Bridge India

How will ‘Make in India’ work for solar?

At the ongoing Vibrant Gujarat Summit 2015, Adani Enterprises and SunEdison have announced a partnership to explore building an integrated solar manufacturing facility worth USD 4 billion at Mudra, Gujarat (refer).

  •  This partnership to culminate into the biggest solar manufacturing related announcement till date
  • These manufacturing decisions are driven by compelling fundamentals of cost of manufacturing, domestic consumption and export
  • If new domestic capacities are globally competitive, there is enough room for such capacities to be set up

 The envisaged facility will vertically integrate poly-silicon refining along with ingot, wafer, cell and panel production. It would also include a broader ecosystem involving extended supply chain for raw materials and consumables. This is the biggest solar manufacturing related announcement in India till date. However, actual implementation is still subject to a feasibility study. If realized, the facility is expected to begin production in around 2019. In 2014, SunEdison had made similar announcements to set up a poly-silicon refining facility in China (refer) and a fully-integrated manufacturing facility in Saudi Arabia (refer). All these facilities, including the one planned in India have been touted as “the lowest cost in the industry”. Whether all or only select of these announcements will go through is yet to be seen.

BRIDGE TO INDIA is also aware of other ongoing efforts by leading Chinese and American module manufacturers to set up manufacturing facilities in India. This seems like a victory for the country’s ‘Make in India’ proposition. Is this driven by Domestic Content Requirement (DCR)? Far from it. India can only impose domestic content requirement until it is providing direct incentives to the sector. According to the guidelines for phase two of the NSM, there might be no direct incentives beyond 2018, at least for large scale projects. Until now, only 1,000 MW has been earmarked for DCR. Even for new manufacturing facilities than can come up within 2015-16, the premium for DCR sales will be limited to a couple of years. These manufacturing decisions have to be driven by compelling fundamentals of cost of manufacturing, domestic consumption and export. All of these might not be there yet but things seem to be moving in the right direction.

 India is soon expected to become a 3 GW per year solar market and then grow from there on. The current operational cell manufacturing capacity in the country is less than 400 MW a year. If new domestic capacities are globally competitive, there is enough room for such capacities to be set up. Overall, ‘Make in India’ is a promise for new companies such as Adani and existing international globally competitive companies such as Trina Solar and SunEdison. However, it is unlikely to considerably change fortunes of existing Indian solar cell and module manufacturers unless they are able to raise capital or enter into partnerships to invest into becoming globally competitive through upgrading and expanding their capacities. Up-gradation and expansion is expected to be a continuous process for anyone looking to get into solar PV manufacturing.

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