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The dilemma of Indian photovoltaics: silicon wafers and cells are dependent on imports from China

published: 2024-05-22 17:34

India's energy sector is at a critical crossroads, reflecting the opposition between the urgency of global climate action and the inertia of established systems. In its quest for solar self-sufficiency, India faces the brunt of its entrenched dependence on coal and fluctuations in international market forces.

This contrast forms the heart of India's energy paradox – the need for coal-fueled rapid industrial growth contrasts sharply with the desire to lead in the renewable energy sector.

The number of bidders for solar tenders has been relatively stable in recent years. Foreign investors, while cautious, have maintained a steady level of interest. While enthusiastic about India's solar potential, these developers have been bidding on and off, indicating that they have adopted a cautious strategy amid the changing tide of international policy and market dynamics. This bidding model shows that global players are weighing the benefits of India's solar market against the risks inherent in such a large-scale transition.

In this context, India's technological catch-up in solar module manufacturing is particularly prominent. Manufacturers in India are struggling to move away from imports of old technology, and they must step beyond the innovation frontier to get a piece of the growing renewable energy sector.

India's solar industry, while accelerating, is still constrained by coal-dominated energy supply. India's growing demand for electricity is evidenced by its reliance on coal, which surged by more than 10% in 2023 alone.

There is also a silver lining in this complex situation. The recent surge in solar capacity tendered – 16.1GW in 2023 – is commendable and demonstrates the potential scale of India's renewable energy ambitions. However, the underlying numbers make the story nuanced: new coal projects are expected to come on stream in 2024, a stark reminder of India's continued dependence on fossil fuels. The expected increase in coal capacity, which could reach 7GW in 2024 due to a strong 18GW stockpile, reveals the tension between India's development needs and environmental commitments.

What we are looking at is a country that is trying to balance the energy mix. India is navigating this duality with an eye on short-term energy security and long-term sustainable development goals. Such a balance requires not only firm policy and innovation, but also the active participation of international partners. These partners, while currently coming and going in solar tenders, play a vital role in technology transfer and investment, influencing India's ability to truly harness its solar potential.

In piecing together, the threads of the solar supply chain, technology adoption, and the coal conundrum, the narrative becomes clear around a central theme: transformation is a marathon, not a sprint. India's story highlights the broader global challenge of how to quickly decarbonize while meeting the urgent need for economic growth.

India must harness political will, innovation, and international cooperation to forge a future that maximizes solar energy and minimizes the impact of coal. The story is still unfolding, and the world is waiting to see how India's path will reveal the possibilities and pitfalls for emerging economies that are grappling with similar challenges. It is a story of modern development, a story of a country struggling with the dynamics of global dependence while seeking energy self-sufficiency.

India's solar industry is at a critical juncture in its quest for clean energy. India is trying to localize its solar supply chain, but is still constrained by international imports, mainly from Chinese suppliers. This delicate balance raises questions about India's ability to achieve its goal of indigenization while navigating the complex interplay of technological advances and international trade dynamics.

The story begins with solar silicon wafers, which are the building blocks of solar cells. China has tightened its grip on this essential supply, becoming a major producer and supplier to India, with imports soaring to $120 million in 2023.

China accounts for 97% of the world's wafer production capacity, and Chinese suppliers are not only leading the way, but are constantly evolving, offering best-in-class technology, and benefiting from economies of scale.

India's dependence on China is not limited to silicon wafers. Another key component in solar cell manufacturing, silver paste, is completely imported, with major suppliers being Chinese mainland, Taiwan, and Singapore. This reliance highlights a major challenge – silver pastes are not only expensive, but they are also critical, accounting for about 7% of the cost of the module.

In addition, the technology adopted by Indian solar manufacturers is also lagging. Despite India's push for domestic production, manufacturers are still importing batteries based on older technologies. At the same time, the global market has shifted to the adoption of high-efficiency cells with a higher number of busbars, which are conductive bars in solar cells that play a crucial role in efficiency. The technology is evolving as project developers prefer to import more advanced and cost-effective equipment, and India's slow adoption of the technology could stifle India's ambitions.

The Indian solar industry is at a crossroads where ideals and realities meet. To build a fully vertically integrated domestic supply chain, India will need to navigate a complex set of factors: from continued reliance on foreign technology and raw materials, to the need for significant investment in research and development, and a policy framework that promotes self-sufficiency without abandoning the benefits of global trade and cooperation.

To truly harness solar energy, India will have to bridge the gap between its current import-dependent and future self-sufficient solar industry. Only by committing to technological innovation, strengthening domestic production capacity, and developing strategic trade policies can India hope to achieve its laudable goal of a greener and more self-reliant future in solar production. Time is running out, and solar energy waits for no one.

Source: PV TECH

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