India’s Solar Capacity To Increase Significantly, Says CRISIL

A recent report by the rating agency CRISIL forecasts a significant expansion in India’s solar capacity. The report states that capacity will grow fivefold to reach approximately 50 GW by Fiscal Year 2027. This growth will be driven by government policy measures aimed at reducing imports of solar cells and modules while encouraging backward integration by module manufacturers.

The capital expenditure for this expansion is expected to be ₹28,000-30,000 crore, with funding structured through a 70:30 debt-equity mix, according to the report. The emphasis on domestic production aligns with the Make in India initiative, which aims to drive demand and ensure sustainable growth within the solar sector.

CRISIL Ratings Director Ankit Hakhu highlighted in the media that around 19 GW of renewable capacity was implemented in FY24, of which 17 GW was solar. This 17 GW signifies the increasing demand for solar modules, which were previously sourced primarily from China. However, domestic production has seen a significant rise, with research indicating that around 60-70% of module demand can now be met within India.

The demand for solar cells is also rising in parallel with that of modules. However, due to the current low domestic cell production capacity, India continues to rely on imports from China. The focus has now shifted toward increasing domestic cell manufacturing, aligning with the progress made in module production.

Hakhu further explained that assembling imported cells into modules yields approximately 5% lower margins compared to manufacturing cells from wafers and then converting them into modules. This impacts conversion costs.

He also noted that several key players, including Waaree Energies, Premier Energies, and Adani Energy Solutions, have expressed interest in vertically integrating their operations as part of the Production-Linked Incentive (PLI) scheme. This indicates a shift toward incorporating cell manufacturing within their business strategies.

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