Home Business India’s solar module manufacturing capacity may jump over 60% by 2025: Icra

India’s solar module manufacturing capacity may jump over 60% by 2025: Icra


New Delhi: India’s solar photovoltaic (PV) module manufacturing capacity is likely to increase to over 60 GW by 2025 from the current level of 37 GW, with improved backward integration into cell and wafer manufacturing, according to a report by rating agency Icra.

This is likely to further enhance to nearly 100 GW as the capacity awarded under the production-linked incentive (PLI) scheme comes on stream, led by the strong policy support and growing demand from domestic solar power installations, it said.

The policy measures include the notification of Approved List of Models & Manufacturers (ALMM) comprising only domestic manufacturers, imposition of basic customs duty on imported cells and modules, and the PLI scheme. Further, the solar power generation capacity is expected to witness significant growth over the coming decade on the back of India’s climate transition goals, in turn driving the demand for solar PV module, according to the report.

“While the abeyance of the ALMM order till March 2024 and sharp decline in global module prices is leading to an increase in PV module imports in FY2024, the expected scale-up in domestic manufacturing capacity with backward integration over the next two to three years, along with resumption of the ALMM order, is expected to reduce import dependence,” said Vikram V, vice president & sector head – corporate ratings, Icra.

He said that apart from module capacity, the OEMs are expected to enhance the wafer and cell manufacturing capacities with cell capacity expected to cross 25 GW by 2025 from the current level of 6 GW. However, the country will remain dependent on polysilicon imports as these capacities are likely to take longer to set up, involving a larger capital investment, Vikram added.

The solar PV module supply chain is currently dominated by China, with over 80% share in manufacturing capacity across polysilicon, wafer, cell, and modules. In comparison, the manufacturing capacity in India is relatively low and is largely restricted to the last manufacturing stage. The PLI scheme is expected to change this, with integrated module units expected to come up in India over the medium term.

The Centre has so far awarded incentives for setting up module manufacturing capacity of 48 GW, including fully integrated facilities of 24 GW, from polysilicon to module. The capex outlay for setting up these integrated module capacities is estimated to exceed 1 trillion. Given the significant scale-up expected in manufacturing capacity, garnering a share of the global demand through exports would remain critical for domestic solar OEMs.

“The Indian module manufacturers have benefited from the healthy export demand growth, mainly from the US, over the past 18 months. The exports increased by over 364% in FY2023 over FY2022 and further by 748% in the first five months of FY2024 over the corresponding period of the previous year. This is owing to the healthy demand from the US and restrictions imposed by that country on module-sourcing from China,” said Vikram.

While this remains positive in the near term, the sustainability of this demand remains to be seen, considering that a large scale-up is expected in the module manufacturing capacity in the US, given the significant benefits available under the Inflation Reduction Act, a significant climate legislation announced by the US government, he added.

In the past few years, the government has announced several steps to boost the domestic manufacturing ecosystem for solar modules, cells among others with a view to also lower the import dependence on China with which India has had repeated diplomatic tussles since 2020.

Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Catch all the Industry News, Banking News and Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.


Updated: 06 Nov 2023, 04:43 PM IST

Source link

Previous articleAngelo Mathews becomes first to be ‘timed out’ in international cricket
Next articleAngelo Mathews ‘Timed Out’ for walking ‘slowly’ to the crease. Explained


Please enter your comment!
Please enter your name here