India's solar drive idles factories that are unable to break reliance on China
Industry sources claim that Indian solar panel makers are forced to close factories because they have to wait up to 8 months for domestic components to replace Chinese imports. This is due to the government's push to boost domestic manufacturing.
Manufacturers and analysts have said that the disruptions caused by rules which came into effect on June 1?threaten thousands jobs and investments of almost $4 billion. They also put India's 2030 solar energy target at risk.
"We have suffered a lot because domestic cells were not available for the last three months," said Shailendra Shkla, the chairman of Icon Solar. A module maker, Shukla expects that production will drop sharply from 3.2 GW to 1 GW.
The All India Solar Module Manufacturers Association reported that nearly a third (or 80%) of India's 140 small and medium solar panel manufacturers, who make up 60% manufacturing capacity, had halted production and the remainder reduced cycles to 3 to 4 days.
The cost of solar panels made in the United States is almost double that of those using Chinese cells.
India's clean energy ministry stated that it has not received any formal reports regarding production halts of solar modules by independent manufacturers. However, the ministry is keeping a close eye on prices and expects adequate cell manufacturing capacity to be available within six months.
The industry sources say that India has struggled to increase?supply due to the fact that building solar cell factories requires time, and China has cut back on exports of technology, equipment, and technical assistance for solar manufacturing.
DELAYS COULD PUT 2030 TARGET OUT OF REACH
Analysts and industry sources said that the shortages could delay solar projects, increase costs and?slow down India's drive to achieve 500 gigawatts of non-fossil energy capacity by 2030 from 288 GW at present.
The growing electricity demand will force a slower deployment of solar energy to be compensated by a greater use fossil fuels, especially coal. This will delay the switch to cleaner energy.
The Central Electricity Authority reports that solar power accounts for 29% of India’s non-fossil energy capacity. It is expected to grow to 292 GW from its current 162GW by 2030.
The government estimates that while?Indian companies have built up a solar panel manufacturing capability of?about?200 GW, they are only able to produce 27 GW of Solar Cells.
EUPD Research, a German company, and industry sources said that the gap is even wider in reality, with a manufacturing cell capacity of around 16 GW-18 GW.
They said that the government's numbers reflect installed capacity or nameplate capacity. However, many of these are not operational yet or running at levels well below their rated levels.
Rajan Kalsotra is a senior consultant with EUPD Research. He said that India faces a severe shortage of cells and it will take between three to five year to close the gap.
He added that it would take time to build new facilities for cells, which require significant capital, partnerships in technology and long commissioning periods.
It will be difficult to scale up local cell production, as China controls much of the global manufacturing equipment and technology.
CHINA?EXPORT CURBS HINDER EXPANSION
Industry estimates indicate that India imports solar cells from China in about 95%. These imports grew 37% to $1.86 billion in the past fiscal year.
The industry sources who spoke under condition of anonymity because the issue is sensitive said that China restricts the sale of equipment to India.
Six manufacturers, who also requested anonymity for fear of Chinese government retaliation, said that China's export restrictions would delay the setting up of cell manufacturing plants.
Cosimo Ries is an analyst with policy consultancy Trivium China. He said that China will likely seek to maintain its dominance in the solar industry over the long-term.
The Chinese commerce ministry has not responded to requests for comment.
CELL SHORTAGE RAISES OUTGOINGS AND JOBS
Three solar module manufacturers have temporarily stopped production due to the lack of locally made cells. Four more have reduced their capacity by about a third.
The manufacturers claim that it takes much longer to bring new manufacturing capacity on line than the government anticipates.
Solex Energy chairman Chetan Shah said that it was impossible to begin production of cells within 18 months due to the complexity of technology and manufacturing requirements, such as land, and the difficulty in sourcing raw materials.
He was referring the December 2024 deadline set by the government for the use of solar cells made in the United States.
India has extended the deadline for certain projects to December 2026, citing concerns about shortages and the need to protect manufacturer's investments.
The makers' group said that the waiver was only a partial relief if it were not extended to the whole industry.
According to a state-run industry group, standalone module makers who do not have the capability of manufacturing cells employ 75,000 people. Of these, 45,000 are in Gujarat, Prime Minister NarendraModi's home state.
Pinaki Bhattacharyya is the chief executive officer of AMPIN Energy Transition, a power producer. She said that short-term, capital costs could increase by about 35% until the domestic cell manufacturing capacity increases. Sethuraman NR, Mayank Bhardwaj and Clarence Fernandez edited the article.
(source: Reuters)
