India is on the cusp of a significant transformation in its solar energy sector, driven by the government's plan to include solar cells in the Approved List of Models and Manufacturers (ALMM) by April 2026. This move aims to boost domestic manufacturing and reduce reliance on imported solar cells. However, experts warn that this policy change could drive up manufacturing costs in the short-to-medium term.
The current state of solar cell manufacturing in India is a far cry from the robust module manufacturing capacity. While India produces around 7 GW of solar cells, the module manufacturing capacity has grown to 60 GW. The government's decision to bring solar cells under ALMM is a strategic move to ensure quality and reliability in the solar energy sector.
Under the ALMM framework, manufacturers will be required to source their solar cells only from producers included in ALMM List II or invest in new cell production lines. This means that Indian manufacturers will need to either rely on domestic cell production or set up new production lines, which could be challenging given the current capacity and infrastructure.
Manish Narula, executive vice president of Jinko Solar India, highlighted the high cost of producing cells in India. 'The cost of producing cells from wafers imported from China is very high, compared to the cells prepared in China. The cost in India comes to around 12 cents/watt peak due to higher conversion costs compared with 4 cents/watt peak in China,' he said.
Another significant challenge is the long gestation period of commissioning new cell plants. It may take anywhere between 18-24 months for the plants to get commissioned, and another six months to get the ALMM approval. This timeline raises concerns about meeting the 2030 target of 500 GW of renewable capacity.
Gautam Das, founder and CEO of Oorjan Cleantech, emphasized the need for a balanced approach. 'Given the enhanced momentum of renewable energy adoption, this policy should be enforced gradually, coupled with Production Linked Incentive, to ensure that adoption of green power is not the victim,' he said.
Tanmoy Duari, CEO of Axitec Energy India, pointed out the capital-intensive nature of cell manufacturing. 'Cell manufacturing, unlike modules, is capital intensive and cannot be set up anywhere. It requires continuous supply of water and corresponding government clearances,' he explained.
The Indian government's move to bring solar cells under ALMM is a step towards achieving its ambitious renewable energy targets. However, it also underscores the need for careful planning and strategic implementation to avoid driving up costs and delaying the transition to cleaner energy.
As India continues to push for a significant increase in solar energy production, it is crucial to address these challenges proactively. By doing so, the country can ensure a smooth transition to renewable energy and meet its ambitious targets without compromising on quality or affordability.
The inclusion of solar cells under ALMM will not only drive up manufacturing costs in the short-to-medium term but also necessitate a robust supply chain and infrastructure. It is a critical step towards making India a global leader in solar energy manufacturing.
As we move forward, it is essential to monitor the progress closely and make necessary adjustments to ensure that the policy benefits are maximized while minimizing the short-term costs. With careful planning and strategic implementation, India can successfully navigate this transition and emerge as a major player in the global solar energy market.
