India Needs to Establish Value Chain to Boost Solar Equipment Manufacturing : Industry

Domestic manufacturing of solar equipment in India will need the support of a back-end supply chain that needs to be quickly established

The plans for establishing domestic manufacturing of solar equipment in India will need the support of a back-end supply chain that will need to be quickly established, industry executives said.

Sumant Sinha, chairman and managing director of Renew Power, said the government’s plans to install 300 GW of solar capacity generation by 2030 will need installations of 400,000 Megawatts of solar modules, which means nearly eight times the current capacity.

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That will require investments of around USD 150 billion, he told a conference titled India PV Edge 2020.

“So far we have been importing solar modules from China… I would say  80-90 percent of our (India’s) solar installations have solar modules imported from China,” Sinha said. “I would say that is something the government is appropriately trying to stop now by developing a local ecosystem of manufacturing,” he said.

“There is no need to have an externalised system as then we will be changing our reliance on countries for imports of oil to solar modules,” he said. India imports nearly all of its oil needs, which is one of the biggest drains on the country’s foreign exchange reserves.

But what the plan to establish a solar manufacturing system in the country will mean is that a research and development system will also need to be established, he added. “You can’t buy technology off the shelf in our industry and expect it to be viable for 10-15 years,” he added.

Sinha highlighted that the technology evolution has been so rapid in the solar industry that costs have dropped by around 80 percent in the last decade — a pace of reduction that is unmatched by most other industries.

”This reduction in cost will continue, though it may not happen at the same speed,” he highlighted, adding that independent power producers were duty-bound to bring down the cost of solar power as much as possible and therefore the latest technological advancements were needed.

Sinha urged the government to provide policy support to encourage the development of the latest solar technology in the country rather than accept older technologies. However, unlike other countries, Indian solar power developers needed to play an active role in manufacturing as well, he added.

There are only one or two solar power developers in the country who are also involved in manufacturing equipment currently.

Ramesh Nair, chief executive officer of Adani Solar, said that their company was developing an integrated 1.2 GW integrated solar module and cell manufacturing capacity at  Gujarat’s Mundhra.

He said the facility was looking at the latest technologies that go beyond monocrystalline solar panels and were looking at N-type that provides 25 percent higher efficiency.

Nair said the last 1-1.5 years have opened up tremendous prospects for the solar industry in the country with the expansion of rooftop solar projects and the PM KUSUM program that aims to provide solar-based water pumps to farmers at subsidised costs.

“It is only a matter of time before we see 10 GW of solar cell capacity in the next 2 years and module (capacity) going up to maybe 15-20 GW,” he said.

Nair added that the polysilicon solar panel capacity coming up in the country needs to be consolidated in one or two locations and not be fragmented in 10-20 different units across the country.

Besides solar cells, wafers and modules, he emphasized that the country needed to establish back end manufacturing for a number of other products such as Aluminium frames and glass in the country.

“There is a huge scope for employment generation. Most of the things are currently imported,” he added.

“We are looking at very exciting times for solar (equipment) manufacturing in the country,” Nair said, adding that the government needed to establish a stable policy framework so that investors are assured of their business prospects.

In a prior session, Deepak Bagla, managing director and chief executive officer at Invest India, said there were tremendous investment prospects emerging in India, especially in clean and renewable energy sources like solar.

“The government of India is out to make the investment journey,” he said, adding that by the first quarter of next year a new single-window clearance system will be introduced.

Bagla said that the process of investments in India has been simplified so much that a 640 MW solar project could be established within eight months, a record that is unmatched elsewhere in the world. “Today investors are comfortable taking a long-term call on India.”

He said that in the last financial year foreign direct investments went up by 18 percent to USD 74 billion, out of which 40 percent of the projects were in establishing greenfield capacity.

RK Singh, minister for new and renewable energy, said that the government had already launched talks with a number of global players for establishing manufacturing facilities in solar and other renewable energy systems.

Simultaneously, state-run energy companies were also planning to set up renewable manufacturing capacity. That includes Coal India Limited, which is the world’s largest coal producer.