Nov. 19 (Bloomberg) -- Phoenix Solar AG plans to boost its business in Asia led by China and India, as the countries announce incentives to generate electricity from the sun, a company official said.

Phoenix Solar, which builds and operates solar plants, has bid for projects in China and India, and may expand in Malaysia where the government has announced plans to give tariff incentives, said Christophe Inglin, managing director for the company’s subsidiary in Singapore.

“Asia will become the biggest market for renewables and solar,” Inglin, who has worked for the solar units of Siemens AG and Royal Dutch Shell Plc for a decade, said in an interview at Clean Energy Expo in Singapore today.

China and India plan to create generation capacities of 20 gigawatts each by 2020 to produce electricity from the sun’s rays, diversifying from more polluting sources such as coal. China may increase its capacity to generate electricity from sunlight by more than 13-fold by 2011, Cui Rongqiang, head of the Shanghai Solar Energy Society, said on Aug. 31.

The projects in India and China are of “megawatt” capacities compared with its biggest venture in Singapore at 400 kilowatts and a 71-kilowatt project in neighboring Malaysia, Inglin said.

Shares of Phoenix Solar have gained 41 percent this year in Frankfurt to 35.37 euros. The German company holds 75 percent in the Singapore unit, Inglin said, with the rest held by him and other partners. Revenues from international operations, excluding the EU, accounted for less than 1 percent in 2007, according to Bloomberg data.

Phoenix Solar cut its full-year revenue target to between 430 million euros and 480 million euros from an earlier guidance of 520 million euros on difficult weather conditions and financing and permitting delays, according to a statement Nov. 12.

Both China and India may surpass their 2020 targets as the declining cost of solar components and modules makes the sector competitive against thermal power generation, Inglin said.

Polysilicon Drops

Prices of polysilicon, the raw material used in solar panels, collapsed from about $450 a kilogram in 2008 to less than $70 and may stay at such levels until 2013, Michael Liebreich, chairman of New Energy Finance, a London-based consulting firm, said in a presentation at the event. Overcapacity may persist for the next couple of years, he said.

India’s new feed-in tariffs at 15 rupees (32 cents) a kilowatt-hour for 10 years is a start “but stingy,” Inglin said, as solar projects need tariff certainties for 20 to 25 years.

China is considering setting the benchmark price for solar power at between 1.09 yuan (16 cents) and 1.2 yuan per kilowatt- hour, China Securities Journal said. This compares with 3 yuan per kilowatt-hour for solar power plants in the West such as Italy and Germany, it said.

Lower costs of solar power generation may obviate the need for subsidies while rural areas may directly access renewables bypassing the traditional grid, boosting clean energy demand in Asia, Inglin said. More than a third of the population in Asia and nearly 700 million in South Asia lack access to electricity, according to the World Bank.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.

Last Updated: November 19, 2009 06:07 EST