Opportunities in Solar Trading

Opportunities in Solar Trading

The solar industry is gearing up with growing number of solar system installers (a.k.a. EPC) and increasing number of manufacturers. There has also been a rise of stockists/warehouses specifically of foreign brands of inverters, modules etc. Solar trading is becoming an important link in the chain of business. Primarily, traders are for solar equipment (modules, batteries, inverters, etc.) and accessories like cables, switchgear. The other type of traders are for EPC orders (though they may be most often called as business development associates, partners, etc.). I am bringing up the second type in the picture as many equipment traders also book sales orders for EPC (Engineering, Procurement and Construction) for other larger companies or for themselves.

solar equipment

Let us study the major parts of a typical solar system and their trading options:

Modules: These are categorized as imported or local and most often in 60 or 72 cell configurations with polycrystalline being the major player. For large orders (>1MW) which are not under Domestic Content Requirement and /or for the Government bids; or smaller orders which may be not seeking subsidy, the imported modules are available in India through direct sales, local sales office or representatives and in some cases local stockists/distributors.

The purchase prices of stockists who are not warehousing on behalf of and owned by the manufacturing companies are a function of volume of purchase, and therefore working capital is an important requirement. Since the fragile solar equipment and modules require good warehousing, a cost associated with storage, loading/unloading, insurance; and market intelligence is to be considered for optimum inventory holding. A general requirement for direct import is Letter of Credit, with some manufacturers offering extended payment terms covered under the L/C, levering the lower interest cost in foreign countries, primarily China. While foreign Tier 1 companies have their offices (so direct sales) or existing large distributors, there is enough room for traders to sell to small roof top EPC companies, generally on demand generated by their orders booking. These trading options include local manufacturers’ products. Local manufacturing companies generally offer lower minimum purchase orders, most often some credit period and are flexible in terms of mix of the module rating mix. These companies are also good source for often hand strung solar (cut) cells for smaller ratings of modules (<200W), used in street lights to solar lanterns etc.

Inverters: These are often foreign brands if grid tied; and local manufactured if off-grid/hybrid type. A strong erection/ commissioning and after sale service in terms of engineering skill and network is a “good-to-have” feature for traders.

For both modules and inverters- brand, reputation, quality and overall market share are critical to consider for one to start trading in them. It would be good to have some preferred supplier/buyer relationships/tie ups and a occasional visit to the manufacturer’s facility is recommended, as the volume builds.

Batteries: These are often lead acid types: flat, tubular, sealed for solar. These are not commonly traded by solar traders as the only component, as a larger network of nonsolar (auto, industrial, UPS) battery dealers already exists in the country. One may trade batteries while supplying a larger number of equipment or the complete system. Liion batteries are getting into the market, especially for smaller systems like solar street lights, but technical evaluation and brand are important skills to have before one tries them.

Mounting Structures: Aluminum or galvanized steel roof top pre-designed/standard structure and accessories are now available off the shelf, and are good business options. Moreover, one can add the service offering for erecting these systems for EPC players. Erection on rooftops is a specialized skill involving safety of personnel and equipment; and found in pre fabricated steel roof installers’ personnel. Hence, some of these roof material traders/dealers are getting into solar rooftop business as traders, or even being as system installers.

In general, the main difference amongst rooftop solar systems, from a design perspective, is the structure and their variance, considering optimum, shadow free, optimally tilted and oriented (at right azimuth) within the constraints of the roofs. Site specific type of mounting structures and strength of roof differentiates these systems. Structural engineering skill therefore comes handy, and more if there are specific raised structures/ pitched thatched/tiled roofs.

Navratan Katariya

Navratan Katariya | Founder | SY-Energy Consultants

Balance of Systems (BOS): From cables, to junction boxes, combiners boxes, weather measurement, SCADA and currently, IoT based monitoring and control systems are the various components that are sold generally under one roof. Multi brand/capacity components and stocking/trading operations is growing with the increase in rooftop installations across the country. The traders also find Tier 2 and Tier 3 cities as good opportunities, for there is generally reduced competition, lesser price pressure and the option of being a system installers themselves, independently or with partnership with larger, experienced EPC companies. Standard, complete systems are being imported (as well as exported sometimes) for off grid small home/office power packs and packages like solar lights, chargers, consumer goods (lights, mobile chargers etc.). Some traders have erection and monitoring tools made available to EPC companies. It is likely that in future, solar systems which are commodotized or have become standard packages, will come with Do-it-Yourself instructions and a bit of training.

Raw material: There are trading companies who trade in raw material or solar equipment and components, like solar wafers/cells, EVA, backsheet, cables etc., most of which would need to be imported. Stock and sell is not a common feature in high volumes transactions. The commission agency is the route followed for them, except some have started stocking smaller value items like cables, combiner and junction boxes, consumer goods etc. Another trading activity is for exports, and the well-established manufacturers in India (primarily of modules) have their own branches/representation in foreign countries. However, smaller orders (minimum 1 container e.g.) could be booked by export houses for countries in Africa, Latin America and island countries.

Price, variance with volumes, delivery & quality consistency/adherence, warranty & after sales support; and not to miss, sound business ethics are important parameters to consider while choosing your supplier. These are same as applicable to many engineering goods and thus not unique to solar modules/systems.

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