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India's solar manufacturing capacity set to surge, aiming for 100 GW by 2025
Industry News- Nov 09,23
According to a report by rating agency ICRA, India's solar photovoltaic (PV) module manufacturing capacity is anticipated to surge to over 60 GW by 2025, up from the current 37 GW.
According to a report by rating agency ICRA, India's solar photovoltaic (PV) module manufacturing capacity is anticipated to surge to over 60 GW by 2025, up from the current 37 GW. This growth is attributed to improved backward integration into cell and wafer manufacturing. The report suggests that this capacity could further increase to nearly 100 GW with the implementation of the production-linked incentive (PLI) scheme, driven by strong policy support and increasing demand from domestic solar power installations.
The report outlines several policy measures, including the creation of an Approved List of Models & Manufacturers (ALMM) comprising only domestic manufacturers, imposition of basic customs duty on imported cells and modules, and the PLI scheme. Additionally, India's solar power generation capacity is expected to see significant growth in the next decade due to the country's climate transition goals, boosting the demand for solar PV modules.
Vikram V, Vice President & Sector Head - Corporate Ratings at ICRA, stated that while there might be a temporary increase in PV module imports in FY2024 due to the abeyance of the ALMM order until March 2024 and a sharp decline in global module prices, domestic manufacturing capacity is expected to scale up in the next few years. He emphasised the importance of reducing import dependence through the expansion of domestic manufacturing, particularly in wafer and cell production. However, India is likely to remain reliant on polysilicon imports due to the time and capital investment involved in setting up these capacities.
Currently, China dominates the solar PV module supply chain, accounting for over 80% of the manufacturing capacity across polysilicon, wafer, cell, and modules. In contrast, India's manufacturing capacity is relatively low and mainly limited to the final stage of production. The PLI scheme aims to change this by encouraging integrated module units to be established in India in the medium term.
The Indian government has awarded incentives for setting up module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW, covering the entire production process from polysilicon to module. The capital expenditure (capex) required for these integrated module capacities is estimated to exceed Rs 1 trillion. With the significant increase in manufacturing capacity, it is crucial for domestic solar Original Equipment Manufacturers (OEMs) to secure a share of the global demand through exports.
Vikram highlighted the recent growth in exports, especially to the US, which increased by over 364% in FY2023 compared to FY2022 and further by 748% in the first five months of FY2024 over the corresponding period of the previous year. However, he cautioned about the sustainability of this demand, considering the US's plans to scale up its module manufacturing capacity due to the benefits available under the Inflation Reduction Act, a major climate legislation announced by the US government.
In recent years, the Indian government has taken several initiatives to boost the domestic manufacturing ecosystem for solar modules and cells, aiming to reduce import dependence on China, with which India has experienced diplomatic tensions since 2020.
Source: Mint
Solar manufacturing capacity
India
PV modules
production-linked incentive
ALMM
domestic manufacturers
solar power installations
polysilicon imports
PLI scheme
Vikram V
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