What is behind India’s love affair with thin film?

There are at least three good reasons why thin film is doing well in the Indian market. The question for the beleaguered sector is how long these factors will continue to hold sway.

In what could be thin film’s most challenging year to date it was good to see at least one manufacturer has been reporting good news.

US cadmium telluride (CdTe) panel maker Abound Solar inked a deal with Solar Integration Systems India Private Limited to build a 1 MW plant in Kadiri, in the Indian state of Andhra Pradesh, with support from the Jawaharlal Nehru National Solar Mission (JNNSM).

This was not the Loveland, Colorado, company’s first foray in India. Last July it bagged a US$9.2 million long-term loan from the Export-Import Bank of the United States (Ex-Im Bank) to ship modules to Punj Lloyd Solar Power for a 5 MW project in Bap, Rajasthan.

Other thin film companies, and most notably First Solar, have had similar success in the Indian market. In fact, India is probably the only major PV market in the world where thin film is the dominant technology.

Dr Tobias Engelmeier, managing director of Bridge to India, a renewable energy consultancy, says: “At the end of last year it was 80% of installed modules on the ground.”

That is a significant share, particularly at a time when thin film is being edged out of practically all its other markets by cheaper crystalline-silicon panels. So what makes India different?

Observers point to three factors: thin film has a better performance than crystalline silicon in India’s sweltering climate; it is not subject to a local content requirement under the JNNSM; and US panel makers have benefited from Ex-Im Bank’s help in exporting to India.

While everyone agrees that these three features of the market have contributed to thin film’s success, there is less of a consensus over which is the most important factor. MJ Shiao, a solar analyst for GTM Research, believes performance is the strongest card.

More kilowatt-hours

“A lot of thin film manufacturers have been able to communicate to the Indian solar market that thin film does produce better in the India climate than crystalline silicon technologies,” he says.

“With hot, muggy Indian weather the thin film panels will produce more kilowatt-hours per kilowatt than a crystalline silicon module. You're getting a little more bang for your buck.”

In contrast, Stefan de Haan, principal photovoltaic analyst at IHS iSuppli, says: “The underlying reason is that they can get around the local content criteria using thin film. That's why the American CdTe producers First Solar and Abound Solar are very successful there.” 

Engelmeier does not buy either argument, though. “If we look at the higher temperature coefficient, I think the verdict is out on that,” he says. “It's not the module but the whole system you need to look at, and in terms of the system I'm not sure it's so much of an advantage.”

Regarding the domestic content requirement, he adds, it only applies to the JNNSM. And in Gujarat, where there is no local manufacturing stipulation, thin film still dominates. “That tells me that probably that argument isn't valid,” Engelmeier says. 

Instead, he theorises: “I think that what we see is a very strong push by First Solar based on US Ex-Im Bank loans. Because the market is so small in India, one individual player can completely distort the picture, and that's what's happened.

“I would say a large part of the thin film success in India is the sales success of one company, named First Solar.”

Local content

If he is right then it has important implications for thin film’s fortunes in India, since the Ex-Im Bank cannot continue to prop up exports forever. For that matter, the local content requirement is unlikely to be of much help to thin film in the long term, either.

“If they decided to implement some form of local content criteria for thin film, then this would change the case completely,” says de Haan. Similarly, there is no guarantee that home grown manufacturing will be required in future editions of the JNNSM.

That leaves only thin film’s hypothetical superior performance as a unique selling point in the Indian market. As Engelmeier points out, this claim is open to question.

Unsurprisingly, then, most analysts predict thin film will not be able to maintain its current stranglehold on the Indian market for much longer. 

Says Shiao: “With such over-supply in the module production market, if Chinese crystalline players are able to sell into India, it is going to be one of the bigger markets this year and then going forward. Thin film's not going to dominate the landscape.”

De Haan agrees. “If the local crystalline industry grows in parallel with the market and brings their cost down, which they have the potential to, then they will more and more penetrate into the domestic market,” he says.

“In the end this artificial thin film bubble that we see there now will decrease to some extent.”