India emerging as a solar equipment-making hub

At the Tata Power Renewable Energy subsidiary TP Solar's new plant spread across 317 acres at Tirunelveli in Tamil Nadu, autonomous mobile robots (AMR) move systematically and silently to help produce nearly 20,000 solar PV equipment in a day. The Industry 4.0 standard plant, set up with an investment of ₹4,300 crore and mostly with imported German machines, uses advanced technologies in solar equipment manufacturing (cells and modules)- TopCon, mono PERC and bifacial technology. In simple terms, the solar panel can generate electricity from both sides to give maximum efficiency. The module production line was commissioned in October 2023 and it has already produced 1,250 megawatts (MW) of solar modules. The solar cell production line is now fully operational with a capacity of 4 gigawatts (GW). Vikram Solar, one of the leading solar module manufacturers with a capacity of 3.5 GW, recently introduced bifacial modules with Heterojunction technology (HJT). The Kolkata-based company has a manufacturing plant started a couple of years ago in Kanchipuram, Tamilnadu.

Those are just the beginning of a massive solar equipment manufacturing ecosystem evolving in the country, targeting both the domestic and export markets. In the first half of the year 2024, India added a record 11.3 GW of solar modules and 2 GW of solar cell capacity. With that, the country's cumulative manufacturing capacity reached 77.2 GW in modules and 7.6 GW of cell capacity. Gujarat alone accounts for 45% of module manufacturing and 52% of cell manufacturing. Telangana has 28% of solar cell manufacturing capacity. That was not the situation five years ago. As per the Government data as of May 31, 2017, India had only 3 GW of solar PV cells and around 8GW of solar module manufacturing capacity.

Competition to China

The International Energy Agency (IEA) in a recent energy outlook notes that China accounted for 60% of the new renewable capacity added worldwide in 2023 – and China’s solar PV generation alone is on course to exceed, by the early 2030s, the total electricity demand of the United States today. Over the past five years, annual global solar capacity additions quadrupled to 425 GW, but annual manufacturing capacity is set for a sixfold increase to more than 1,100 GW. Solar PV Market was valued at $289.6 billion in 2023 and is anticipated to grow at a CAGR of over 8.3% from 2024 to 2032.

China invested heavily in the solar value chain over the years to create huge capacities and currently controls over 75% of global polysilicon production, 97% of the world’s wafer production capacity, 80% of solar cell production and 70-80% in solar modules production. Global leaders in these segments include companies like Tongwei Solar (TW-Solar), LONGi Green Energy, JA Solar, Trina Solar, Jinko Solar etc. Of the top six global producers of solar equipment, five are from China. The ability to mass produce at nearly 30% cheaper than other countries was what helped Chinese manufacturers corner a lion’s share of the world of solar equipment manufacturing.

But that is changing now. Under the Inflation Reduction Act (IRA), 2022, the US is now heavily incentivising to boost local production, with $370 billion in clean energy programmes. The US imposed tariffs on imported solar cells, EVs, batteries and critical minerals from China from September 27. The Office of the US Trade Representative (USTR) of the US Department of Commerce says Chinese-made electric vehicles would attract 100% import duty, on solar cells 50% and 25% on EV batteries, critical minerals, aluminium and steel. Polysilicon, used in solar panel manufacturing, will attract a 50% import duty from 2025. However, the USTR has given tariff exceptions to import solar and wafer-making machinery.

That is helping Indian manufacturers. India's solar exports rose 227% to $1.8 billion in 2023 from $561 million in 2022 and the US accounted for over 97% of Indian exports. The rest were from Indonesia and a couple of African countries. With more developing countries embracing solar and other renewable energy, opportunities are growing for Indian solar equipment makers.

India adding big capacity

According to various projections, module manufacturing capacity in India is projected to grow 172 GW and that of cell capacity to reach over 80 GW by 2026.

Mukesh Ambani-led Reliance Industries will complete the first phase of its 10 GW integrated solar production facilities - which include modules, cells, glass, wafers, ingot and polysilicon - by the end of this year. The facility will bring out first-generation bifacial solar panels with cell efficiency exceeding 26% with HJT technology from REC Singapore, a RIL subsidiary. R&D efforts are on to develop disruptive technologies like perovskites and back-contact HJT-IBC, which RIL has already demonstrated at a pilot scale and plans to commercialise within the next two years.

Adani Solar, the solar PV manufacturing arm of the Adani Group, has already set up 4 GW cell and module, and 2 GW ingot and wafer manufacturing units in India. It is building a fully integrated and comprehensive solar ecosystem manufacturing facility of 10 GW capacity in Mundra, Gujarat to have the entire solar manufacturing ecosystem from metallurgical grade silicon to PV modules, including ancillaries.

Waaree Energies, one of India’s largest manufacturers with 13.3 GW of module manufacturing capacity, is planning to set up 11.4 gigawatts (GW) integrated solar cell manufacturing facility in another 2-3 years. It aims to commission 5.4 GW of solar cell manufacturing capacity in the current fiscal and the remaining 6 GW integrated manufacturing facility to produce ingots, wafers, and solar cells by FY27.

Sumant Sinha-led ReNew is setting up a 2GW module manufacturing capacity in Dholera, Gujarat and another 4 GW in Rajasthan. This integrated facility aims to make solar wafer, cells, and modules capacity by fiscal 2025 and enter the polysilicon manufacturing value chain by fiscal 2026.

Policy support

The transformation happened with the Government’s decision to offer a Solar PLI (Production Linked Incentive Scheme). In two tranches, the Union Government gave incentives for setting up 48.34 GW worth of ₹18,500 crore, including ₹14,007 crore for 11 companies to set up integrated value chain. Another was the introduction of the Approved List of Models and Manufacturers (ALMM) on April 1 by the Ministry of New and Renewable Energy (MNRE) to boost domestic solar equipment manufacturing and India's pursuit to achieve self-sufficiency in the sector. India, which was dependent on China and countries like Vietnam for nearly 90% of the solar photovoltaic cells and modules due to lack of domestic manufacturing capacities until 3-4 years ago, imposed the ALMM in 2019 to promote sourcing the equipment from Indian manufacturers. However, the order was kept in abeyance for a year in 2023-24 to help many delayed projects, as its developers were reliant on Chinese equipment imports. Covid-19 and resultant delays then derailed many solar power projects, which were coming up as part of India's plan to have 500 gigawatts (GW) of renewable energy by 2030.

With huge capacity addition happening in solar equipment manufacturing and developed nations looking at sourcing from countries other than China, India is set to become a major force in solar equipment making.