5 Challenges That Can Increase Solar Module Costs In India

5 Challenges That Can Increase Solar Module Costs In India

The Indian solar module manufacturing sector, once heavily reliant on Chinese imports for solar modules and cells, is gradually moving toward self-reliance. However, this transition brings its own set of hurdles, which could lead to increased costs for solar panels and project development, potentially pushing solar tariffs higher in the coming years.

1. Reduced Export Assistance from China

The Chinese government has announced a reduction in export subsidies for solar products, lowering assistance from 13% to 9% effective December 1, 2024. This decision is expected to raise the prices of imported solar cells in India, where domestic production capacity is still insufficient to meet demand.

As a result, the cost of solar cells—a key raw material for module manufacturing—will likely increase, driving up the final price of solar modules sold in India.

2. Anti-Dumping Duty on Aluminium Frames

India has imposed anti-dumping duties on aluminium imports, a critical raw material for solar module frames. Previously, many Indian manufacturers relied on cheaper imports from China. In response, companies like Saatvik Solar, Premier Energies, Insolation Energy, and GenX PV have initiated plans for in-house production.

However, this backward integration will take time, making the procurement of affordable aluminum frames challenging in the interim. These frames are essential for providing strength and protection to solar modules, and the increased costs could impact manufacturing expenses significantly.

3. Stabilization of Solar Cell Prices

Despite the historically low prices of solar cells from China, further price reductions seem unlikely. Experts anticipate that prices will either stabilize or increase in the near future.

Most Indian solar module manufacturers source raw materials on a per-order basis rather than through long-term contracts. This practice leaves them vulnerable to price fluctuations, potentially disrupting cost structures and leading to higher module prices.

4. Partial Rise in Wafer Prices

Recently, Chinese wafer manufacturers like LONGi have announced partial price increases, a trend echoed by other companies. The combination of higher wafer costs and reduced export subsidies could make raw materials even more expensive for Indian solar manufacturers, contributing to a rise in local module prices.

5. Impact of the Approved List of Cell Manufacturers (ALCM)

The Ministry of New and Renewable Energy (MNRE) plans to mandate the use of domestically produced solar cells listed under the Approved List of Cell Manufacturers (ALCM) starting April 1, 2026.

While this move aims to boost local manufacturing, it may also lead to a supply shortfall, as current domestic production capacity is insufficient. Rating agencies like ICRA have warned that this policy could increase solar tariffs in India. Industry players such as ReNew have also highlighted concerns about potential supply constraints in their investor communications.

Conclusion

While India’s shift toward self-reliance in solar manufacturing is commendable, it faces significant challenges. Addressing these hurdles—ranging from policy changes to supply chain disruptions—will be crucial to maintaining the momentum of India’s solar revolution while keeping costs and tariffs competitive.