Solar Boom Drives Indosolar to Boost Wafer Supply Contract to $2 Billion

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--India's solar photovoltaic (PV) cell manufacturer, Indosolar Limited (BSE:533257) (New Delhi), is in talks with China's polysilicon producer, GCL-Poly Energy Holdings (HKX:3800) (Kowloon, Hong Kong), to replace their current $565 million wafer supply contract, which runs to 2014, with a new, larger four-year contract of up to $2 billion.

The Indian company increased its production capacity in March to 360 megawatts (MW) of product by adding an extra 100 MW of capacity. The company manufactures polycrystalline solar PV cells from silicon wafers. The solar PV cell technology converts sunlight directly into electrical power by the process of "PV effect."

Indosolar supplies clients in the domestic Indian market and exports to Europe, the U.S., Canada and Spain. The company is well-placed for growth in the domestic market, and it could reach 5,000 MW of cell production by 2020. Indosolar is planning to reach a production rate of 1,000 MW of cells a year by 2015. It is shortlisted for final approval for the government's Special Incentive package scheme, which would grant it a capital subsidy of 25%.

GCL-Poly is China's largest polysilicon producer and a leading global supplier. Wafer production is expected to reach 6,500 MW by the end of this year. The company owns what is currently China's largest solar power farm, a 20-MW facility in Xuzhou, in Jianngsu province, and has an 11-MW operation in the U.S. In 2009, the Chinese sovereign wealth fund, China Investment Corporation (Beijing), took a 20% stake in GCL-Poly for $710 million.

Some industry pundits forecast that solar power will represent 60% of global electricity production by the end of the century. Current estimates of global installed solar power are at 10,000 MW, which is forecast to see a dramatic rise to 52,000 MW through 2012.

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