As a developing nation at the time of independence, India relied extensively on coal to meet its energy demands, however, since then a lot has evolved. People have realized that from an energy security perspective, solar energy is the most secure of all sources since it is abundantly available. India is endowed with vast solar energy potential, with about 5,000 trillion kWh per year of energy incident over India’s land area, wherein most of the parts receive 4-7 kWh per sq.m daily.
Bhabha Atomic Research Centre (BARC) was founded in the 1950s with an aspiration to secure the country’s long-term energy independence. Today India is the only developing nation with indigenously developed, demonstrated, and deployed nuclear reactors for electricity generation which was made possible due to several decades of extensive scientific research and technology development.
India has always been determined to look out for more energy alternative sources for sustainable development and for this they started with major hydropower projects appearing on the scene of India’s energy arena. Keeping in mind the Sustainable Development Goals, India’s power generation mix is rapidly making a shift towards a more significant share of renewable energy, thereby making India the world’s third largest producer of renewable energy, with 40% of its installed electricity capacity coming from non-fossil fuel sources. All these factors are the reason behind the upward trajectory of the renewable energy industry in India and appear to be a promising future for solar energy in India.
Solar Industry in India
India is endowed with vast solar energy potential and using this as an advantage, solar panels or solar photovoltaic power is being effectively harnessed, providing huge scalability in India. There has been a visible impact of solar energy in the Indian energy domain over the past few years. Apart from benefitting the people residing in the urban sector, solar energy-based applications have benefitted millions of people in the rural sector by meeting their cooking, lighting, and other energy needs in an environment-friendly manner.
India is the market with the fastest growth in renewable electricity and by 2026, it is predicted to double up the new capacity additions in the renewable electricity domain. The Indian renewable energy sector is the fourth most attractive renewable energy market in the world, ranked fourth in wind power, fifth in solar power, and fourth in renewable power installed capacity, as of 2020.
In addition, the solar power installed capacity has increased by more than 18 times, from 2.63 GW in March 2014 to 49.3 GW at the end of 2021. In 2022, till November, India has added 12 GW of solar power capacity.
As of October 2022, India’s installed renewable energy capacity (including hydro) stood at 165.94 GW (Gigawatt), representing 40.6% of the overall installed power capacity, the non-hydro renewable energy capacity addition stood at 4.2 GW for the first three months of FY23 against 2.6 GW for the first three months of FY22.
Furthermore, India has set a target to reduce the total projected carbon emission by 1 billion tonnes by 2030, reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade, and achieve net zero carbon emissions by 2070. These low-carbon emission technologies would create a market worth US$ 80 billion in India by 2030.
Exports of Indian Solar Modules
The Government of India has taken several measures to make India an attractive destination for Foreign Direct Investment. Owing to this fact, a massive jump has been recorded in the solar panel export from India to the United States in the previous quarter, which coincided with a push amongst Indian manufacturers to ramp up the capacity to meet domestic demand.
Source: Ministry of Commerce and Industry and Make in India
With a quarter-on-quarter sequential growth standing at 499%, solar module exports have surged to US$ 157 million in the July-September period year-over-year.
Over the years, Chinese solar modules have dominated Indian solar projects, however, imposing a prohibitively high customs duty of 40% on imported modules early this year, and the government-mandated Approved List of Models and Manufacturers (ALMM) policy last year have really got the Indian manufacturers into action.
India has seen over 9 GW of production lines commissioned in the last two quarters. New manufacturing lines with updated technology have made sure that some module manufacturers are able to get export orders. In addition, many manufacturers who are installing new manufacturing lines with imported machinery are obligated to export a certain share under the Export Promotion Capital Goods (EPCG). This allows them to claim duty benefits under the plan.
India is also expected to emerge as the preferred module supplier to the World Bank and International Monetary Fund (IMF) projects as they strive to increase renewables share in African and Latin American Countries. In addition, module manufacturers are also setting up larger production units in order to cater to the constantly increasing demand and to make it more efficient, these manufacturers have started manufacturing mono PERC cells in India. Dialogues with overseas developers are underway for a larger supply of Indian modules, which result in a further jump in exports. This gives an indication that there is a possibility wherein India would be able to surpass Chinese module suppliers in the European markets, thereby opening another avenue for Indian modules.
Demand for Solar Panels in India
Power is one of the most critical components of infrastructure, crucial for the economic growth and welfare of the nation. India’s power sector is one of the most diversified in the world. Sources of power generation range from using conventional sources such as oil, natural gas, coal, lignite, hydro and nuclear power to non-conventional sources which include wind, solar, agriculture, and domestic waste.
The fundamental principle of India's power industry to provide power universally and in an affordable manner has not only led to a rise in solar panel demand in India but has also shown a subsequent rise in the export of Indian solar modules.
The existence and continuous development of power infrastructure is an essential factor for the sustained growth of the solar energy industry in India. With the growing threat of climate change due to the excessive release of carbon emissions, people have started realizing the importance of adopting an environmentally friendly approach and have identified several benefits that come along with the consumption of solar energy vis-à-vis using conventional sources. These advantages include:
As of November 2022, over 51.62 lakh smart metres have been deployed under the National Smart Grid Mission (NSGM), with an aim to further deploy 61.13 lakh smart metres.
Moreover, in order to meet India’s 500 gigawatts (GW) renewable energy target and tackle the annual issue of coal demand and supply mismatch, the Ministry of Power has identified 81 thermal units which would replace coal with renewable energy generation by 2026.
India’s thriving renewable energy market conditions, inclusive policy decisions, investment, and technology improvements focusing on self-reliant supply chains has pushed the clean energy transition to new heights. However, the sector must be careful to navigate bottlenecks that could threaten continued rapid growth.
Solar Panel Industry in India
The solar PV module Industry in India is witnessing exponential growth. India is increasing in the clean energy power generation industry, and currently holds the third position in the Renewable Energy Country Attractiveness Index in the global market. Looking at the global energy crisis, renewable energy is the most reliable source of power generation further resulting in the optimum utilization of natural resources which benefits not only the environment but also society as a whole.
The solar power generation market has high growth potential in India. The country aims to expand its power generation market and develop one of the most extensive energy programs globally by 2022.
The Government of India has identified the power sector as one of the key pillars of the Indian Economy to promote sustained industrial growth and for this, under the Union Budget 2022-23, the government announced the issuance of sovereign green bonds, conferred infrastructure status to energy storage systems including grid-scale battery systems.
In addition, in the same budget, US$ 2.3 billion (Rs.19,500 crores) was allocated for a product-linked incentive scheme to boost the manufacturing of high-efficiency solar modules. Schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) are expected to augment electrification across the country.
In addition, as a policy supportive measure by the government, 100% Foreign Direct Investment (FDI) allowed in the power sector under the automatic route with no prior requirement of government approval has boosted FDI inflow in this sector. Total FDI inflow in the power sector reached US$ 16.39 billion from April 2000 – June 2022.
Currently, India stands at the 4th position for overall installed renewable energy capacity in the world and is the third most attractive nation for renewable energy investments and deployments. Over the past seven years, investments worth US$ 70 billion have been made in the renewable energy domain in India.
Moreover, with policy supportive measures being introduced by the government, the export of solar panels from India is on an upward trajectory.
The Road Ahead
The Indian electricity sector is set to witness a major transformation during 2020 – 2029, with respect to market operations, energy mix, and demand growth. With the plan to establish a renewable energy capacity of 500 GW by 2030 (280 GW of solar power), the government of India is preparing a ‘rent roof’ policy which would help in generating 40 GW of power through solar rooftop projects by 2022, pointing towards a bright future of the solar modules in India.
As of September 2020, US$ 59.35 billion have been invested in solar power projects. Furthermore, it is expected that in 2022, India's renewable energy sector is expected to go on a higher scale with an investment of US$ 15 billion, as the government would be focusing on electric vehicles, green hydrogen, and the manufacturing of solar equipment.
As per the Central Electricity Authority, India’s power requirement is expected to grow up to 817 GW by 2030. Moreover, it is expected that by 2040, approximately 49% of the total electricity would be generated with the help of non-conventional sources and due to this, the use of renewable sources would save US$ 6.5 billion (Rs.54,000 crores) annually.