extra power to the state and help in electricity generation will expand the solar market immensely. We are doing demonstration projects for some governments for this. We are also talking to banks for rural electrification as they are not opening new branches because of less power. We are developing programmes with banks to open ATM machines in places where there is no power.

Is manpower a constraint in such a business?
Manpower cost is very small in our business as it is a highly-automated business. Equipment, infrastructure and buildings form a major chunk of the cost. We have a good quality of workforce here. Of the 1,700 people in the PV subsidiary, 75 per cent are engineers and the rest are technicians. As we grow our capacity, we will grow the headcount too.

Which technology is the best-suited for India?
Crystalline is best suited for colder regions and where real estate is at a premium, while thin film is the preferred technology for warmer areas. Concentrators are made for places near the equator. For India, the thin film technology is best-suited.

We are ready to start production of ultra-large solar modules on the 40 MW capacity line which is the largest thin film solar line in India. We already have 80 mw crystalline silicon capacity in Greater Noida and 40 mw of thin film. The concentrator capacity stands at 5 mw now.

See the original article here

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