Vikram Solar’s $1.5 Billion US Manufacturing Bet

News about Kolkata-based Vikram Solar’s plans for a manufacturing push into the US might have surprised a lot of industry watchers, but it is really not as surprising as it seems. A new venture backed by one of India’s oldest solar panel manufacturers at a serious scale announced plans last week to invest up to $1.5 billion in the US solar market, beginning with a factory in Colorado next year.

A new company, VSK Energy LLC, will build on Vikram Solar’s experience in solar manufacturing and supply chain to build a plant that can compete with China-based imports.

For the Kolkata-based, over Rs 2,000 crore revenue Vikram Solar, which had opened a second manufacturing plant in Tamil Nadu in 2021, the manufacturing story in India has been mixed, peppered with the long period of struggle till Solar finally took off post-2014, and again, due to industrial action issues at its plants. While issues in West Bengal might be understandable to an extent, the Tamil Nadu story has not been smooth for reasons this article cannot really go into at this stage. The firm currently has a module manufacturing capacity of 3.5 GW in India. The firm also won an allocation of 1 GW in India’s Phase 2 PLI scheme for solar manufacturing, one of the smallest among 11 allottees save one.

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The significant move to the US takes the firm to a market it understands well, however, thanks to years of exporting its made-in-India modules there, besides other markets in Europe and elsewhere.

VSK is a joint venture between Kolkata-based Vikram and two New York-based private equity firms, Phalanx Impact Partners and Das & Co, an investment and development company with solar holdings in both the United States and India.

The company hopes to begin producing modules in Brighton, Colorado, next year. It plans to open a second facility in an undisclosed southern state in the US in 2025 that will produce cells, wafers and ingots. Solar adoption is expected to be far higher in the Southern US states due to favorable climatic conditions. These US moves are undoubtedly also driven by incentives provided under the Biden administration’s Inflation Reduction Act, which is heavily focused on supporting US-based manufacturing.

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While the Colorado facility is slated to produce2 gigawatts (GW) of modules a year initially, with plans to double that amount later, the plans for the second factory are even bigger, with a possible investment of up to $1.25 billion.

Gyanesh Chaudhary, chairman of Vikram Solar, said the investment decision was based largely on US policies encouraging clean energy manufacturing.

“For us to take this step forward is because of all of the positive policy initiatives by the government and the Biden administration to promote renewable energy,” he was quoted as saying in an interview.

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Vikram Solar was among the pioneering movers into solar manufacturing in India when it started way back in 2006. It remains to be seen if its latest US move serves to light the way for more Indian firms.