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Shortage of domestically manufactured solar cells in India

published: 2024-07-11 17:40

As per the reports from the Indian media, the nation's grand solar energy initiative is grappling with a significant hurdle: a dearth of domestically manufactured solar panels.

The media highlighted that despite the availability of government financial aid, household photovoltaic projects in India are still dealing with a scarcity of solar cells produced within the country. Should they manage to acquire these locally made solar cells, they are confronted with the need to incur extra expenses and there's no assurance of punctual delivery. In certain instances, the lack of supply has compelled projects to resort to utilizing recycled components. A solar company in West Bengal revealed that due to the high cost of modules under the domestic content requirement (DCR) regulations, many projects have begun to turn to second-hand modules, which are refurbished and affixed with new warranty labels. Manufacturers refurbish these used modules and make them significantly cheaper than new modules. However, this practice is not only unethical, but may also have long-term negative effects on projects.

Lower-priced imported cells have prompted domestic suppliers to speed up. An industry insider pointed out that DCR cells were difficult to obtain in the past, but the supply situation has improved with the merger of several companies. Although DCR cells are now available, whether they can meet the demand in time remains a problem. The redeployment of the approved list of models and manufacturers (ALMM) has increased the demand for domestic cells and modules.

Another industry insider mentioned that due to the large number of customers and large orders, the arrival of modules at the project site may be delayed. Many customers prefer large-sized modules, but manufacturers are struggling to meet this demand. They either ask for high prices or have subcontracted production capacity to other manufacturers.

According to industry insiders, modules made using Chinese cells are difficult to export due to trade restrictions, while there is demand in the US market for modules made using domestic Indian cells. If this market develops, demand for DCR modules may increase in the short term, which may exacerbate the current supply shortage.

The cost competitiveness of domestic modules remains a major challenge. Although the basic customs duty on imported modules provides some protection for domestic manufacturers, developers still find imported modules cheaper and of superior quality. Finding a balance between protectionist measures and the need for cost-effective solar solutions remains a challenge.

The price of imported solar modules ranges from 13.50 rupees (about 0.16 US dollars)/watt to 14.50 rupees (about 0.17 US dollars)/watt, while the price of DCR modules is about 23 rupees (about 0.27 US dollars)/watt. This huge price difference raises questions about the competitiveness of DCR modules. The price gap is further exacerbated by the limited supply of DCR cells, and the current annual production of DCR cells is about 3 GW, which cannot meet the rapidly growing market demand.

The cost of raw materials such as silver and copper paste has risen by more than 40%, putting more pressure on domestic manufacturers. Despite these challenges, the industry still has huge potential for development. The government's policy to promote self-reliance, along with measures such as the production-linked incentive scheme, is expected to significantly increase module and cell manufacturing capabilities in the coming years.

Recently, the Ministry of New and Renewable Energy (MNRE) of India has developed an online portal to ensure traceability of domestically produced solar PV cells and modules and help verify the domestic content requirement (DCR) of Indian solar PV modules.


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