Thread by @Investor_Mohit

#Solar Energy Theme :

There were very lesser investors who were aware or interested in this theme few years back.

Reason - Wealth destruction in Moser baer & Indosolar.

These companies expanded their capacity with the help of huge borrowings.

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Later on, they couldn't compete with Chinese imports and were unable to service their debt.

Lesson learnt - Never over-expand without knowing the risks.

Now, India has set some ambitious targets for #Renewable Energy which makes it more interesting.

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Now, let's understand cost percentage break-down of a solar power project :

- Solar Panels : 50-60% of the total cost.

- Solar Inverter : 10-15% of the total cost.

- Mounting Structure : 5-10% of the total cost.

- Balance of System : 5-10% of the total cost.

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Standard Solar Panel constitutes of :

- Solar Cell : 45-50% of the total cost.

- Solar Glass : 10-12% of the total cost.

- Frame : 12-13% of the total cost.

- EVA : 6% of the total cost.

- Backsheet & others : 20-25% of the total cost.

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Some facts :

Costs for setting up a :

1 GW module manufacturing facility = 60-70 Crores INR

1 GW solar power project = 4000 Crores INR

In bifacial panels, the cost of solar glass increases to 20% of total module cost.

More than 90% market share with China.

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Companies operating in Solar Power Sector : (as of now)

- Adani Green : Solar Module + Solar Cell + EPC + O&M.

- Tata Power : Solar Module + Solar Cell + EPC + O&M.

- Borosil Renewables : Solar Glass Manufacturing.

- SW Solar : Pure Play EPC + O&M.

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India's Solar installations reached 40 GW milestone in FY-21.

India has ambitious targets for renewables of achieving :

Capacity of 175 GW by 2022 & 450 GW by 2030. (Mostly by Solar)

China has also set an ambitious goal of achieving net zero carbon by 2060.

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All these points makes the sector interesting but what are the risks :

- Innovative technologies disrupting current model.

- Huge under-penetration over the globe for solar components.

- Storage technologies.

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What can increase the demand :

- US is also signing paris agreement which will increase the demand in near future.

- India is also setting a plan to be carbon neutral by 2050.

- Companies achieving economies of scale outside China.

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Now, let's talk about some recent developments :

- Increase in Poly-Silicon prices :

As we know, poly-silicon is the key raw material for solar cell. This price rise is due to the shortage of the raw materials.

China holds 90%+ share in poly-silicon globally.

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- Increase in Solar glass prices :

This was lead by supply demand mismatch which may continue because of the increasing usage of bifacial modules.

Lifespan and efficiency increases in bifacial module as compared to Standard module.

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My Opinion :

If you can catch right companies which can achieve economies of scale, you can ride this mega-trend.

My conviction bet is BRL in this sector.

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