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Solar module making capacity set to soar 400% by FY25: Crisil – EQ Mag Pro

Solar module making capacity set to soar 400% by FY25: Crisil – EQ Mag Pro

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Mumbai :Local manufacturing of solar modules is set to soar by almost 400 per cent by fiscal 2025 compared to the last financial year with 30-35 GW of fresh module capacity at an investment of Rs 50,000 crore across the value chain, says a report.

Rating agency Crisil’s report is based on an analysis of the capex plans of the top 11 domestic module manufacturers that account for 80 per cent of the current solar module installed effective capacity

The solar module manufacturing value chain starts with poly silicon and/or ingots, which are converted into wafers. These wafers are used to produce solar cells, which are then assembled to manufacture solar modules.

As of March 2021, the country had 3 GW of solar cell capacity, mostly used for captive production of solar modules, and 8 GW of effective solar module capacity. However, there is no local manufacturing of poly silicon and wafers yet.

Even this 8 GW capacity remains under utilised at 20 per cent because of higher cost of domestic modules compared with Chinese ones, which are 15-25 per cent (4-61 cents/watt) cheaper because of subsidies and scale efficiencies. As a result, nearly 80 per cent of our current annual solar module demand is catered to by Chinese module manufactures, it said in a report this week.

With the government now supporting domestic manufacturing through policy measures, their competitiveness relative to the Chinese is expected to improve, it added.

According to the report, the 40 percent custom duty on imported modules and the Production-Linked Incentive (PLI) scheme will not only eliminate existing price gap but may even make domestic module competitive by 2-3 cents/watt at current prices.

The country’s solar capacity implementation is expected to rise to 14 GW per annum between fiscals 2022 and 2024, and further, given aggressive renewable energy plans. This will drive demand for cells and modules.

In addition to price competitiveness, developers may also prefer domestic modules because they get better control of the supply chain over imports apart from also helping developers offset risks from surging freight cost seen in the recent past.

The report has estimated Rs 50,000 crore of investments across the value chain for capacity building through fiscal 2025. Module and cell manufacturing capacity is estimated to increase by 30-35 GW each, and the PLI scheme may help backward-integration into poly silicon and wafer capacities, it added.

While a 1 GW module line costs Rs 250 crore, a 1 GW cell line that requires high technological know how and higher value addition costs Rs 600 crore. Further, backward integration to poly silicon and wafer may cost Rs 2,500 crore per GW.

Source: PTI
Anand Gupta Editor - EQ Int'l Media Network