ALMM On Solar Cells Can Push Tariffs By 50p/unit: CareEdge

A latest report by CareEdge Ratings said that the imposition of an Approved List Of Models and Manufacturers (ALMM) for solar cells in India can push solar tariffs up by up to Rs 40 paise per unit to Rs 50p/unit. The Ministry of New and Renewable Energy (MNRE) has planned to bring in ALMM for solar cells from June 2026. With the imposition of ALMM for solar cells, the Indian solar module makers will be bound to procure solar cells only from domestic solar cell makers.

“The introduction of ALMM-II for domestic cells may result in an increase in the delivered cost of domestic modules by 6-7 cents/Wp, leading to a rise in solar tariffs by 40-50 paise per unit for the short run till local cell supply scales up,” the report said.

The agency said that the domestic solar cell capacity might reach 60 GW by FY27. This is against the current domestic solar cell manufacturing capacity of around 8 GW. “Domestic cell capacity is expected to grow correspondently, reaching 60 GW by FY27, with
investment of ~Rs 30,000 crore by major players over the next 2-3 years, supported by strong policy measures for progressive backward integration. The resultant capacity growth will make India a surplus market, given the annual module requirement of 40-50 GW, necessitating that the domestic players tap the export markets,” the report from CareEdge Ratings said.

Annual RE Installations To Rise 

While India installed 18.5 GW of RE capacity in FY24, CareEdge Ratings expects the annual RE installations to surpass 35 GW over the next two years, primarily supported by a healthy pipeline of more than 100 GW. The study indicated that growth in solar capacity in the medium term will be driven by an annual tendering target of 50 GW RE capacity through renewable energy implementing agencies, with the majority expected from solar. It anticipates additions of ~20 GW from rooftop solar, hybrid solar components, and off-grid solar over the next 2-3 years. This apart, solar open access capacities of 4-5 GW are likely to be added annually over the next 2-3 years, aided by ESG commitments of corporates and improving the economic viability of C&I projects. 

CareEdge Ratings said that to meet the capacity addition plans of ~80 GW by leading module manufacturers will entail a capex of ~Rs 12,000 crore over the next 2-3 years as per research findings. It anticipates domestic cell capacity to grow correspondently, reaching 60 GW by FY27, with investment of ~Rs 30,000 crore by major players over the next 2-3 years, supported by strong policy measures for progressive backward integration. The resultant capacity growth can make India a surplus market, given the annual module requirement of 40-50 GW, necessitating that the domestic players tap the export markets.

Proactive policy support through tariff and non-tariff barriers to drive demand for Indian players 

The BCD rule was implemented by the government to safeguard against Chinese predatory pricing of 25% and 40% on Chinese cells and modules respectively, effective from April 01, 2022. Consequently, the  BCD increases the landed cost by 4-5 cents/Wp for imported modules and 1-2 cents/Wp for imported cells, DCR modules are pricier than both imported as well as non-DCR modules on a landed basis, it said. CareEdge accredited this change due to a steep fall in global module prices over the last two years, which partly offset the impact of BCD. Nonetheless, the BCD remains a key tool in enhancing the cost-competitiveness of domestic modules.