India has added 9,327 MW of utility scale wind and solar capacity in last 12 months. The total renewable energy capacity is estimated at 66,650 MW as on September 30, 2019. According to a KPMG report, a sustainable domestic manufacturing industry can save $ 42 billion in equipment imports by 2030 and create 50,000 direct jobs and at least 125,000 indirect jobs in the next 5 years, besides providing equipment supply security. This article discusses opportunities for Indian manufacturers in the renewable sector and trends in renewable equipments.

 

India has set an ambitious renewable energy target of 175 GW by 2022, including 100 GW of solar power. Of that, the government aims for 60 GW to be utility-scale solar, and the rest to be rooftop solar. Though India has made significant progress on the 60 GW utility-scale solar targets, getting to the 40 GW rooftop solar targets will be a significant undertaking. 

 

As of December 2016, installed capacity of rooftop solar was only 1.25 GW, which means that ~6 GW would need to be installed every year to reach the 40 GW target by 2022. Filling this gap between the current installment and the 40 GW goals will require an estimated $ 39 billion (Rs 3 trillion).

 

The renewable sector is the one which is picking up pace. The government has kept its intentions clear with restricting imports from China by increasing import duty. Much of the industry is dependent over imported equipments. Even though the import duties are higher for China, India is importing for easy access and cheaper equipments. It is noted that there are a very few equipment manufacturers and solution providers in India. 

 

In order to increase customer demand, major vendors in solar power equipment market are focusing on introducing technologically advanced solutions and systems at cheaper prices. This helps vendors to differentiate themselves from counterparts and sustain competition. Moreover, strategic partnerships & collaborations with Developers & EPC contractors and investments in R&D activities are some of the other strategies adopted by major market players to enhance their existing product portfolio and expand their market footprints.

 

“Regionally, southern region is the major demand generator for solar power equipment, with states like Karnataka, Tamil Nadu, Andhra Pradesh and Telangana being the key markets in the region,” says Dr Anil Garg, CEO, Energy and Environment Foundation. The market for solar power equipment in the southern region is growing due to increasing investments in solar power equipment and presence of rich states in terms of annual quantity and availability of solar radiation. Southern solar power equipment market is anticipated to witness steady growth during forecast period.

 

On the basis of equipment, the Indian solar power equipment market is categorised into solar cell, solar inverter, solar charge controller, solar thermal collector and others. Of all, solar cell market holds significant share in the Indian solar power equipment market and is anticipated to maintain its dominance during forecast period as well. “The major factors driving the growth of solar cell market include rising installation of solar projects across different regions and favourable government policies,” says Garg.

 

India’s requirement for solar power generation is rapidly increasing and because of that demand for solar equipment also increasing rapidly. India’s solar equipment demand is 90 per cent met by imports. This shows that there is a huge scope for Indian startups in the area. Another opportunity is in the area of developing solar energy storage devices or equipment. As solar power generation is based on the sun’s energy, and it is not available for the full day or year.

 

Boosting manufacturing 

According to a KPMG report, a sustainable domestic solar equipment manufacturing industry can save $42 billion in equipment imports by 2030 and create 50,000 direct jobs and at least 125,000 indirect jobs in the next five years, besides providing equipment supply security.

“The installed capacity of photovoltaic cell production is very limited in India and is nowhere close to the ambitious implementation targets. India needs a lot of fresh investments in the manufacturing sector to make it self-reliant and at par with the global industry," says T S Ramesh, GM, Deccan Energy Solutions Pvt Ltd.

 

Apart from imposing safeguard duty, Ministry of New and Renewable Energy (MNRE) had announced a number of incentives in the month of June for promoting indigenous manufacturing of solar equipment across the value chain.

 

These included restructuring the Domestic Content Requirement (DCR) to include early stages of equipment development and upward integration; capital subsidy for new capacities or upgradation to the extent of 30 per cent; interest subvention of three per cent for loans taken from nationalised banks; and a scheme under which Public Sector Undertakings have been mandated to set-up 12 GW of solar projects using locally-sourced solar panels.

 

Rising Imports

India’s imports of solar cells and modules grew four-fold from 162 million units in 2014-15 to 663 million units in the first eleven months of 2018-19, according to BridgetoIndia data. In value terms, imports jumped over three times from Rs 4,317 crore to Rs 15,400 crore. Assuming that there is a total price decline of about 30 per cent in 4 years, imports in 2022-23 may be estimated at just over $ 2 billion, estimated BridgetoIndia.

 

According to PwC, the country imported around 9.8 GW of solar modules in 2017-18 meeting 85 per cent of the local demand. India has so far imported 77 million units of Silicon wafers worth $66 million, mostly from China and South Korea.

 

Meanwhile, there is desperate need to consider manufacturing equipments and components pertaining to the renewable energy sector.  This will help India to be self-dependant on solar equipment and components. It will also help India to become an exporting nation instead being an importing nation in the renewable industry.

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QUOTES

The installed capacity of photovoltaic cell production is very limited in India and is nowhere close to the ambitious implementation targets.

T S Ramesh, GM, Deccan Energy Solutions Pvt Ltd

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Regionally, southern region is the major demand generator for solar power equipment, with states like Karnataka, Tamil Nadu, Andhra Pradesh and Telangana being the key markets in the region. 

Dr Anil Garg, CEO, Energy and Environment Foundation