India likely to become second largest solar module manufacturer by 2025: Wood Mackenzie report

India, which accounts for 3 per cent of the global solar manufacturing market, is expected to become the world’s second largest module manufacturing region by 2025, Wood Mackenzie said in its latest report. 

“Looking outside China, India is forecasted to overtake Southeast Asia as the second-largest module production region by 2025, which will be driven by India’s strong PLI incentives,” Wood Mackenzie said, which is a global consultancy firm for renewables, energy and natural resources.

“The US and India have announced more than 200 gigawatts (GW) of planned module capacity since 2022, driven by the Inflation Reduction Act (IRA) in the US and the Production Linked Incentive (PLI) in India,” it added.

The consultancy said that after investing over $130 billion into the solar industry in 2023, China will hold more than 80 per cent of the world’s polysilicon, wafer, cell, and module manufacturing capacity from 2023 to 2026.

India’s manufacturing push

Earlier this month, ICRA said it expects India’s solar photovoltaic (PV) module manufacturing capacity to increase to more than 60 GW by 2025 from the current level of around 37 GW, with improved backward integration into cell and wafer manufacturing.

ICRA’s Vice-President & Sector Head (Corporate Ratings) Vikram V said that while the abeyance of the Approved List of models and manufacturers (ALMM) order till March 2024 and sharp decline in global module prices is leading to an increase in PV module imports in FY2024, the expected scale-up in domestic manufacturing capacity with backward integration over the next two to three years, along with resumption of the ALMM order, is expected to reduce import dependence.

“Apart from module capacity, the OEMs are expected to enhance the wafer and cell manufacturing capacities with cell capacity expected to cross 25 GW by 2025 from the current level of around 6 GW. However, the country will remain dependent on polysilicon imports as these capacities are likely to take longer to set up, involving a larger capital investment,” he added.

Similarly, the International Energy Agency (IEA) in a report last month said the project pipeline under the production linked incentive (PLI) scheme suggests that India’s domestic production capacity can surpass 70 GW by 2027.

The world’s fastest growing renewable energy market is offering around $2.5 billion in subsidies under the PLI scheme for expanding solar PV module manufacturing capacity.

Under Tranche-I of the PLI scheme, with an outlay of ₹4,500 crore, Letters of Award (LoA) have been issued for setting up of 8,737 megawatts (MW) of fully integrated solar PV module manufacturing units (manufacturing of Polysilicon, Wafers, Cells and Modules).

Under Tranche-II, with an outlay of ₹19,500 crore, the LoAs have been issued for setting up of 39,600 MW of fully/ partially integrated solar PV module manufacturing units, through which 12 GW of polysilicon capacity, 28.8 GW of ingot-wafer capacity, 36.2 GW of cell capacity and 39.6 GW of module capacity is envisaged.

The capex outlay for setting up these integrated module capacities is estimated to exceed ₹1 lakh crore.

Global manufacturing landscape

As per the IEA, solar manufacturing today is highly concentrated in just five countries accounting for over 90 per cent of global capacity. China is far and away the largest, with the capacity to produce solar modules with an output of over 500 GW every year, equivalent to 80 per cent of world manufacturing capacity.

The other four are Viet Nam (5 per cent of the global market), India (3 per cent), Malaysia (3 per cent) and Thailand (2 per cent). The next five leading solar manufacturers – the US, Korea, Cambodia, Türkiye and Chinese Taipei – each account for around 1 per cent of the global total, as does the European Union.

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