About Premier Energies Limited

Established in 1995, Premier Energies is an integrated solar cell and solar module manufacturing company. Backed by GEF Capital, a Washington DC based Private Equity Investor, Premier Energies is at the forefront of innovative technology, crafting photovoltaic products and solutions. Premier Energies' cutting-edge manufacturing units are spread across three locations in Telangana, totaling an aggregate land area of over 44.91 acres. As of March 31st, 2024, the company boasts an annual production capacity of 2 GW for solar cells and 3.36 GW for solar modules. Additionally, another Topcon Cell line and module line, covering a combined land area of 75 acres, are currently under development. These new facilities are projected to have Cell and Module Facility.

Equipped with fully automated mono perc cell line with an annual production capacity of 2 GW, along with module lines capable of producing 3.36 GW, Premier Energies manufactures solar cells of M10 wafer size, achieving an average cell efficiency of 23.2%. Furthermore, in line with technological advancements, Premier Energies is introducing a new TOPCon cell manufacturing line in the Fiscal Year 2024-25. Premier Energies Photovoltaic Pvt Ltd facility spans 25 acres and is a LEED Gold Certified manufacturing facility.

Their solar modules are also subjected to reliability testing by PVEL to ensure that they meet international quality standards and performance benchmarks. 12 of their modules were recognized as “top performers” in the 2023 Module Reliability Scorecard released by PVEL, an annual assessment of solar modules from manufacturers globally. While making earth a great place to live, Premier Energies also provides its employees a great environment, and has been certified 'GREAT PLACE TO WORK' a third year in a row, for 2024-2025.

Their key customers across their business offerings include several IPPs, OEMs and off-grid operators such as NTPC, TATA Power Solar Systems Limited, Panasonic Life Solutions Private Limited (“Panasonic”), Continuum, Shakti Pumps, First Energy, Bluepine Energies Private Limited, Luminous, Hartek Solar Private Limited (“Hartek”), Green Infra Wind Energy Limited (a subsidiary of Sembcorp Green Infra Limited), Madhav Infra Projects Limited (“Madhav”), SolarSquare Energy Private Limited (“SolarSquare”) and Axitec Energy India Private Limited (“Axitec”).

OVERVIEW OF THE INDIAN POWER SECTOR
As per the latest data available, global installed power generation capacity has reached 9,063 GW at the end of CY2023. The Asia-Pacific region accounts for approximately 40% of this installed capacity, followed by 22% for North America and 18% for Europe. India accounts for approx. 5% of global installed power generation capacity at the end of CY2023. Global installed power generation capacity is expected to grow at 4.8% CAGR till CY2050 to reach approximately 33,000 GW. Nearly three-quarters of this capacity would be added through renewable sources.

Global annual renewable capacity additions increased by almost 55% to nearly 475 GW in CY2023 as against 305 GW in CY2022, the fastest growth rate in the past two decades. As per the latest projections available with IEA, global renewable energy installed capacity is expected to cross 7,300 GW by CY2028. Share of renewables in global electricity generation is expected to increase from 28.5% in CY2020 to 72.3% by CY2050 – from approximately 5,700 Terawatt-hour (“TWh”) in CY2020 to 51,000 TWh in CY2050 at a CAGR of 6.5% (source: Enerdata). In India, share of renewables (including large hydro) in electricity generation stands at 20.7% in FY2024. As per the climate actions presented by the Indian government during COP-26, 50% of the country’s energy requirement would be met from renewable sources by CY2030.

With 442 GW installed generation capacity at the end of FY2024, India is the third-largest producer and consumer of electricity globally – the capacity is expected to reach 622 GW by FY2028. Power generation capacity has grown more than 100-fold since independence and growth in electricity demand has been even higher due to heightened economic activities. As a result, India’s energy companies have made substantial progress in the global energy market.

India is making a big shift from coal to renewable energy primarily through solar power. The Government has set an ambitious goal of 500 GW renewable energy capacity by CY2030, out of which 300 GW would come from solar. This includes grid-connected solar, off-grid solar applications, and the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahaabhiyaan (PM-KUSUM) program which promotes solar pumps for farmers. Additionally, the Government plans to replace 81 coal plants with renewable energy sources by CY2026. This move towards cleaner energy sources is a positive step for India’s future. With these plans from the Government, solar is estimated to be the major contributor to the Indian power sector in the coming years. Given India’s focus on net-zero carbon emissions and innovative collaborations with international organizations and countries, the steps taken towards energy transition should lead to a greener future for the country.

Power is among the most critical components of infrastructure, crucial for the economic growth, industry, and welfare of nations. The Indian government has made significant efforts over the past decades to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network and achieving universal household electrification.

The Government is further supporting States for electrification of any left-out households under the ongoing scheme of Revamped Distribution Sector Scheme (RDSS). RDSS has an outlay of INR 3,038 billion with gross budgetary support of INR 976 billion from Government of India over a period of five years from FY2022 to FY2026.

India had a total installed power generation capacity of 442 GW at the end of FY2024. Based on generation capacity addition plans of the Government and projects on ground, Frost & Sullivan estimates that an additional 180 GW of power generation capacity would realistically be added till FY2028, taking the country’s total installed power generation capacity to 622 GW. Approximately 65% of this capacity would be added through solar – this would take the country’s installed solar capacity from 82 GW in FY2024 to 198 GW by FY2028.

Thermal power accounts for 55% of the country’s installed capacity at the end of FY2024. Renewable energy including large hydro is the second biggest contributor with 43% share, out of which the share of solar is around 19%. As solar capacity additions will be accelerated in the coming years, this mix is expected to see a drastic change – share of solar may increase to 32% by FY2028 while, share of coal may go down to 43%.

Indian power sector has seen a huge turnaround with peak power deficit reaching from 16.6% in FY2008 to 0.4% in FY2021. However, the peak deficit has reached higher levels of 1.2% in FY2022 and 4.0% in FY2023. Sudden spike in electricity demand during the monsoon months and inadequate firm capacity additions in the recent years may have caused this higher peak deficit. Peak deficit however significantly dropped to 1.4% in FY2024 due to better fuel management. To avoid the high peak deficit situation in the future, the Indian government has decided to add nearly 88 GW capacity of base load thermal power plants to meet 295 GW and 366 GW of peak power demand by FY2028 and FY2032, respectively. Besides, converting the RE plants to RTC plants would also mitigate the risks of higher deficits in the coming years.

Energy deficit on the other hand has shown a more consistent trend and remained within 0.3% - 0.7% between FY2018 – FY2024. Energy requirement of the country in FY2024 was 1,626 billion units and the country’s power generating stations and grid were able to supply 1,622 billion units.

Average cost of electricity supply (“ACS”) indicates a simple average cost to supply electricity to the consumers. The below chart indicates that ACS has steadily increased from ₹3.6 / kilowatt hour (“kWH”) in FY2010 to ₹6.7 / kWH in FY2023. However, average solar tariff during the same period demonstrated an opposite trend – with higher adoption, the tariff has steadily decreased since FY2010 and now stabilized between ₹2.3 / kWh and ₹2.6 / kWh in the last five years. Comparing all types of fuel sources, average solar tariff in the country is even lower than many thermal power plants – this indicates a sustainable and viable future for solar energy in the coming years.

SOLAR CELL AND MODULE MANUFACTURING SECTOR IN INDIA
To reduce levelized cost of power, it is a common industry practice to pair inverters with over-sized DC module capacity. A 1 MW DC plant rarely produces 1 MW of power as solar modules operate at their maximum efficiency only during peak hours of noon and that too during select months of the year. DC overloading allows the plant to increase generation during non-peak hours. The chart below depicts the requirement for solar modules to meet domestic solar capacity addition targets.

Various supply side measures have put the Indian solar manufacturing sector on an accelerated growth trajectory in the last few years. With potential for solar power generation, India is actively developing its cell and module manufacturing capabilities. The country’s module manufacturing capacity has reached approximately 72 GW at the end of FY2024. This positions India as the third largest solar module manufacturer in the world after China and Vietnam.

An article from All India Solar Manufacturers’ Association (AISMA) and ALMM suggests that there are over 100 solar module manufacturers in the country. The top 10 manufacturers have a cumulative manufacturing capacity of 50 GW at the end of FY2024. These top 10 module manufacturers are Waaree Energies, Renew Power, Tata Power Solar, Premier Energies, Mundra Solar, Rayzon Solar, Vikram Solar, Goldi Solar, First Solar and Emmvee Group, in that order. Premier Energies, the fourth largest module manufacturer in India, had an annual installed capacity of 4.13 GW at the end of FY2024.

PREMIER ENERGIES LIMITED STRENGTHS
1. They are an integrated solar cell and solar module manufacturer
2. They have a long track record in the solar module manufacturing sector
3. They are experienced in solar cell line production
4. They have a diversified customer base with customer relationships both within India and overseas with a robust order book
5. They have an experienced Promoter-led senior management team

PREMIER ENERGIES LIMITED STRATEGIES
1. Expand their overseas presence and increase their exports especially in the U.S. market through strategic backward integration of their production chain and establishing manufacturing capabilities outside of India
2. Develop and grow their rooftop solar offering
3. Capitalize on available market opportunities to grow their domestic business

PREMIER ENERGIES LIMITED RISK FACTORS & CONCERNS
1. The business and prospects of their Company is dependent on the success of two products namely, solar cells and modules.
2. Their manufacturing facilities are located in the state of Telangana, India, which exposes their operations to potential geographical concentration risks arising from local and regional factors which may adversely affect their business.
3. Most of their Subsidiaries have incurred losses at some point in the last three Fiscals and the three months ended June 30, 2024.
4. Expansion of their annual installed capacity despite existing underutilization may adversely affect their business.
5. The Company experienced a significant decline in actual production and annual installed capacity of solar modules in the past three Fiscals and the three months ended June 30, 2024.
6. They are dependent on projects awarded by government entities and public sector undertakings.
7. They bid for engineering, procurement and construction (EPC) projects through a competitive bidding process, and they may not be able to qualify for, compete or win such projects.
8. Their Subsidiary, Premier Solar Powertech Private Limited, has availed unsecured borrowings which had an outstanding amount of ₹21.07 million as of June 30, 2024.
9. There are various risks associated with solar cell and solar module manufacturing.
10. Their manufacturing processes for solar cells and solar modules currently rely significantly on nonrenewable energy sources.