The Development Trend of U.S. Solar India Southeast Asia Market

The price of solar panels plummeted and was cheaper than diesel generators. This is where the money can be made. The solar energy industry needs to change and it can no longer rely on subsidies.

Jungle Power Generation: This is a 430-kilowatt solar array array that is installed by Optimal Power Systems to supply thousands of people to remote villages in eastern Malaysia. The inverter capacity can convert about 2.5 million kilowatts of DC power into AC power and distribute it to villages. On sunny days, when the solar panels are running at full capacity, excess power can be stored in the batteries.

Last week, Solar Edison, the largest solar power installer and consortium, announced a new project that will use solar power to power 30 villages in India. It has already equipped a village with solar panels. A small distribution network can supply more than 70 homes. The backup battery system can provide all-weather power.

The first village was a pilot project, not for profit, said Gopalan Pashupathy, managing director of Sun's South Asia and Southern Sahara. But he expects that economies of scale, as well as improved design and installation processes will reduce costs and companies can make money in the coming years. "By 2014, we hope to be able to expand into thousands of villages," he said.

The reason for the optimistic attitude of Solar Edison is that solar panel prices have plummeted, making this type of electricity cheaper than diesel generators. "If this industry is staring at diesel, there will be a very big change. I think there will be money," he said. “This is where you can make money, because the industry needs to change and you can no longer rely on subsidies.”

Diesel is the main source of electricity in South Asia and Africa, where electricity is not available in many areas, and frequent power cuts have prompted those who spend money to install standby generators. These markets help the solar industry. The industry is struggling and profit margins are low because of the oversupply of panels. In return, the price of solar power is low, which can accelerate deployment in poor countries and provide a more economical alternative to diesel powered pumps and generators. It is also a faster route to electrification than to waiting for power grid infrastructure.

The first economic application of solar energy is to replace diesel-powered irrigation pumps, Gao Palan said. These pumps do not need to operate at night and therefore do not require batteries, which reduces costs. “Only in the Indian market alone amounts to 15 to 200,000 kilowatts, and pumping irrigation has large-scale applications in Asia and Africa,” he said. On the whole, the total installed capacity of solar power currently is 650,000 kilowatts, according to management consultancy McKinsey.