India eyes solar cell exports as capacity surges: Pralhad Joshi

India is exploring solar-cell exports as manufacturing capacity is set to outstrip domestic demand, with Africa and Europe among potential markets. 

New Delhi: India is looking to export solar cells as its rapidly rising manufacturing capacity of the product, which converts sunlight into electricity and assembled into solar panels, is set to far outstrip domestic demand. In a first, the government is now in talks with several countries to find buyers for these cells, Union minister for new and renewable energy Pralhad Joshi told Mint in an interview.

This optimism comes even as India's dependence on China for cells' key inputs remains a challenge to scaling up production.

India already exports solar panels, or modules, but steep US tariffs have disrupted shipments to its largest overseas market, forcing manufacturers to look for buyers elsewhere. Export of solar cells will mark a significant shift for a country that once relied on the product's import to manufacture modules for its transition to green energy.

India's cell manufacturing capacity, currently at 50 gigawatts (GW), is expected to double to 100 GW by next year, Joshi said. But with annual domestic demand of no more than 50 GW, the country could soon face a glut, much like the one already seen in modules.

The minister said the government is already in talks with several countries for cell procurement from India at a time when the US market remains virtually shut due to high duties. Africa and Europe are among the potential export markets.

“Our manufacturing capacity is growing. Now, our cell manufacturing capacity will be 70 GW by December. In another three-four months, it will be over 100 GW. Once it is over 150 GW, we should be in a position to look at the market also…,” Joshi said.

Exports needed

Citing the excess production of solar cells, he pitched the need for export, either as cells as is or “with domestic cells we should manufacture modules and export”, adding that "if some country is ready to take the cells and manufacture the modules, we should do that."

The minister said there is global interest. "When we do things in this scale, the world also starts believing. We are already doing it (exploring the global market) for cells. Several countries want cells after seeing the success of India. We will see as we were already supplying modules to the US. Let's see what happens," he said.

Backed by domestic sourcing requirements, incentives and investments, India's solar module manufacturing capacity has grown sharply in recent years, helping the country emerge as a key supplier to the US as it looked to reduce its dependence on Chinese imports. The country has been the largest buyer of Indian solar modules, but recent anti-dumping and countervailing duties of up to 126% have forced manufacturers to halt shipments and explore alternative markets.

Considering ways to create demand

Data from the commerce and industry ministry showed that India exported $61.47 million worth solar modules to the US during April-July, way lower than $646.23 million in the year-ago period. During these four months this fiscal, most of the exports went to the US. Total exports of solar modules for the period were at $65.24 million, about one-tenth of the $668.05 million shipments in the year-ago period.

Now, with a booming cell manufacturing capacity, the government is forced to think of ways to create demand for these indigenous cells.

In a recent report, industry body the Indian Solar Manufacturers Association (Isma) said India's overall solar photovoltaic manufacturing is projected to attract about $89 billion by 2047, translating into an average investment of about $4.3 billion annually during 2027-2047. Nearly 70% of this amount is expected to flow into polysilicon, wafers and cells, it said.

The report projects that the country’s annual solar component import bill could decline from about $4.4 billion currently to zero by 2041 under the Vision 2047 pathway. India could account for 26.5% of global solar module supply by 2047, compared with around 5.9% under the current policy scenario by 2030.

Solar modules are produced by assembling cells, and the backward integration involves use of polysilicon to manufacture ingots that are used to produce wafers. These wafers are then used to manufacture the cells.

Cell conundrum

The production pathway for solar cells comes with a share of uncertainties. Although India has considerable capacity of cells to meet its domestic demand, Chinese cells are still imported, as they cost less. The freight on board (FOB) cost of Chinese cells is around ₹5 per kilowatt peak, while that of Indian cells is around ₹11.

Although the growth projections are robust, external factors may play a key role in India's plans of becoming a solar component export hub. The sector's top global player China recently proposed curbs on export of equipment for solar component manufacturing, which, if implemented may impact manufacturing of cells, wafers and ingots in India.

India is almost entirely dependent on China for wafers, ingots and polysilicon that are, in turn used to manufacture cells and eventually modules. Government has said it will bring wafers and ingots under the ambit of the Approved List of Models and Manufacturers (ALMM) framework, in a bid to develop sub-component manufacturing and indigenize the entire solar component ecosystem.

This framework requires government-backed projects to source specified equipment from approved domestic manufacturers. ALMM-I and ALMM-II cover locally-manufactured solar modules and cells, respectively, while the Approved List of Models and Manufacturers for Wind covers quality-certified turbines permitted for use in utility-scale projects.

Call on ALMM framework soon

While the frameworks for solar modules and wind turbines are operational, that for solar cells has been deferred until 31 December amid concerns over supply constraints. The minister had recently said government would soon take a call on the need to further extend implementation of the ALMM framework for cells.

Santosh Kumar Sarangi, secretary to the ministry of new and renewable energy, had on Thursday said in view of the high dependence on "certain geographies", the industry has urged government to extend its domestic manufacturing push beyond solar modules and wind turbines to include battery energy storage systems (BESS) and other critical components, seeking measures along the lines of the ALMM norms.

Although India has seen significant growth in terms of green power generation and module and cell manufacturing capacity addition in the past few years, its energy transition pathway faces several challenges, including a lag in commensurate growth in transmission capacity to evacuate the power generated, leading to generation curtailment and distress sale of excess power on the exchanges.

The lack in storage capacity has also resulted in a pile-up of unsigned power purchase agreements for about 40 GW of renewable energy capacity. Lack of storage capacities amid growing green power generation also raises concerns over grid stability, as both solar and wind are intermittent sources that could lead to instability and grid collapses.

About the Author

Rituraj Baruah is a special correspondent covering energy, housing, urban affairs, heavy industries and small businesses at Mint. He has reported on diverse sectors over the last eight years including, commodities and stocks market, insolvency and real estate; with previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.