The Indian solar power industry has been witnessing significant changes over the past few months with the government bringing back the Approved List of Models and Manufacturers to push domestic manufacturing. Starting April 1, 2024, ALMM mandates that solar power developers can buy modules only from those domestic manufacturers whose names figure in the list. While this policy should have been reinforcing indigenous production, finally, the bag is mixed with opportunities and challenges for the industry in this proposed policy.
Two months into the reinstatement, the ALMM effect on the availability and affordability of solar modules is a focal point of concern. According to stakeholders in the industry, this has resulted in continued challenges, especially in sourcing modules at competitive prices. While imported modules come for about Rs 15/Wp after considering the duties, domestic modules using imported solar PV cells are expensive at around Rs 19-20/Wp. It presents a financial challenge to the setting up of solar projects at this price differential, even while remaining feasible in the context of current bid tariffs.
According to Sarthak Sengupta from Amplus Solar, market dynamics have changed with increased demand for domestic modules. It is the taut supply chains and fragmented supply, however, that have come because of this surge in orders with project timelines delayed. Suppliers avoid committing to large-scale orders—this contributes to these challenges at the bottom line through cost pressures and operational efficiency.
Ashish Agarwal of BluPine Energy accepts that early days were challenging, but he points to a gaining reliability in domestic module supply. With concerns on performance parity to international standards, Indian OEMs showed a considerable resilience by supplying at large volumes to not only the domestic markets but are also exporting into markets around the world—that has not happened without proving their quality and capacity.
Yet, scaling up and making them competitive remains some challenge. Most of the Indian manufacturers are making P-type PERC modules; N-type modules are at different stages of various development processes. There are large gaps in quality standards globally, which calls for continuous process up-gradation and huge investments in technology and infrastructure.
This is further confounded by the fact that critical components, including solar cells, are sourced from China—a telling pointer to the huge deficit in local cells manufacturing capacity. It is the plan of action that shall eventually create an impactful strategic investment and policy support in building greater domestic manufacturing capacity, with the long-term view of reducing import dependence.
Therefore, going ahead, apart from the quest of ALMM toward fostering self-reliance through indigenous industries, how well this policy remains oriented towards sorting out existing manufacturing capabilities and bottlenecks of quality standards and supply chain robustness will matter. The role of the government in facilitating conducive policies, incentivizing R&D, and attracting global manufacturers to establish operations within India will be very critical to bridging these gaps.
While the reinstatement of the ALMM itself is a significant move toward the strengthening of India’s solar sector in manufacturing, it also underlines the high level of complexity involved in changing tracks to the self-reliant model. Both imperatives—affordability and assurance of quality and resilience in supply chains—will require joint collaborative efforts from industry stakeholders and sustained policy interventions. As the sector negotiates these transitions, proactive measures will be required to realize India’s solar potential and achieve overall sustainable growth in renewable energy infrastructure.
It has brought together, in an incisive manner, an overview of the present canvas, opening out with much-touted reintroduction of ALMM and highlighting both the opportunities and critical challenges for India’s solar power industry.