In 2019, LONGi Solar was just starting to set up its footprint as a module supplier in India. In a short span of less than two years, it has emerged as one of the leading module suppliers in the country, catering to around 22-24 per cent of the annual solar power market. The China-based vertically integrated solar player supplied close to 1,500 MW (DC) of modules in 2020. This is besides the 100-120 MW capacity it catered to in the solar commercial and industrial (C&I) space in India.
In an interview with LONGi’s Director of Business for India and Sri Lanka , Pradeep Kumar-, highlights the key factors that make LONGi stand apart, the importance of strong developer-vendor partnerships, key trends shaping the Indian solar market, regulatory challenges that need to be addressed and the outlook for 2021.
Q.What were LONGi’s new offerings in 2021 and what was the uptake?
Currently, we are offering Hi MO 4 series which is 445-450 Wp module in a 9 busbar configuration, The product has received BIS approval. This has been an incredibly positive improvement as the industry can make use of a higher efficiency, lower losses, and much lower degradation levels. We have already supplied over 2GW of Hi MO 4 series modules to Indian solar market.
Apart from this, a key offering in 2021 is the Hi MO 5 series designed for ultra-large power plants. It is in the process of getting a BIS approval. This is a 182 mm wafer-based module that would start from 530 Wp size and go up to 545-550 Wp. This would be our latest offering, and we will continue to offer Hi MO4 series.
What are the benefits of Hi MO5 series modules? What would be the impact of Hi MO 5 series on project cost?
Hi-MO 5 has high power and high efficiency, and the open circuit voltage is consistent with conventional modules, so it is the lowest BOS cost product for ultra-large power stations. Compared with mainstream 410W module (158.75mm), Hi-MO 5 can save more than $1.2 cents /W in BOS cost (using fixed rack, centralized inverter), and more than $0.59 cents /W in BOS cost compared with M6 445W module. If string inverter and tracker are used, the BOS cost saving advantage will be more obvious.
Hi-MO 5 can increase the single string power and significantly increase the DC/AC ratio of the power station when string inverters are used. AC-side equipment cost is reduced, thus reducing the LCOE.
Due to higher utilization of container space, Hi-MO 5 can reduce logistics costs
Q.What would you say about the ongoing debate about the 182 mm wafer-based modules becoming an industry standard versus the 210 mm wafer-based modules?
At LONGi, we invest about 6-8 per cent of our revenue on research and development (R&D). Our job is to identify the technology that helps with the lowest LCOE at the best possible efficiency level. We have tried and tested all types of technologies extensively and the conclusion we arrived at is that 182 mm wafer size is the most efficient for the industry. It can currently be mass produced at the lowest cost giving maximum benefit to our client.
Q.What are the biggest challenges that LONGi or any other large module manufacturer faces in India?
A key challenge that has emerged for large module manufacturers globally pertains to the supply chain. After the issue of polysilicon supply and prices were addressed, there was a new issue of solar glass shortage. This comes as the global demand for modules increased in the last quarter of 2020, at the same time whether solar industry is pivoting toward bifacial panels, which increase glass requirements. And manufacturing capacity for glass cannot be expanded in short duration due to technical and environmental factors.
As glass prices continue to climb in the short term (at least in H1 2021), it can severely impact module production, leading to increases in module prices. The resultant impact on end users such as project developers, can be severe in terms of their project economics. In a price sensitive market like India, this is a concern.
China itself had upped its solar target based on revised 5-year plans. It has revised its plan from 40 GW capacity addition to 70 GW every year from 2021. Other countries like the US have also increased their solar targets. This would further create a pressure on demand for modules. We believe that this problem would be persistent for the next 12-14 months until the production for glass is expanded to meet demand. In India, it is particularly important for developers to choose strong partners who can leverage their scale and are able to meet their commitments.
Another issue impacting all large China-based manufacturers in India is the high volatility / fluctuations in currency conversions between CNY, USD and INR.
Q.How has LONGi addressed or plans to address these challenges?
We are a highly vertically integrated player; hence we are able to mitigate in part the supply chain impact on our production. However, we are also dependent on 3rd party sources for various components like glass, but we ensure that we secure them in advance by concluding long-term supply contracts for solar glass for with the leading industry players.
In fact, LONGi had foreseen this glass shortage and therefore, managed to secure the long-term contracts. That is the kind of commitment we have to our clients. It must be noted that we fulfilled 100 percent of our orders at a time when the entire industry was facing supply and logistics constraints.
Q.How did the Indian solar power market perform in 2020?
While COVID-related extension pushed the timelines of projects by 5-6 months leading to a comparatively lower installation rate in 2020, 2021 looks to be a promising year for the Indian solar industry. Clubbed with government’s aggressive push with cohesive policy measures like Ministry of Finance’s decision to reduce the Performance Bank Guarantee (PBG) and Earnest Money Deposit (EMD), Ministry of Power’s decision to allow Letter of Comfort issued by IREDA/PFC/REC in lieu of bank guarantee, we have a positive outlook for next year. For the first time in many years, we can also expect a significant capacity addition when it comes to manufacturing of solar cells and modules in 2021 and this would further increase in years to come. Special thanks to government of India’s aggressive push for self-reliance.
Q.How much capacity is lined up in India in 2021?
According to many estimates, India has a plan to set up 12-13 GW of solar power capacity per annum to achieve a target of 100 GW. However, due to a variety of reasons, local capacity addition has not been up to the mark. Last year’s capacity addition was much lower due to COVID-19 related challenges. With this scenario, the government has launched a variety of tenders to boost project supply. Large developers who were unable to install significant capacities in 2020 are looking to make up for the lost opportunity. Almost all large developers are planning to develop 1-2 GW of capacity this year. This is a good sign. If their plan materialises, this will imply a capacity addition of 12-15 GW in 2021.
Q.What is the advantage of working with LONGi?
LONGi is the one of the few suppliers who can honour its commitments on time. So, our track record for delivery has been extremely strong.
India is a key market for LONGi. We are determined to meet our client’s need and support the country in meeting its solar power development targets.
Q.What are the prospects for C&I solar market in India?
Large scale commercial and industrial users are increasingly moving towards rooftop solar projects to reduce dependency on grid and electricity boards. Particularly in south India, with high irradiation, this is proving to be a strong economical model. The trend has picked up pace especially in the past two years and we expect it to grow at a much higher rate in the coming years. The government has also been promoting solar power development in this segment.
At LONGi, we have a separate dedicated team to cater to this segment. We see strong potential for in the C&I space . Since LONGi only deals with high-efficiency modules and rooftops are always constrained for space, we have a natural technology and product advantage.
Q.In India, which segment is more price sensitive – C&I or utility?
In my overall experience of selling in the solar space in India, I have not met a single customer who is not aggressive in terms of price negotiations. India overall is a price sensitive market.
So, I would say that both C&I and utility-scale segments are equally price sensitive. The difference lies in the fact that smaller C&I players can still depend on polycrystalline products as the project size is small and can be financed through internal resources. Their knowledge may also limited given the fact that solar is not the core part of their operations.
With the larger C&I players, the project economics changes due to multiple factors. Project sizes are larger requiring proper financing. In most cases, their lenders would not approve module suppliers that do not have a bankable track record as that would pose a risk for their own portfolio. This would propel them to go for high quality modules by leading manufacturers.
One can say that players in the C&I segment have realised that any compromise in terms of quality would have a long-term adverse impact on their portfolio.
Q.What are the key regulatory challenges faced by manufacturers in India?
In my view, two main challenges are BIS approvals and the Approved Lists of Models and Manufacturers (ALMM). The government has been extremely supportive in getting BIS issues resolved, but there continues to be delays in various processes. The ALMM order needs more clarity. The process of getting listed is time-consuming, and this may translate to project commissioning delays and supply chain disruptions.
Q.There has been a great deal of push from the government for Atma Nirbhar Bharat. What is LONGi’s strategy in this regard?
LONGi always has big plans. We are in India for a long-term play. We actively explore local manufacturing opportunities and with the right time and conditions, we will not hesitate in setting up facilities in India.
Our entire team, including the decision-making group based in India, completely supports the government’s mission of going local.
Q.Is LONGi catering to India’s cell and wafer demand as well?
India has an overall solar cell capacity of around 2 GW. LONGi supplies wafers to many industry players. However, this is miniscule relative to LONGi’s overall wafer production and supply across the world. We have a global wafer production capacity of around 75 GW.
Q.How do you expect the business model and competitive landscape changing in 2021?
The industry has learnt a great deal from the issues they faced in 2019 and 2020 and we see several positive trends emerging.
One, India’s solar power industry has become more quality conscious. This is reflected in the fact that all large and serious developers are working towards developing strategic partnerships with select vendors. Until 2019, the mix of module suppliers to India comprised a large number of tier II manufacturers especially given the price sensitive nature of the market. However, as the industry matured during 2020, it has already shifted towards a top few Tier 1 manufacturers. So, we expect very healthy competition among manufacturers in 2021 and in the years to come as the industry realises the importance of bankability and the advantages of high efficiency and high reliability modules.
Second, with these strategic partnerships in place, the decision making at developers’ end would become much faster thus ensuring timely deliveries and installations.