Solar could shine on photo voltaic module manufacturing | India

IIndia’s formidable goal of attaining 500GW of renewable power capability by 2030, with 280GW from solar energy alone, is difficult. Until April 2024, the put in photo voltaic capability is 82.63GW, which requires a further annual capability of round 33GW to succeed in its objective. While the federal government goals to realize this goal by way of home manufacturing, India’s photo voltaic power transition is very depending on imported photo voltaic cells and modules, primarily from China. More than 80% of the 38GW enhance in solar energy manufacturing over the previous 4 years has come from imports, highlighting a big hole between home capabilities and the 2030 goal.

Despite authorities initiatives – such because the imposition of primary customs obligation (BCD) to curb imports, production-linked incentives (PLI) to extend home manufacturing capability, and the obligation deferment scheme below Manufacture and Other Operations in Warehouse Regulations, 2019, to free working capital reserves – Indian module producers are unable to compete with Chinese corporations on price and scale. China dominates your entire manufacturing spectrum, from uncooked supplies together with polysilicon, wafers and ingots to completed merchandise equivalent to cells and modules. This reliance on imported important uncooked supplies exposes home producers to cost volatility and international provide chain disruption.

Solar cell manufacturing capability at round 6GW in comparison with 50GW module manufacturing capability in February 2024, additional exacerbating the issue. Module producers should import the cells, paying 25% BCD. This raises prices and makes merchandise much less aggressive than Chinese equivalents. This highlights the pressing want for India to strengthen its backward integration of module manufacturing capabilities.

To enhance the home module manufacturing ecosystem, the federal government launched the PLI scheme in two tranches in April 2021 and September 2022, with a complete capital expenditure of INR240 billion (USD2.9 billion). It encourages buyers to arrange built-in polysilicon-to-module manufacturing services by providing monetary incentives primarily based on components equivalent to module gross sales and native (home) worth addition. Due to those supportive insurance policies, India’s nameplate module manufacturing capability will greater than double from 18GW in March 2022 to 38GW in March 2023. Despite the preliminary difficulties, 2024 is constructive, which has 500MW of module capability commissioned. The authorities expects 7.4GW to be out there in October 2024, 16.8GW in April 2025 and 15.4GW in April 2026.

While the PLI scheme guarantees long-term competitiveness in opposition to Chinese modules, the Approved List of Models and Manufacturers (ALMM) supplies speedy assist for home producers. By requiring the usage of ALMM-compliant modules in photo voltaic tasks for presidency companies and open entry and net-metering tasks, ALMM has established a commerce barrier to imported modules as a result of all however one of many ALMM entities are Indians. Implementation, nevertheless, has seen coverage modifications with controversies round ALMM for open entry and net-metered tasks that had been lastly resolved in March 2024 and for presidency tasks which was rested in May this yr. Such coverage uncertainty impacts all stakeholders. Solar energy builders are struggling to amass gear, buyers have gotten cautious of long-term commitments in an unpredictable surroundings and producers are seeing enlargement plans and books so as affected. Policy stability should be a precedence.

Initiatives like ALMM and PLI have given the a lot wanted increase to photo voltaic manufacturing capabilities. However, a big weak spot stays. The module manufacturing equipment is totally imported from China. Breakdowns and routine upkeep go away home producers depending on Chinese suppliers for spare components and help. Bridging this technological hole and attaining full self-sufficiency is crucial. Encouraging R&D and creating industry-academia synergies is essential.

Achieving 500GW of renewable power capability by way of home manufacturing alone within the brief time period will likely be difficult, however self-reliance on this sector is crucial for a sustainable future. With strategic options that create a powerful home photo voltaic manufacturing ecosystem, the home manufacturing {industry} will turn into a frontrunner within the international renewable power panorama.

Niharika Puri is an affiliate and Mayank Udhwani is a senior affiliate at Trilegal