India’s local solar manufacturing industry, having been historically dependent on imports, has suffered due to stiff competition from imported equipment. The government has, in recent years, tried to encourage domestic manufacturing through a slew of interventions aimed at reducing the import burden. Incentives have also been introduced for setting up indigenous manufacturing facilities. It is an interesting time for solar manufacturers, both Indian and foreign, as, despite these measures, imports continue to dominate the market while exports are on the rise. With increasing capacity, the market for equipment such as trackers, inverters and cables is also expanding. Against this backdrop, solar equipment manufacturers discuss the technology trends, key challenges and the outlook for India’s solar segment.
What are the most pressing issues confronting the renewable energy manufacturing industry in India?
Gyanesh Chaudhary
The Indian solar manufacturing industry has made significant progress in recent years, with photovoltaic module manufacturing reaching nearly 38 GW in 2023 and being well on track to reach 110 GW by 2026. This progress is essential to India’s goal of achieving net zero emissions by 2070. However, the industry faces a number of challenges, including a lack of financial intermediaries, limited infrastructure and a shortage of skilled labour. For instance, India’s manufacturing capacity is relatively low compared to that of China and is largely concentrated in the final stages of production. This is due to the high upfront investment required to set up and operate renewable energy manufacturing facilities. This investment barrier can be a challenge for smaller companies, but larger players may be able to invest independently.
With regard to infrastructure, transportation, logistics and energy distribution infrastructure for renewable energy components is not yet well developed in India. This slows down the production and transportation of renewable energy equipment and makes it more difficult to achieve economies of scale. On the skilled manpower front, India requires about 8.4 million people to support renewable energy deployment, but the sector employed only 1.64 million people in fiscal 2022. This shortage of skilled workers can slow down the manufacturing process and affect the quality of products. In order to mitigate challenges faced by the Indian solar industry, the government should provide financial support to smaller companies to help them overcome the upfront investment barrier. The government should invest in developing the transportation, logistics and energy distribution infrastructure for renewable energy components. The government should work with the industry to develop training programmes to address the shortage of skilled workers.
By addressing these challenges, the Indian solar manufacturing industry can become a major player in the global renewable energy market and help the country achieve its net zero goals.
Gautam Mohanka
The renewable energy manufacturing industry in India is grappling with several pressing issues. A significant challenge is the disruption in the supply chain, initially triggered by the Covid-19 pandemic and later exacerbated by geopolitical tensions such as the India-China border standoff, as well as the Russia-Ukraine and Israel-Palestine conflicts.
These disruptions have resulted in shortages of critical components and raw materials essential for renewable energy manufacturing. Additionally, the industry faces hurdles such as high upfront capital costs, a shortage of skilled labour and a market slowdown that has impacted funding. While there have been improvements, uncertainty in government policy has been a significant issue, though recent developments have seen less frequent policy changes, allowing for better planning for long-term investments.
Manjunath Reddy
When China rose to predominance in solar manufacturing in the early 2010s, it laid emphasis on the entire PV landscape and not just solar cells and modules. The Indian government’s policy support was mainly focused on the final PV products, but the production-linked incentive (PLI) scheme has brought a shift in its approach to solar manufacturing. Now, production of raw materials such as polysilicon and wafers will also gain significance.
We feel that the extension of the Approved List of Models and Manufacturers (ALMM), a favourable policy for domestic manufacturers, has gone against the development of domestic manufacturing. It has raised questions regarding policy implementation by the Indian government and its volatility. We believe that this has adversely affected investments in the domestic PV manufacturing. Following the lifting of the ALMM compulsion, the Indian market has been flooded with modules imported from China or through free trade agreement countries, and the domestic module manufacturing capacity has not been utilised. This impact has been felt across the solar PV manufacturing industry as ultimately the fate of solar ancillary manufacturers is linked to module manufacturing.
China’s solar manufacturing expansion has been driven by the local supply chain from polysilicon to modules as well as its ancillaries, technology upgrades and policy support. By investing in the necessary infrastructure, promoting innovation and cultivating a skilled workforce, India can emerge as a shining example of how a nation can transition to clean and affordable solar energy.
How are global supply chains transforming and how does this impact manufacturers?
Gyanesh Chaudhary
As we know, Chinese components have dominated the global solar supply chain. With the US recently attempting to reduce its dependency on Chinese products, India-manufactured products stand an opportunity to expand in the US. A global push to rely less on China-based supply chains has led to more significant manufacturing being established elsewhere. Global supply chains are transforming through diversification, increased resilience measures, regionalisation and the integration of technology. However, manufacturers are adapting to ensure stability, manage risks and enhance the overall production efficiency. This impact even extends to cost efficiency, innovation, sustainability and market adaptability for solar manufacturers, as they navigate evolving global supply chains.
With the transformation of global supply chains, manufacturers need to identify and engage with multiple suppliers from different regions, leading to increased complexity in supply chain management. This can enhance resilience but may also require additional resources for coordination and monitoring. This shift can also open opportunities for local manufacturers to capture market share in specific regions. Manufacturers need to be agile in responding to market trends, adjusting production volumes and quickly incorporating changes in product specifications. This requires a flexible and responsive supply chain. The transformation of global supply chains presents both challenges and opportunities for Indian manufacturers.
As global businesses seek to diversify and reduce their dependency on Chinese components, Indian manufacturers have the opportunity to position themselves as alternative suppliers. This shift opens up avenues for increased exports and growth in the Indian manufacturing sector, particularly in industries such as solar energy, where China has traditionally dominated. However, to capitalise on this opportunity, Indian manufacturers must enhance their competitiveness by improving the infrastructure, adopting advanced manufacturing technologies and ensuring a reliable and efficient supply chain. The trend towards regionalisation also offers a chance for Indian manufacturers to cater to specific regional markets, leveraging their proximity and understanding of the local dynamics.
Todd Li
Globally, we have increased our solar module production capacity, and we are doing really well in the markets. I believe this is a good year for India as the market size has significantly increased. Last year, it was around 17-18 GWh, and this year it is around 20-25 GWh.
Our solar module sales have expanded to more than 160 countries. There is a substantial global demand, specifically in European nations, because they aim to reduce their gas requirements, with solar power now established as a mainstream energy source for them. Apart from this, markets such as Uzbekistan, Kazakhstan and Malaysia are experiencing rapid growth. China, of course, is one of the biggest markets. We already have manufacturing bases outside China, such as in Thailand and Vietnam, and we are increasing their capacities. We have also announced plans to establish 5 GWh of manufacturing in the US market. Our production capacity continues to grow.
Gautam Mohanka
Global supply chains are becoming increasingly complex and interconnected, driven by factors such as globalisation, technological advancements and the growing capacity of renewable energy installations. While China dominates the world’s solar manufacturing sector, recent initiatives by the US and Europe to reduce dependence on Chinese solar PV imports have disrupted global supply chains. Chinese manufacturers have responded by establishing production facilities in countries such as Cambodia, Malaysia, Thailand and Vietnam to circumvent US tariffs on Chinese solar modules. Moreover, the China+1 strategy adopted by the US and European countries has provided a boost to manufacturers in India, as they seek to capture a share of the market that has become available.
Manjunath Reddy
The supply chain is no longer just an operational concern, it is a strategic asset that holds the key to success in turbulent times. So far, the world has largely depended on China for its PV equipment requirements. The huge concentration of the entire PV value chain in one country poses a risk to other countries, and the world has witnessed the impact of relying on one country during Covid times.
We at DhaSh, who recently exhibited at various expos globally, have found that all major PV importers aim for a “China+1” strategy for their PV sourcing requirements. In addition to already having the second largest module manufacturing capacity, India has significant expansion plans for the next two to three years. Hence, Indian manufacturers are seeing huge interest and demand from abroad for their products. Self-sustenance and insulation from global supply chain shocks are some of the key reasons why local manufacturing is important.
Dan Shugar
The solar industry has been growing steadily over the years. At Nextracker, we have sustained an annual compound growth rate of 30 per cent for four years in a row, and we are continuing to experience strong growth this year. We also went public in February in one of the major initial public offerings of the year, highlighting the confidence that investors have in the renewable power sector. We are witnessing vibrant growth in solar adoption and are very excited about the growth of the market in India. We believe that the government’s policies and vision are driving the transition to renewable power.
Nextracker has been investing in India for 10 years, ever since we founded our company, and we have over 200 employees here. Currently, we have 35 projects that are either completed and operating or under fulfilment. Recently, we announced two major developments in India. First, we have continued our capacity expansion through contracted manufacturing partners, and have secured a contract for 10 GW per annum of local manufacturing capacity. Further, we have achieved over 4.5 GW of projects under contracts, which are currently in the fulfilment phase.
What has been the impact of key policy measures to promote local manufacturing in the country? What more needs to be done?
Gyanesh Chaudhary
India is at the forefront of the global renewable energy revolution and the solar manufacturing industry is playing a critical role in driving this growth. The government’s aggressive measures to reduce imports and promote domestic solar module manufacturing have been highly successful, with imports declining from 9.8 GW in the first half of 2022 to 2.3 GW in 2023. Initiatives such as Make in India and Atmanirbhar Bharat have been catalysts in reducing India’s dependence on imported renewable energy products. Local manufacturing has enhanced supply chain resilience, reduced imports and positioned India as a global leader in renewable energy innovation and manufacturing. The government’s ambitious target of boosting India’s solar capacity from 37 GW to 60 GW by 2025 and potentially reaching nearly 100 GW with the PLI scheme is being driven by strong policy support and increasing demand.
The ALMM and changes in basic customs duty (BCD) on solar components have had a positive impact on domestic manufacturers. Imposing ALMM on domestic manufacturing is expected to attract significant investments of $7.2 billion over the next three to four years, which will help indigenise the solar manufacturing value chain. This will boost India’s economic growth and job creation, and help achieve the net zero target through solar. In addition to ALMM and BCD, the government has implemented a number of other policies to support the domestic solar manufacturing industry, such as the PLI scheme, which provides financial incentives to companies that manufacture solar modules and other components within the country. These policies have helped create a conducive environment for the growth of the industry. The government is also working to address some of the challenges faced by the domestic solar manufacturing industry, such as the shortage of skilled workers and the lack of access to affordable financing. We need to focus more on developing newer technologies and innovations in the solar sector. These efforts will help in further boosting the growth of the domestic solar manufacturing industry to make India a global leader in this sector.
Another critical initiative underlining India’s commitment to solar energy is the Solar Park Scheme, designed to establish 50 solar parks of 500 MW and above with a cumulative capacity of 38 GW by 2025-26. These solar parks will act as a hub for solar energy generation, attracting investments and fostering a conducive environment for solar power development. They will be instrumental in achieving net zero targets. As the production of solar PV increases, there will be a proportionate rise in solar energy production as well.
Todd Li
Given its potential, we cannot afford to overlook this market. The country is not lagging behind in technology adoption, but it is a cost-sensitive market, and thus, uptake depends on the price of products. Availability is another crucial factor, as putting up a new module in India requires BIS certification, which takes time. Technology-wise, India is on par with global trends. We have approved a plethora of reliable and capable local steel suppliers for our tracker structural components and have established an innovative tripartite contract structure. With this, our India clients can procure compatible tracker structural parts directly from our India suppliers. This ensures best-in-class reliability and performance, as well as competitive pricing.
We are not a new player in India and have a long-standing presence in the country. We are committed to supporting the Indian solar industry by supplying customers here with high quality products using the latest technology available in the market. I would say there are both positives and negatives in terms of local manufacturing policies. However, we believe that Indian manufacturers or manufacturing processes should be competitive on a global scale. Therefore, it is crucial to establish an open market for all.
Gautam Mohanka
The Indian government has implemented various policy measures to encourage local manufacturing in the renewable energy sector. These measures include PLIs for the manufacturing of solar modules, solar cells and other components related to renewable energy. These incentives offer financial benefits to manufacturers engaged in the production of high-efficiency solar modules within India. They are particularly crucial for supporting vertical integration, starting from the initial stage of magnesium silicate (MG silica) to the final production of solar modules. While India has a significant module production capacity, the local production of polysilicon, ingot wafers and solar cells is minimal. Additionally, the government has mandated that a specific percentage of renewable energy products procured by public agencies must be manufactured in India. This domestic content requirement has played a vital role in boosting local manufacturing.
Looking ahead, the government could introduce PLI-like schemes for micro, small and medium enterprises in the solar sector or facilitate low-interest loans. Furthermore, leveraging initiatives such as Skill India to impart training to the youth could help create a skilled labour pool for the renewable energy sector.
Manjunath Reddy
Reflecting the favourable policy environment created by the Indian government, PV module manufacturing has grown rapidly in the past two to three years. Between 2020 and 2023, solar module manufacturing capacity increased multifold in India. These initiatives include BCD on the import of solar cells and modules, the PM-KUSUM scheme, rooftop solar schemes, central PSU schemes and PLI schemes to enhance the domestic PV manufacturing ecosystem.
However, module and cell production cannot expand significantly without the development of ancillary industries. To promote the growth of the manufacturing value chain as a whole and create an all-encompassing ecosystem, it is crucial to focus on bolstering domestic solar ancillary manufacturing capacity, along with solar module manufacturing. This way, there is scope for backward integration into secondary component manufacturing avenues in the future as well. So, from the solar ancillary manufacturing perspective, we believe the content requirement should not be restricted to solar cells and it should cover other balance of materials required for solar panels, BIS certification should be introduced for ancillary components of solar panels and an approved list of ancillary manufacturers should be implemented like the ALMM scheme.
What trends do you anticipate in the renewable energy manufacturing sector in the coming years?
Gyanesh Chaudhary
India is poised to lead the global renewable energy market, with domestic solar rooftop installations and solar module manufacturing set to exceed 15 GW and 38 GW, respectively, by 2023. This sustainable expansion is being driven by a paradigm shift towards decentralised energy infrastructure, based on hybrid microgrids that leverage solar, thermal, hydro, wind and clean hydrogen energy. The government is actively supporting this transition with a number of policies and initiatives, including the PLI scheme for solar module manufacturing, the offshore wind target of 10 GW and the development of ultra-mega solar parks with a combined capacity of 40 GW by 2024.
The industry is also exploring new-age technologies such as blockchain, artificial intelligence and machine learning to further optimise renewable energy systems and make them more efficient and affordable. India’s commitment to green growth and net zero carbon emissions is evident in the growing adoption of electric vehicles and the government’s focus on developing a sustainable energy future.
Todd Li
The pricing of polysilicon is at its lowest as of now, and I do not think the prices will go down further. It will stabilise at this price level.
In terms of technology, p-type is currently more popular. However, by the second half of 2024, the adoption of n-type will surpass that of p-type.
We recognise the growing significance of energy storage. Apart from this, we are also manufacturing electrolysers for green hydrogen in China. So, we are keeping pace with new technology advancements, establishing the company as a one-stop solution for any renewable energy requirements.
Gautam Mohanka
There are several trends in the renewable energy manufacturing sector, particularly in the solar industry. Firstly, there is a notable shift towards the adoption of autonomous machines and equipment in solar module production. This ensures higher efficiencies, increased production output and reduced chances of defects and waste. Another significant trend is the transition from polycrystalline to monocrystalline solar panels. Polycrystalline panels are gradually phasing out, and the narrowing price gap between polycrystalline and monocrystalline panels is prompting even those prioritising short-term cost considerations to gravitate towards monocrystalline solar panels. Moreover, emerging technologies such as TOPCon and heterojunction panels are diminishing the market share of the predominant mono-passivated emitter and rear cell technology, thanks to their higher efficiency and durability.
Manjunath Reddy
India’s commitment to reach net zero emissions by 2070 and to meet 50 per cent of its electricity requirements through renewable energy sources by 2030 is a significant development in the global fight against climate change. Thus, with these critical levers established to foster accelerated investments in renewables, India will witness decades of immense growth in the renewable energy sector.
- Smart and fully integrated factories
- Continuous innovation and technological advancements
- Development of an ancillary market
- Export market development
Setting up a domestic manufacturing unit holds the promise of not only reducing production costs over time, but also steadily increasing capacity utilisation, paving the way for sustainable growth and competitiveness in the long run.
Dan Shugar
As markets mature, there is a shift towards solar trackers as they help produce more energy. Another factor that has helped trackers gain share in India is that they now almost entirely support bifacial panels. Bifacial panels generate more power by capturing reflective light. Fixed systems, by the nature of their architecture, do not capture much power in bifacial panels, while trackers help receive maximum bifacial energy.
Nextracker’s architecture uniquely creates the maximum amount of bifacial energy as it allows us to elevate the panels to a higher altitude, capturing more reflective light. This has been documented by third-party independent engineers and customers. We have observed that more customers are opting for trackers when they want to achieve lower costs of energy.
I have been involved with solar trackers since the 1980s and have analysed various forms of trackers. We have concluded that the single-axis tracker is the most promising trend because it offers significant energy gains while still maintaining well-managed land and structural costs. This has been validated by the overwhelming number of investments, and the majority of trackers deployed around the world, across different geographies and climates, are single-axis trackers.
With our technology, while standard solar panels power solar plants, small solar panels self-power our tracker technology, enabling them to work without grid connectivity. We launched a software-controlled system called TrueCapture eight years ago, which monitors atmospheric conditions in real time. We also acquired a machine learning company and configured our software to optimise rapidly changing meteorological conditions, and these individual algorithms help generate significantly more energy. Today, over 200 utility-scale projects around the world are utilising our TrueCapture technology.
In 2018, we developed a tracker system called NX Horizon-XTR, which allows our system to track highly undulating terrains without the need for grading and disruption of land. This not only reduces costs for developers but also significantly accelerates schedules. This year, we have continued to release additional innovations that generate additional energy for customers.
