India's Solar Equipment Manufacturing Capacity Expected to Expand Significantly in the Coming 2-3 Years: Report
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Mumbai, Dec 19 (NationPress) India's solar equipment manufacturing capacity is on the verge of substantial enhancement over the next 2-3 years, with projected module and cell manufacturing capacities of roughly 80 GW and 50 GW respectively, according to a recent report.
This growth will necessitate a capital expenditure of nearly Rs 1 lakh crore with an expected debt financing of around Rs 70,000 crore in the medium term, which includes investments in polysilicon and wafer production, the report noted.
As of March 2024, India's module and cell capacities were approximately 70 GW and 8 GW respectively, although the high-efficiency module capacity is limited to 50 GW. The capacity listed under the Approved List of Models and Manufacturers for Modules (ALMM-I) reached 60 GW by September 2024, with a significant portion still in the ramp-up phase, thus barely meeting domestic module needs.
The accelerated expansion over the past year has been driven by the increasing ESG focus of corporations, heightened investor interest, proactive policy support, and improved financing options, the report stated.
According to CareEdge Ratings, the capacity addition plans of leading module manufacturers, aiming for around 80 GW, will require a capital expenditure of about Rs 12,000 crore in the upcoming 2-3 years.
Domestic cell capacity is also forecasted to grow correspondingly, potentially reaching 60 GW by FY27, backed by approximately Rs 30,000 crore in investments from key players over the next 2-3 years, supported by strong policy backing for progressive backward integration. This capacity growth will transform India into a surplus market, considering the annual module demand of 40-50 GW, prompting domestic manufacturers to explore export opportunities.
CareEdge Ratings anticipates that the solar sector will play a crucial role in bolstering India's renewable capacity.
As of September 2024, India's RE capacity was at 155 GW, with the solar segment being the largest contributor at 91 GW due to significant capacity increases over the past 7-8 years. The rising proportion of RE capacity can be attributed to strong policy initiatives, improved tariff competitiveness, and robust investor engagement.
During FY24, India installed 18.5 GW of RE capacity, and CareEdge Ratings projects that annual RE installations will exceed 35 GW in the next two years, primarily supported by a solid pipeline exceeding 100 GW.
The anticipated growth in solar capacity in the medium term will be fueled by an annual tendering target of 50 GW RE capacity through renewable energy implementation agencies, with the majority expected to come from solar.
Considerable capacity additions of approximately 20 GW will arise from rooftop solar, hybrid solar components, and off-grid solar in the next 2-3 years. Furthermore, solar open access capacities of 4-5 GW are likely to be added each year over the next 2-3 years, aided by corporate ESG commitments and the improving economic feasibility of C&I projects, the report concluded.
