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Tuesday, May 12, 2009

U.S. Solar Company To Build Plants In India

MUMBAI - U.S. renewable energy company Signet Solar is investing $2 billion to set up manufacturing operations in India over the next 10 years.

Palo Alto, Calif.-based Signet Solar will start constructing the first of three planned factories to produce solar photovoltaic modules in early 2008. The company is still scouting for a location.

“We are talking to state governments and considering the infrastructure-readiness of various locations. We’ll take a decision in two to three months. It’s likely to be located in a SEZ [special economic zone] as we’re export-focused,” said Signet Solar CEO Rajeeva Lahri.

Earlier this year, the government announced a semiconductor policy under which it will incur 20% of the capital expenditure if companies set up in special economic zones and 25% if they come up elsewhere. The minimum investment limit for the benefits is $570 million.

Privately held Signet Solar, which was founded in 2006, is talking to investors in India and abroad to raise capital for its plans. “We’re looking at a mix of private equity, debt and government incentives for manufacturing in India,” Lahri told reporters in New Delhi Thursday.

The firm will target power plants, rural electrification and irrigation and large commercial units in India. The plant will initially have a capacity of 60 megawatt that will expand to 1 gigawatt annually over 10 years. “I think in India we have not realized the potential of solar energy here. It is a huge market and its demand is only going to grow,” Lahri said.

Signet Solar is also setting up a manufacturing plant in Dresden, Germany. Worldwide solar photovoltaic installations grew at an annual rate of nearly 40% in the last five years, and increasing demand is expected to sustain growth for a while, the firm said in a press release.

India’s government wants to produce 10% of its growing energy needs from renewable sources by 2012. At present, over 5% of power comes from renewable energy.

Both India and China, where energy consumption has surged because of rapid industrialization, came under fire in a recent S&P report for their reliance on carbon-intensive fuels to meet energy needs (See: “ Coal Still King In India And China”).

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