Longi Solar, a Chinese solar component manufacturer, will invest $309 million to double the capacity of its cell and module factory from 500 MW to 1 GW in the state of Andhra Pradesh.
The investment would include approximately $240 million for the construction and roughly $68 million for its working capital.
According to the company, the construction of the new solar cell facility is expected to be completed by January 2020, while the expanded module assembly plant is expected to be completed by the end of August 2019.
In 2017, Longi had suspended the entire project in face of delays in gaining funds. The company then decided to split the funding between the parent company and its previously established Indian subsidiary, Lerri Solar Technology Private Ltd.
Commenting on the development, Wenxue Li, the president of Longi Solar said, “The expansion of our Andhra Pradesh factory is part of Longi’s global growth strategy. While the global demand for solar modules continues to grow, Longi is making moderate capacity investments in select markets to hedge against the risks of trade protectionism, while remaining focused on the Chinese domestic market.”
According to the preliminary estimates, the new expansion will support $380 million in annual sales and roughly $19 million in net profit every year.
“India is already China’s biggest export market for solar products by sales value. During 2017, China’s exports accounted for 24.1 percent of India’s solar products, with sales growth seen in both cells and modules,” Wenxue added.
In December 2017, Mercom had confirmed Longi Solar’s plans to set up cell and module manufacturing units of 500 MW (each) in the state of Andhra Pradesh.
In an exclusive interview with Mercom, Rahul Kapil, the India chief of Longi Solar, had said, “In the first phase, we are going to produce 500 MW of cells and modules each. Construction of our new manufacturing units is ongoing and will take another year. I think we will be operational by the end of 2018 or the first quarter of 2019.”
“While the demand in India is growing, the primary reason behind Chinese companies planning to setup manufacturing units in India is the fear of upcoming anti-dumping duty imposition. India has already started imposing 7.85% in port duties on imported modules. This could also be a gateway to export some panels to the U.S. though Indian solar crystalline silicon exports are restricted to 3%,” said Raj Prabhu, CEO of Mercom Capital group.
Recently, MNRE released a concept note of a proposal to build out India’s manufacturing supply chain, including polysilicon, wafers/ingots, cells and modules.
Indian solar manufacturers have already said that the strategy is to first get anti-dumping imposed on modules and cells followed by wafer and polysilicon after they have enough manufacturing capacity. “If the India market remains robust in the 8-10 GW range, we might see some more foreign companies announcing manufacturing plans in India. With a lack of technological advantage and scale, smaller Indian manufacturers may find it tough to compete with foreign companies manufacturing out of India,” added Prabhu.
With 1 GW of Installed capacity Longi could become the 2nd largest manufacturer of modules and cells in India (based on capacities as of today) according to Mercom’s India Solar Cell and Module Manufacturing Tracker.
Image credit: Longi Solar