SunEdison Plans To Build A $4B Mega Solar Factory in India

SunEdison plans to build a massive, $4 billion solar equipment factory in India with an Indian conglomerate in the logistics and energy business, the company said Monday. SunEdison has been a long time manufacturer of silicon and wafers for making solar cells and chips, and it has historically outsourced solar cell and panel manufacturing from suppliers in China and elsewhere to support its power project development business.

The new factory, with an annual production capacity of 7.5 gig watts, will make the key ingredients for solar panels, starting with poly silicon that will then be turned into ingots and cut into wafers. The wafers will be chemically processed to create solar cells, which will then be assembled into panels. Trina Solar, the largest solar panel maker in the world, reached about 3.8 gig watts of annual production capacity by the end of 2014 while First Solar FSLR +1.47% totaled 2.4 giga watts as of last September.

The factory project with Adani Enterprises reflects SunEdison’s plan to create a secure, long-term supply of solar equipment to grow its project development business. The company is one of the largest solar power project developers in the world if you count both what it has built and in its pipelines. It also wants to use solar panels that won’t be subject to harsh tariffs or other sanctions, which have been imposed on Chinese-made solar products sold into the U.S. and Europe.

Many of SunEdison’s rivals are both manufacturers and project developers, and two of its chief rivals, First Solar and SunPower SPWR +0.04%, both recently announced plans to boost solar panel production. SolarCity SCTY -2.19% bought a solar tech company and is now working on building its first solar panel factory.

“The world of solar has dramatically changed. Two years back you depended on selling solar into developed countries because of their interest in dealing with climate change,” said Pashupathy Shankar Gopalan, SunEdison’s president of Asia Pacific. “Today the economics of solar is such that we are starting to build large projects that don’t need (government) incentives.”

SunEdison plans to form a joint venture with Adani to build the mega factory in Mundra, in the state of Gujarat. The two companies still need to work out a feasibility study and business plan that will spell out their stakes in the venture, Gopalan said. The likely plan is to secure loans for 60% of the $4 billion needed to build and equip the factory, he added.

India is a good choice for the factory because it’s a growing solar energy market, yet it lacks a good manufacturing base to support that growth, Gopalan said. There are some homegrown solar cell and panel makers, but no suppliers of silicon, ingots, and wafers, he noted. Adani’s interest in teaming up with SunEdison also makes the project attractive. Adani owns and operates ports, builds grain and produce storage facilities and generates electricity for the wholesale market. It’s, in fact, a rival of SunEdison since it also develops solar and the wind power projects (SunEdison buying the wind project developer, First Wind). There are no plans for the joint venture to take on solar power project development, Gopalan said.

The two companies are looking at building the factory over 3 years. But they will build the panel assembly portion first and buy cells from suppliers to make panels while the rest of the factory is being built. This way, SunEdison could start shipping solar panels before the entire factory project is complete. If all goes well, then the factory will start rolling out panels during the second half of 2016, Gopalan said. The factory will produce both multi-crystalline and mono-crystalline solar panels. Multi-crystalline silicon cells are typically cheaper to make but can’t be as efficient at converting sunlight into electricity as the mono-crystalline variety.

Although the new factory will not be far from China, one of SunEdison’s big targets, the company has yet to decide whether it will use the solar panels from the new factory for its projects in China.

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