The government plans to create an additional domestic solar equipment manufacturing capacity of 25 gigawatts (GW) each of solar cells and modules, and 10GW of wafers by April 2023, said two government officials aware of the matter.
India currently has a manufacturing capacity of 3GW for solar cells and 15GW for modules. The plan to augment local manufacturing follows an additional allocation of Rs19,500 crore for the production-linked incentive (PLI) scheme for high-efficiency solar modules in the FY23 Union budget. This is in addition to the Rs4,500 crore already allocated to the scheme for manufacturing solar photovoltaic modules. The manufacturing push comes ahead of India’s plan to impose a basic customs duty of 40% on modules and 25% on solar cell imports from 1 April. Also, a large manufacturing zone each in a coastal state, a mountain state and a landlocked state are being set up to produce power and renewable energy equipment.
Queries emailed to a spokesperson for the new and renewable energy ministry on Saturday remained unanswered until press time.
Prime Minister Narendra Modi last week said the budget will not only ensure green growth but will also generate green jobs. The leitmotif of energy transition and climate action was imprinted across the budget, with “Energy Transition, and Climate Action” being one of the priority areas for the government.
Along with leveraging its growing green energy market to boost manufacturing, India is also looking to play a bigger role in global supply chains. PLI schemes seek to create global manufacturing champions in India by removing sectoral disabilities and creating economies of scale to develop complete component ecosystems in the country.
Polysilicon is the building block for solar PV manufacturing from which ingots are cast. Wafers cut from ingots are then used to make solar cells, after which modules are assembled. Globally, the manufacturing of polysilicon, ingot and wafer is dominated by China. A global rally in prices of traditional fuels such as crude oil, gas and coal has extended to the solar space, with module prices touching a high of 28 cents per kilowatt-hour (kWh) last year, the highest since 2019. With modules making up nearly 60% of a solar power project’s total cost, any price increase will impact the internal rate of return (IRR) from such projects, many of which have already signed power purchase agreements (PPAs). As a result, India’s solar cells and modules imports fell to $571.65 million in 2020-21 from $1.68 billion and $2.16 billion in 2019-20 and 2018-19, respectively.
India pledged to cut carbon emissions by 1 billion tonnes by 2030 and achieve net-zero carbon emissions by 2070 at the COP26 summit in Glasgow in November. The commitment also includes meeting half of India’s energy needs from renewable energy by 2030 and boosting non-fossil fuel power generation capacity to 500GW by the end of this decade. “One emerging trend is that our peak energy will be 325 GW in 2030, and our total installed capacity is projected to be 817 GW,” India’s power secretary Alok Kumar said in an interview previously.
The union budget made a raft of announcements outlining India’s playbook to combat climate change, including carbon emission and intensity reducing measures such as ‘Battery Swapping Policy’ to promote green mobility, issuance of sovereign green bonds and a policy that has made it mandatory for coal-fuelled power projects to use biomass pellets as 5% of their fuel mix.
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