International Groups Partner Up for Controversial 200-MW Solar Manufacturing Facility in Russia

Russia’s Solar Systems, Germany’s SCHMID Group and Turkey’s Pekintas Group have established a long-term partnership to build a 200-MW turnkey PV cell and module manufacturing facility in Russia’s SEZ (special economic zone) in Alabuga, the Republic of Tatarstan. But the project has raised the eyebrows of some Russian energy sector experts who say that the factory “stands no chance” business-wise in the Russian and, moreover, in international PV production markets.

Russia’s Solar Systems, Germany’s SCHMID Group and Turkey’s Pekintas Group have established a long-term partnership to build a 200-MW turnkey PV cell and module manufacturing facility in Russia’s SEZ (special economic zone) in Alabuga, the Republic of Tatarstan. But the project has raised the eyebrows of some Russian energy sector experts who say that the factory “stands no chance” business-wise in the Russian and, moreover, in international PV production markets.

“The Chinese could, certainly, build the factory cheaper if they pursued it alone,” insisted Mikhail Krutikhin, a partner of RusEnergy, a Russian energy consulting company.

Solar Systems, a subsidiary of China-based Amur Sirius, has made a firm footstep in the Russian solar energy market having been given a bulk of the solar development capacity in the Russian Government-orhestrated tender in 2014.

The plant is set to be commissioned in two phases, with SCHMID and Pekintas acting as the general contractor that will set up the manufacturing lines, building and facilities, according to the agreement.

Construction is expected to be completed in 2016, according to Mikhail Molchianov, CEO of Solar Systems. “This has been a very important decision to all of us, and we hope that the SEZ will be able to feel tangible benefits from the partnership. That the new plant will appear in the economic zone is a result of the mutual collaboration between the management and shareholders of Solar Systems and the authorities of the special economic zone,” said MolchianovHe underlined the favorable taxation and customs environment the republic established in the Alabuga SEZ.

With this project SCHMID and Pekintas are extending their collaboration in PV manufacturing, which started with founding a Turkey-based joint venture SCHMID-Pekintas in 2012.

Christian Schmid, SCHMID Group CEO, said that the joint venture will allow the company to provide its customers reliable and inclusive integrated manufacturing solutions and enable “highly competitive local manufacturing.”

But Mikhail Krutikhin, of RusEnergy, told Renewable Energy World  he “does not believe” in the prospects of the three companies’ joint PV facility. “The Chinese investors, founders of Solar Systems, could obviously build it successfully on its own, without any partners. Business-wise, it would definitely be simpler task in terms of the project management and, importantly, costs,” Krutikhin emphasized.

The price of the production will be considerably higher than that if it were made by the Chinese, according to Krutikhin. “It would be even smaller if the PV production came to Russia from Chinese soil. But with Russia's requirement for local content, it cannot be done. Still, assembled in Russia, the photovoltaic production will be less competitive in the market, moreover in the international markets."

Solar Systems, SCHIMD Group and Pekintas Group did not elaborate on the factory's details and production costs.

Krutikhin said the business model seems “irrational and, very likely, with a tinge of corruption.”

“It is akin to the wide-spread scheme in Russia, when a local producer hooking up with foreign investors gets an easier access to the state budget coffers. I won’t be surprised if we learnt in the future that part of the money for the project ended up being misused, satisfying local interest. Still many remains to be seen,” noted Krutikhin.

Lead image: Hand shake via Shutterstock

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