EQ International hosted a webinar to discuss IREDA PLI Scheme for Integrated Solar Manufacturing in India on November 15, 2021. The panellists discussed the kind of opportunities and challenges it brings for the entire solar industry.
The PLI Scheme is advancing well, and the bidding results for the IREDA tender were announced recently. The government will soon enhance the funding under the PLI Scheme for the domestic solar cells and module manufacturing to 24,000 crores, as per the recent announcements. In the webinar conducted by EQ Magazine, Abhishek Shah, Director, Strategy & Transformation, IGH-KPMG, participated as the moderator, and Kanchan Bhalla, Deputy General Manager- IREDA, participated as the keynote speaker.
Most of the ideas on the development of solar manufacturing are under-implementation. Shah said that there is no reason why the Indian manufacturers cannot create a big scalable base in India but become a major exporting power as well. He added, “We have all the necessary conditions, and it is up to the industry to perform. Given the heavyweight applied (on) the scheme, I think we would become a successful solar manufacturing power in the coming years.”
The other panellists of the webinar included Nikhil Agarwal, General Manager Engineering, Avaada; Syed Naqvi, Head, Module Technology, ACME Solar; Kunal Saxena, Head of Strategy- Adani Solar; Abhilakh Singh, Sr. Associate – NSEFI; Bimal Jindal, Head – Solar Development at Larsen & Toubro; and Ashvini Agarwal, Senior Lead – Business Process & Expansion- Vikram Solar.
PLI Scheme on High-Efficiency Solar Modules
Kanchan Bhalla, Deputy General Manager- IREDA, discussed the PLI scheme. She informed that the main objective of the Ministry’s PLI Scheme is to build solar PV manufacturing capacity of high-efficiency modules in the country domestically. This would enable players to bring cutting-edge technology to India for setting up these manufacturing bases.
The scheme is technology-agnostic. It allows all the technologies that can be used for setting up these capacities. Technologies that result in better module performance will be incentivized. It would promote the setting up of integrated plants for better quality and competitiveness. “I believe it would develop an ecosystem for sourcing of local material in the solar manufacturing chain, which would promote employment generation,” she said.
It is designed to give more weightage to fully integrated plants and higher capacities. Further, higher efficiency and higher local value addition fetch more PLI. She informed, “PLI, defined as per the scheme, is the product of the sales volume, the base rate PLI defined by the efficiency matrix provided in the scheme, tapering factor for five years and the local value addition.”
At present, the local installed capacity in India is around 9 GW for modules and 3 GW for cells. She added, “Industry is largely dependent upon imports of solar PV cells and modules as we have limited operational capacities. The market for solar components is dominated by Chinese firms. I would say, maybe, COVID 19 has played a positive role in helping India to become the second-largest manufacturer in solar manufacturing components.”
PLI Scheme is a welcome step
The national program on high-efficiency solar PV modules will reduce our import dependence, especially in a strategic sector like electricity, thus reinforcing the Prime Minister’s vision of Atmanirbhar Bharat. The government has set up an enabling ecosystem by imposing 40 per cent BCD on solar modules and 25 per cent on the cell to be imposed from April 2022, which would mean the imports become costlier, further encouraging local manufacturing.
“I have seen such traction recently in this sector that we have a total of 55 GW of bids in this scheme, which is overwhelming. As announced by the minister, the outlay is proposed to increase to 24, 000 crores from 4,500 crores which we have recently allotted. Enabling environment has also been created by our recent COP26 commitment of 500 GW to be installed by 2030,” said Kanchan Bhalla.
Sharing the perspective of developers on the scheme, Syed Naqvi, Head, Module Technology, ACME Solar, said, “This scheme is beneficial in many ways… (It) would help us get the second source of sourcing for us. As a developer, we are dependent on the Chinese. It makes our business plans, future outlook a little uncertain in terms of pricing and sureties of the contracts.”
Highlighting the positive part of the scheme, Bimal Jindal, Head – Solar Development at Larsen & Toubro, said, “It is talking about the complete value chain, from polysilicon to module… With the PLI Scheme, it is the first time India will focus on polysilicon. Polysilicon is going to be the key to self-reliance. It’s a positive start…”
Manufacturing Sector in India
Discussing the PLI Scheme and the solar sector Nikhil Agarwal, General Manager Engineering, Avaada, said that the manufacturing sector in India is going to benefit from the imposition of the BCD. He said, “Once we start manufacturing in India with a large scale of 55 GW, nobody will be able to stop us. This 55 GW is just a starting point. We will see the capacity ramping up to 60-75 GW in a couple of years.”
Talking about the pricing in the short-term and long term, Syed Naqvi said that the pricing is high currently due to the service-chain disruptions caused because of the pandemic. “We don’t see any fundamental difference to why these prices have gone up. It is only a matter of demand and supply… In India, the domestic pricing would be on the higher side for the start because it’s natural for a new industry to take time… Going forward, I believe, we will be more competitive than the Chinese…”
“A lot of developers and IPPs would go towards backward integration and would have some kind of manufacturing capacities in-house. It is the need of the hour… We have some kind of incentives to promote in-house manufacturing. To achieve the targets of 450 GW by 2030, we would need to have in-house manufacturing capabilities…”, he added.
Discussing the technology ecosystem, Kunal Saxena, Head of Strategy- Adani Solar, mentioned, “The concept of technology manufacturing requires a certain amount of localisation. With this scheme, we are quite confident that the local value addition would be achieved…”
He talked about the need for emphasis on the technology ecosystem, saying it is essential for India to become a significant participant in technology manufacturing. “There is a belief in the ecosystem. There is a belief that the landscape would improve… when these big players come up, we will together create India as a country where manufacturing flourishes…” Abhilakh Singh, Sr. Associate- NSEFI, talked about the need to emphasize Research and Development. He said that the technologies can be developed further if a small amount goes to R&D.
Sharing perspective on other green sectors, Bimal Jindal said that green hydrogen is one of the future. It needs effort, some support and push from the government. He concluded, “We need to look into the infrastructure to build and supply the hydrogen to make it successful. Transportation and the cost of hydrogen are going to be a challenge.”
