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Solar Module Making Capacity Set To Soar 400%: CRISIL


India's solar module manufacturing capacity is set to gallop by almost 400% higher by fiscal 2025, compared with fiscal 2021, with 30-35 GW of fresh module capacity set to be commissioned following strong demand, favourable policies, likely improvement in energy efficiency, and price competitiveness, CRISIL has stated.

Solar Module Making Capacity Set To Soar 400%: CRISIL

A CRISIL Ratings study of the capex plans of the top 11 domestic module manufacturers, which account for 80% of the current effective solar module installed capacity of 8 GW, and some new entrants, indicates as much.

"The solar module manufacturing value chain starts with polysilicon and/or ingots, which are converted into wafers. These wafers are used to produce solar cells, which are then assembled to manufacture solar modules.

As on March 31, 2021, India had 3 GW of solar cell capacity (mostly used for captive production of solar modules) and 8 GW of effective solar module capacity. However, there is no manufacturing capacity for polysilicon and wafers yet.

Even this 8 GW capacity remains underutilised, at ~20%, because of higher cost of domestic modules compared with Chinese ones, which are 15-25% (4-61 cents/watt) cheaper because of subsidies and scale efficiencies. As a result, nearly 80% of India's current annual solar module demand is catered to by Chinese module manufactures," CRISIL has stated.

According to the ratings agency, this low demand has till now disincentivised major investments in better-technology products and backward integration into polysilicon and wafer manufacturing, which also has high capital cost.

Says Ankit Hakhu, Director, CRISIL Ratings, "However, now, with the government supporting domestic manufacturers through policy measures, their competitiveness relative to the Chinese is expected to improve. The imposition of 40% custom duty on imported modules and the Production-Linked Incentive (PLI) scheme2 benefits will not only eliminate the existing price gap, but may even make domestic module competitive by 2-3 cents/watt at current prices."

Story first published: Thursday, January 20, 2022, 11:37 [IST]
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