Companies set to back huge India solar expansion

A worker cleans photovoltaic solar panels inside a solar power plant at Raisan village near Gandhinagar, in Gujarat, February 11, 2014.

BY KRISHNA N. DAS AND TOMMY WILKES-NEW DELHI Fri Feb 6, 2015

(Reuters) - India could start installing 20,000 megawatts of solar power capacity as early as April after companies pledged to support the government's drive for clean energy, an official told Reuters.

Details of the plan, which has drawn commitments from U.S., German and Chinese companies, will be announced on Friday, said Upendra Tripathy, secretary of the Ministry of New and Renewable Energy.

"We have got commitments from very established industry, both foreign and domestic for next year," he said in an interview at his office.

Foreign companies will be allowed to decide where they manufacture the required equipment, he said.

The rapidly falling cost of solar power, which is expected to reach parity with conventional energy by 2017, has ignited interest in its potential in India.

Prime Minister Narendra Modi has looked to industry for help in funding what could be a $100 billion expansion in clean energy.

For its part, the government will have to find the land required to build the solar panels on.

Modi aims to make India one of the world's largest renewable energy markets, targeting 100,000 MW of output by 2022 from just 3,000 MW currently.

One megawatt can power roughly 1,000 U.S. homes although this varies widely, depending on the amount of heating or cooling needed, for example.

Despite more than 300 days of sunshine a year, India relies on coal for three-fifths of its energy needs while solar supplies less than 1 percent.

U.S.-based First Solar (FSLR.O) and SunEdison Inc (SUNE.N), Canadian Solar (CSIQ.O) and China's JA Solar (JASO.O) are among the companies keen to expand into India.

Yet analysts say India's target will be difficult to reach given the weak finances of electricity distribution companies that would buy in solar energy and the slow pace at which land for plants is made available.

"There's a lot of interest, but there are concerns as well," said Ajay Goel, chief executive of Tata Power Solar, one of India's largest solar manufacturers and a unit of Tata Power Ltd (TTPW.NS). "Who is buying the power and do they have the ability to pay?"

(Additional reporting by Aman Shah in MUMBAI and Swetha Gopinath in BANGALORE; editing by Jason Neely)