In the 1990s and 2000s, several countries, including the US, India, Taiwan, and Europe, contributed to the global solar value chain. However, it changed during the 2010s, when China and other SEA nations dominated several areas of the sector. Consequently, silicon wafers and polysilicon production is largely concentrated in a few locations.
Fast forward to the 2020s, countries show renewed interest in solar PV manufacturing amid net-zero commitments at COP-26. The focus is also on averting any supply chain disruptions that became apparent during the COVID-19 pandemic.
Likewise, India has also started focusing on reducing its dependence on China under its Atmanirbhar Bharat Campaign. It could help India become a global manufacturing powerhouse in the solar industry.
Government initiatives
As of July 2022, India has installed 57 GW of solar PV, making it one of the top five countries worldwide in terms of both annual and cumulative deployment. However, it was primarily accomplished by importing raw materials. A report by Mercom India observed that in Q1 FY-2022 (January-March), India installed over 3 GW of solar energy capacity, a 50% increase compared to 2 GW of installations in Q1 FY-2021. With this, India also witnessed the import of solar cells and modules worth USD 1.23 billion (INR 92.62 billion) in Q1 2022, a massive 374% surge compared to Q1-2021.
At COP-26, India announced its ambition to have 500 GW of renewable power by 2030 and to achieve Net Zero by 2070. And to achieve this target, India needs to install between 20 to 30 GW of solar PV annually in this decade. If this is achieved domestically, India can become competitive again.
The GOI has announced a number of measures to energize its solar manufacturing, including:
- Production Linked Incentive (PLI): It was introduced in 2021 to incentivise the establishment of global-scale plants to manufacture the full value chain of higher performance solar modules. The Indian government has decided to promote the “Atma Nirbhar Bharat” vision and strengthen the country’s manufacturing and export industries. In order to meet this capacity, the GOI allocated a budget of Rs 19,500 cr for PLI schemes in the Union Budget 2022.
- Basic Customs Duty (BCD): The Ministry of New and Renewable Energy (MNRE)levies a 25% customs duty on the import of solar cells and 40% on modules. This will help promote domestic cell and module manufacturers.
- Approved List of Module Manufacturers (ALMM): It is a list aimed at ensuring the development of the domestic manufacturing ecosystem. From April 1, 2022, only ALMM approved models can access open-access and net-metering projects.
Responses to these announcements have been positive from manufacturers in India.
Technology boost
Silicon dominates the solar manufacturing sector worldwide, with over 90% of the global market share, followed by thin film technologies.
There are prominent silicon technology variants, including p-PERC, n-TOPCon, and HJT. Most Indian manufacturers opt for mono PERC (n or p-type) with a wafer size of up to 210 mm. However, they will need to transit from PERC to TOPCon and cell fabs of >5 GW to be competitive. Since most companies work in greenfield plants, it gives them an advantage.
Companies are also looking to include thin film technology in their portfolio. An example of this is the investment of $684 million by First Solar in a 3.3 GW CdTe plant in Tamil Nadu. Studies also recommend that India should consider adopting CdTe for manufacturing, primarily due to its better temperature coefficient and durability.
The cost of manufacturing in India is still comparably high. There are two reasons for it: the high cost of industrial electricity and the interest burden. The sector can become fairly competitive if the government takes appropriate actions to ease these for the solar industry.
Research and development
India needs to promote robust solar PV activities in its universities and research centres for sustained growth in the solar manufacturing sector.
Notably, the country is already taking multiple steps to develop an education and research ecosystem as it emerges as a global solar manufacturing hub. For instance, MNRE established the National Center for Photovoltaic Research and Education at IIT Bombay in 2010. It also set up the National Institute of Solar Energy under its own aegis and the Solar PV Hub at IIEST in collaboration with DST.
The solar manufacturing business might benefit from enhanced online courses for engineers and employment services. Additionally, on-site training programmes for technicians and engineers would increase the sector’s technical expertise.
The way forward
India is taking several initiatives to make itself a global solar manufacturing hub. India will need consistent policies and a long-term vision to encourage investments in this sector further.
Nonetheless, with the immense focus of countries worldwide on renewable energy, this manufacturing push will give India a tremendous opportunity to become an important supplier of solar components. And with a good fraction of front and backward integration, India will not only achieve its energy requirements but will also meet its energy commitments.