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US-headquartered solar module manufacturer First Solar feels that India’s renewable energy (RE) sector, which aims to deploy 500 gigawatts (GW) of non-fossil fuel capacity by 2030, offers huge opportunities in terms of market expansion and demand growth.
The solar power solutions provider, which has module manufacturing facilities in the US, Malaysia, and Vietnam, expects its ₹5,600 crore 3.3 GW facility in Tamil Nadu to start making modules by October 2023 and hit full capacity about a year later.
“If you look at the trajectory today, we have to hit 500 GW by 2030. You have to do about 25 GW per annum of new installations year-on-year from now. I think that is a significant market opportunity. I’ll put India, perhaps at the third spot globally in terms of the market after China and the EU, maybe slightly more than what the US is doing,” said First Solar VP and Managing Director (India) Sujoy Ghosh.
PLI Vs IRA
As Prime Minister Narendra Modi begins his official trip to the US, the endorsement by a US-based solar module manufacturer on India’s RE market push assumes importance as the Inflation Reduction Act (IRA) in the US threatens to adversely impact investments in emerging and developing economies.
Sources said that investors will want to turn to the US as the subsidy scheme offers more incentives compared to India’s Production Linked Incentive (PLI) scheme.
The IRA, signed into law in August 2022, aims to spend around $370 billion to lower energy costs for families and businesses, accelerate private investment in clean energy solutions, and strengthen supply chains from critical minerals to efficient electric appliances among others.
Inflation Reduction Act
Asked about the impact of IRA on India, Ghosh countered that every country has its own ambitions to incentivise its domestic manufacturing right in the clean energy space. Last decade, from 2010 to 2020, there was an over-dependence on China and the flip side of that is it became risky.
“Having said that, I think you’re right that the IRA has more corpus than PLI. However, the cost of production, labour, and doing business in the US is also a lot higher as compared to economies like India. At the end of the day, you are going to manufacture where you have demand,” he explained.
The IRA never impacted the company’s goals and vision to create capacity and support the Indian government, Ghosh added.
“The question for First Solar as a global player is that you cannot rely on one country. You have got to distribute your risks. When you look at different countries, you look at incentives available in each country on a case-by-case basis and look at whether we have demand for our technology, whether it works or not, and will the incentives help us deliver a more competitive product,” he pointed out.
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