By the end of 2023, India's solar module manufacturing capacity could reach 36GW.

Solar cell manufacturing capacity is also predicted to increase to 18GW in two years from the current 4GW.

India's solar module manufacturing capacity will nearly treble in two years to 36GW from 18GW in December 2021. According to researchers at JMK Research, cell production capacity would increase to 18GW by the end of 2023, up from just 4GW today.

technicians on solar panels

The experts anticipated the capacity expansion over the next two years based on statements by industry heavyweights and new entrants.

According to JMK Research experts, the Indian government's production-linked incentive (PLI) scheme for solar photovoltaic (PV) manufacturing is a major stimulant for the entire solar industry. With a financial allocation of INR 24,000 crore, the scheme is projected to incentivise the production of around 40-50GW of module capacity.

"New entrants to solar manufacturing in India are aiming for GW-scale installation capacities as well as upstream integration, which aligns with the objectives of the Government of India's (GoI) PV module PLI plan. Meanwhile, the key industry players must prioritise workforce development, expanding R&D facilities, and, most importantly, implementing unified, long-term policies for the Indian solar business," the analysts wrote.

According to JMK Research & Analytics, India is on track to treble its solar module manufacturing capacity in the next two years, boosted by government support schemes and new entrants.

While the country presently has roughly 18GW of module manufacturing capacity, the capacity is expected to rise at an extraordinary 40 percent compound annual growth rate (CAGR) by the end of 2023, when it would reach 36GW, according to the consultancy.

Domestic cell manufacturing capacity is expected to double in the next two years, rising from 4GW to 18GW.

Despite the fact that India currently has 18GW of module manufacturing capacity, actual production is significantly lower, as most Indian manufacturing facilities operate at less than 50% capacity utilisation, according to research published last month by JMK and think tank the Institute for Energy Economics and Financial Analysis (IEEFA).

According to the paper, the necessity for a vertically integrated photovoltaic manufacturing ecosystem in India is underscored by a 25% increase in module pricing last year as a result of a raw material shortage, a power price increase in China, and an increase in international freight costs.

By April 2023, the government intends to expand domestic solar equipment production capacity by 25 gigawatts (GW) of solar cells and modules and 10GW of wafers, according to two government sources familiar with the topic.

India currently has a solar cell production capacity of 3GW and a module manufacturing capability of 15GW. The aim to boost domestic manufacturing comes on the heels of an additional Rs19,500 crore allocation in the FY23 Union budget for the production-linked incentive (PLI) scheme for high-efficiency solar modules. This is in addition to the Rs4,500 crore already allotted to the solar photovoltaic module manufacturing scheme. The production effort comes ahead of India's planned 40 percent basic customs tariff on modules and a 25 percent basic customs duty on solar cell imports on 1 April. Additionally, a substantial manufacturing zone for electricity and renewable energy equipment is being established in each of the three coastline states, the mountain state, and the landlocked state.

Last week, Prime Minister Narendra Modi stated that the budget will not only promote green growth but also create green jobs. The budget's leitmotif is "Energy Transition and Climate Action." "being one of the government's top priorities.

Along with capitalising on its burgeoning green energy sector to boost manufacturing, India is eyeing a larger position in global supply chains. PLI plans aim to transform India into a global manufacturing powerhouse by removing sectoral barriers and using economies of scale to construct whole component ecosystems in the country.

Polysilicon is the fundamental component of solar photovoltaic (PV) manufacture, from which ingots are made. Following that, wafers cut from ingots are used to fabricate solar cells, which are subsequently integrated into modules. China dominates the global polysilicon, ingot, and wafer production industries. The global rise in the costs of conventional fuels such as crude oil, natural gas, and coal has spilled over into the solar industry, with module prices reaching a record high of 28 cents per kilowatt-hour (kWh) last year, the highest level since 2019. With modules accounting for roughly 60% of the entire cost of a solar energy project, any increase in module prices will have an effect on the internal rate of return (IRR) on such projects, many of which have already signed power purchase agreements (PPAs). As a result, India's solar cell and module imports decreased to $571.65 million in 2020-21, down from $1.68 billion in 2019-20 and $2.16 billion in 2018-19.

India agreed in November at the COP26 meeting in Glasgow to cut carbon emissions by 1 billion tonnes by 2030 and to attain net-zero emissions by 2070. Additionally, the promise involves satisfying half of India's energy demands through renewable energy by 2030 and increasing non-fossil fuel generation capacity to 500 GW by the end of this decade. "According to one emerging trend, our peak energy capacity will be 325 GW in 2030, and our total installed capacity would be 817 GW "Alok Kumar, India's electricity secretary, earlier stated in an interview.

The union budget included a slew of announcements outlining India's climate change strategy, including carbon emission and intensity reduction measures such as a 'Battery Swapping Policy' to promote green mobility, the issuance of sovereign green bonds, and a policy requiring coal-fired power plants to use biomass pellets as a minimum of 5% of their fuel mix.

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