India’s Clean Tech Capacity To Rise Significantly By 2030: S&P Report

India's Clean Tech Capacity To Rise Significantly By 2030: S&P Report

According to Clean Energy Technology research team at S&P Global Commodity Insights, India has introduced various initiatives to enhance domestic manufacturing, aiming to minimize reliance on imported goods and bolster local manufacturing. With these supportive strategies, India’s clean energy technology capacity is projected to rise significantly by 2030, aiming for full self-sufficiency in solar PV and wind by 2030, reducing its dependency on imports, it said.

However, challenges such as technological innovation gaps, skilled labor shortages, inadequate infrastructure, and inconsistent policy enforcement may hinder progress toward these clean energy goals by 2030.

India’s clean energy technology capacity is projected to rise significantly by 2030, according to Clean Energy Technology research team at S&P Global Commodity Insights. With growing concerns over energy security and the global push to reshore manufacturing, several key clean technology markets have introduced local content requirements in recent years, a trend that is now being adopted by emerging markets. In line with its commitment to reduce carbon emissions and drive economic growth, India is positioning itself as a leader in clean energy manufacturing.

Jessica Jin of S&P Global Commodity said, “The Indian government has rolled out various initiatives, including the Production-Linked Incentive (PLI) scheme, aimed at attracting significant investments in solar modules and battery production. These efforts not only aim to meet the country’s growing domestic demand but also strategically position India as a major player in the global clean energy supply chain.”

Robust domestic demand coupled with favorable local policies fosters local manufacturing in India, it said. In support of local manufacturing, various policy measures have been introduced, including tariffs on imported goods like basic customs duties (BCD) and goods and services tax (GST), along with approved manufacturer and model lists (ALMM and RLMM). Direct incentives, such as the PLI scheme, further promote domestic production and innovation within the sector. These favorable policies are expected to drive substantial growth in India’s clean energy capacity by 2030.

“Projections indicate that India will reach 107 GW in PV modules, 20 GW in wind nacelles, 69 GWh in battery cells, and 8 gigawatts equivalent (GWe) in electrolyzers. This growth will enable India to achieve full self-sufficiency in solar PV and wind, and over 90% in battery cells,” said Indra Mukherjee of S&P Global Commodity Insights.

With the rise of international trade restrictions on Chinese products, India is positioned to capitalize on market opportunities and increase its export activities. India is also poised to capitalize on international trade restrictions on Chinese products, enhancing its export capabilities. In 2023, India’s module shipments to the US surged, totalling 5 GW, a 7.4-fold increase compared to 2022, as the country gained market share from Chinese PV modules.

However, challenges remain in the wind sector, where domestic companies are taking over market dominance from once-leading Western turbine manufacturers. Despite India’s significant wind turbine manufacturing capacity, much of it remains underutilized. Some Western manufacturers have repurposed their Indian factories to focus on exports, though this shift requires additional investment.

India is unlikely to meet its clean energy goals due to several obstacles, such as inconsistent and delayed policy implementation. While the manufacturing capacity is growing, India still faces obstacles in achieving its ambitious renewable energy installation targets. Key challenges include a lack of technological innovation, skilled labor, raw materials, and incomplete infrastructure. In the solar PV sector, India struggles to meet its polysilicon and wafer production goals, which hampers its competitiveness. Similarly, India’s wind turbine product mix requires alignment with global standards for export, and its nascent offshore wind sector will demand further investments.

Flow chart of Indian exports and imports of clean technologies. Source: S&P Global

“India’s hydrogen targets appear overly ambitious, like trends seen globally where there’s been considerable “hype” surrounding hydrogen. Although India’s electrolyzer capacity is projected to have a significant growth by 2030, the electrolytic hydrogen sector remains largely underdeveloped, necessitating a foundational approach. Furthermore, the electrolyzer is merely one component of a hydrogen facility; numerous additional elements, such as transformers and renewable energy sources like solar and wind, are critical. These supplementary components often delay project timelines, complicating the overall development process,” said Katherine Leydon of S&P Global Commodity Insights.

According to Rida Rambli of S&P Global Commodity Insights, “In the battery sector, local manufacturers need time to enhance their production capabilities, as the industry is currently limited to battery pack assembly. High capital expenditure, technological hurdles, and the lack of a battery supply chain ecosystem are significant challenges. Meanwhile, India’s hydrogen ambitions, although promising, face developmental delays due to the complexity of building a hydrogen facility.”

While India’s clean energy sector is on a transformative path, overcoming these challenges will be crucial to fully realizing its potential as a global clean energy leader by 2030.