From pv magazine India
The Indian solar manufacturing sector must strive to build a sustainable, vertically integrated ecosystem, rather than focusing solely on output, according to a new report by JMK Research and the Institute for Energy Economics and Financial Analysis (IEEFA).
India, which is targeting 300GW of installed solar generation capacity by 2030, has a PV cell manufacturing capacity of 4.3GW and a module manufacturing capacity of 18GW. But the actual output is even lower, as most of these manufacturing facilities have been operating below their nameplate capacities at a capacity utilization factor (CUF) of 40% to 50%, or less.
The nation has been a laggard in manufacturing – not just for upstream PV components such as wafers and cells, but also modules. By comparison, China accounts for about 61% of global solar module manufacturing capacity of 358GW. India’s manufacturing capacity of 18GW is roughly equal to the annual capacity additions of the top individual Chinese PV brands, which underscores the vast scope for Indian companies to match their economies of scale, according to the report.
For raw materials, Indian manufacturers rely on imports mainly from China and face associated risks of shortages and price hikes. This highlights the need for a sustainable, vertically integrated domestic solar manufacturing ecosystem.
“Without large-scale domestic manufacturing, from raw materials through to modules, the overarching risks of logistics and commodity price fluctuations for imports will persist,” said co-author Vibhuti Garg, energy economist and lead India, IEEFA.
The report notes that India's ambitious PV installation target, coupled with government support, has made the prospects for indigenous PV manufacturing increasingly vibrant. Dozens of companies are vying to make their mark in the Indian solar sector.
The government of India’s production-linked incentive (PLI) scheme for integrated PV manufacturing, with an initial outlay of INR 4,500 crore ($616 million), plus the additional allocation of roughly $2.5 billion in the 2022 budget, would have the combined potential to produce at least 40GW of solar modules.
“The PLI scheme alone, if judiciously implemented, can increase the integrated solar module, cell and wafer domestic manufacturing capacity several times over in the next three to four years,” said Jyoti Gulia, founder of JMK Research. “This will help in creating a huge demand potential for the PV ancillary market – solar glass, ethylene-vinyl acetate (EVA) … and skilled workforce. The direct investment in the country on account of PLI budget expansion would potentially rise.”
Other issues for the Indian industry are relatively low capacity utilization rates in factories that make solar cells, as well as the type of solar cells being produced. About 60% to 70% of domestic production employs multi-Si module technology, which is nearing the point of obsolescence.
New manufacturers that plan to expand or enter the market aim to install machinery to produce mono-Si modules, which is the prevailing technology. This development will help domestic players to compete with global rivals on quality and price.
The Indian PV industry also faces mid- to long-term challenges of high manufacturing expenses, inadequate research and development (R&D), and a shortage of skilled manpower.
“Developing significant manufacturing capacities in raw materials, especially polysilicon, will be highly capital intensive and technologically complex. Domestic manufacturing companies need to have a proactive technology partnership with innovators or research institutes,” said Garg. “Rather than focusing solely on output, it’s imperative for the domestic solar manufacturing industry to create a strong foundation for sustainable development overall.”
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