India's solar equipment manufacturing capacity set to surge in next 2-3 years: Report

Mumbai: India's solar equipment manufacturing capacity is poised for robust growth over the next 2-3 years, with module and cell manufacturing capacity of around 80 GW and 50 GW respectively in the pipeline, according to a report.

This will entail a capex of nearly Rs 1 lakh crore with an estimated debt funding of nearly Rs 70,000 crore over the medium term, including investments in polysilicon and wafer capacities, it said.

India's module and cell capacity stood at around 70 GW and 8 GW respectively as of March 2024, although high-efficiency module capacity is only 50 GW. The capacity enlisted under the Approved List of Models and Manufacturers for Modules (ALMM-I) reached 60 GW as of September 2024, although a large section is in the ramp-up phase, thus barely sufficing to meet the domestic module requirement.

The accelerated growth over the last 12 months has been an outcome of the growing ESG focus of corporates, buoyant investor interest, proactive policy support, and enhanced availability of financing avenues, the report said.

CareEdge Ratings says that capacity addition plans of around 80 GW by leading module manufacturers will entail a capex of nearly Rs 12,000 crore over the next 2-3 years.

Domestic cell capacity is expected to witness commensurate growth to reach 60 GW by FY27 with about Rs 30,000 crore worth of investments by major players over the next 2-3 years on the back of strong policy support for progressive backward integration. The resultant capacity growth will make India a surplus market, given the annual module requirement of 40-50 GW, necessitating that the domestic players tap the export markets.

CareEdge Ratings believes that the solar segment will significantly help in India's renewable capacity growth.

India's RE capacity stood at 155 GW as of September 2024, with the solar segment being the largest contributor at 91 GW on the back of significant capacity additions over the past 7-8 years. The rising share of RE capacity has been on account of strong policy focus, improving tariff competitiveness, and strong investor interest.

While India installed 18.5 GW of RE capacity in FY24, CareEdge Ratings expects the annual RE installations to surpass 35 GW over the next two years primarily supported by a healthy pipeline of more than 100 GW.

The growth in solar capacity in the medium term will be driven by an annual tendering target of 50 GW RE capacity through renewable energy implementing agencies, the majority of which are expected from solar.

Sizeable capacity additions of about 20 GW will be contributed through rooftop solar, hybrid solar components, and off-grid solar over the next 2-3 years. Besides, solar open access capacities of 4-5 GW are likely to be added annually over the next 2-3 years, aided by ESG commitments of corporates and improving the economic viability of C&I projects, the report added.