The Indian government has released a plan to aggressively promote renewables over the next 5 years. The plan calls for the country to double its present power generation capacity from renewable sources. It also aims to add 10 GW of solar installations during this period,  which could help boost players like First Solar (NASDAQ:FSLR). Solar companies have been hit by falling demand in major markets such as Germany and Italy and are looking at emerging markets in Asia and in the Middle East as major future markets. A commitment from India to install an average of 2 GW per annum for the next five years could slightly ease the existing oversupply situation in the solar market.
We have a $22.19 price estimate for First Solar, which is at a significant premium to its current market price.
India is looking to add around 30 GW of renewable electricity generation over the course of next five years. About a third of this will come from solar installations. India currently has regulations prohibiting the use of imported silicon-based panels, but the ban does not include thin film cells built by companies like First Solar.  Thin film manufacturers should especially benefit from the government’s current initiative to promote solar energy.
Solar is catching on in many emerging markets because of increasing affordability of solar equipment. China is set to become one of the biggest markets for solar panels in 2012 and other countries in Asia are also coming up with their own plans to incentivize solar power.
The solar equipment market has lately been subjected to trade regulations, with the U.S. enforcing tariffs of up to 250% on Chinese solar equipment. China is expected to announce some retaliatory measures on imports. Analysts also expect growing markets like Saudi Arabia to announce measures to force panel manufacturers to set up local facilities to tap into subsidy programs aimed at increasing solar installations. (See: First Solar Could See Big Boost From Saudi Renewables Push) If India expands the import restriction to thin cell panels as well, First Solar could be excluded from this opportunity.Notes: