Bharat Electronics to Set Up 2,500-Ton Polysilicon Manufacturing Facility

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Researched by Industrial Info Resources (Sugar Land, Texas)--Bharat Electronics Limited (BOM:500049) (Bangalore, Karnataka), India's leading manufacturer of solar panels, is planning to enter into a 50:50 joint venture with engineering major Bharat Heavy Electricals Limited (BOM:500103) (BHEL) (Mumbai) to set up a polycrystalline silicon manufacturing unit. Bharat Electronics plans to produce 2,500 tons per year of polycrystalline silicon (polysilicon), the key raw material in manufacturing solar panels. This capacity is equivalent to 250 megawatts (MW) of solar power. The proposed unit will be an integrated production facility for modules, polysilicon ingots, solar cells, solar panel systems and wafers. Products would be sold to local government agencies promoting solar energy projects and cater to the export market, as well.

Bharat Electronics and BHEL, both public sector undertakings, are in talks to finalize the details of the proposed joint venture. The project is likely to be firmed up in the coming months and will take two to three years to begin production. Bharat Electronics is in the process of identifying a suitable location for the project, which will be the company's first major manufacturing unit of raw materials for solar panels. The firm is looking for sites with continuous availability of electric power, essential for its power-intensive manufacturing unit.

Bharat Electronics currently manufactures modules at a complex in Bangalore. It plans to invest $25 million to expand the installed production capacity from the current 5 MW solar cells per year to 30 MW solar cells per year. The company exports 50,000 solar cells per month to Italy, France and Germany, claiming to meet 50% of the present demand of 100,000 solar cells per month in these markets.

The company's decision to set up an indigenous manufacturing facility will enable it to shield itself from the escalating prices of raw materials. The price of polysilicon has risen from $25 per kilogram in 2000 to $515 per kilogram as of June. Bharat Electronics imports polysilicon wafers of solar grade from Japan and Germany for $6.50 each. About 75% of the global polysilicon production industry is dominated by the top seven players in this segment. The industry is likely to see 175 new manufacturers by 2015.

In July, India unveiled its National Action Plan for Climate Change, in which it outlined eight national missions for development with focus on solar power being the greatest. The country aims to achieve photovoltaic production of 1,000 MW per year by 2017. It also aims to establish a generation capacity of 1,000 MW of concentrating solar thermal power in the same period. The government is providing financial incentives of U.S. 30 cents per kilowatt of solar power generated per hour to upcoming solar power units with a maximum generation capacity of 50 MW. It will also bear 20% of the capital expenditure for the first 10 years for development of solar energy related technology projects located in special economic zones.

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