India’s renewable energy RE) ambitions could increase the country’s annual solar import bill to $ 30 billion from $ 7 billion currently with most of it coming from China and as the entire world faces the same issue in its efforts to decarbonise key countries need to unite to global scale solar manufacturing facilities, according to a report by Global Trade Research Initiative.
To meet its goal of 500 GW of renewable energy by 2030 India needs to add 65 to 70 GW each year. This target is ambitious considering that 15 GW of solar capacity in 2023-24 and the US plans to add 32 GW in 2024.
For the solar capacity addition last financial year India imported $ 7 billion worth of solar equipment with China supplying 62.6% of it. China controls 97% of global polysilicon and 80% of solar module manufacturing making it difficult for any country to compete due to lower prices from China. Complete dominance by China that keeps the market oversupplied, putting pressure on manufacturing efforts of countries like India and US.
“The US, India, EU and Japan may unite to establish global scale solar-cell manufacturing facilities. While it may be costly initially, it is essential to break free from China’s dominance,” GGTRI co-founder and author of the report ‘Global Solar Industry in China’s Iron Grip’ Ajay Srivastava said
While initiatives like the Production Linked Incentive (PLI) scheme aim to boost local manufacturing, its impact is limited as it relies on imported inputs. Around 90% of solar manufacturing in India involves assembling solar modules from solar cells with 15% value addition. Very few Indian companies produce commercial scale solar cells from imported polysilicon or wafers that adds 30-40% value locally.
Developing a self-reliant solar manufacturing industry in India will require significant investment to create an integrated supply chain especially in areas like polysilicon and wafer production. Without it India may continue to face high import costs and struggle to meet its renewable energy goals.
India needs to produce solar cells starting from silica refining which involves costly and energy-intensive polysilicon production and requires advanced technology.
Underdeveloped solar industry is not limited to India. The US, EU and most other countries rely on importing directly and indirectly from China. To reduce imports from China India has imposed 40% duty but imports from Vietnam, Malaysia and Thailand are exempt from there tariffs under India-Asean Free Trade Agreement provided they come from 35% value addition.
While EU imports finished solar modules, India and the US are making an effort to develop local manufacturing capacity. However, local value addition stays low at 15%. No country has the capacity to make solar cells from the silica ore processing stage. China dominates 80% of the global solar production and exports, controlling 97% of the world polysilicon supply. In 2023 China exported 227 GW of solar modules worth $ 39.5 billion.
International collaboration will lead the way for a resilient, independent solar industry that may be free from China, Srivastava said.
From: financialexpress
Financial News
