The project pipeline of the production linked incentive (PLI) scheme, under which India is offering around $2.5 billion for expanding solar PV module manufacturing, suggests that its domestic production capacity can surpass 70 gigawatts (GW) by 2027.

“India aims to continue expanding its production capacity to meet domestic needs and to export solar modules: projects in the pipeline under the PLI scheme suggest that its manufacturing capacity could exceed 70 GW per year by 2027,” the International Energy Agency (IEA) said in its latest world energy outlook report.

India, which accounts for 3 per cent of the global solar PV market, is expected to meet its 2030 target to have half of its electricity capacity be non-fossil well before the end of the decade, it added.

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.

Solar manufacturing

“If the new solar PV module manufacturing capacity under the PLI programme comes fully online by 2026, it would progress the solar PV module manufacturing capacity in India to well over what is needed until the end of this decade not just in the Stated Policies Scenario (STEPS) but also in the Announced Pledges Scenario (APS),” the IEA projected.

Solar PV module imports could continue for a few years because developers will source the cheapest panels available, as the capacity utilisation factor remains lower than the nameplate capacity, and there are lags between the nameplate capacity coming online and the panels being manufactured, shipped and installed, it said.

In FY22, India imported solar PV modules worth $3.4 billion.

Nonetheless, as domestic production ramps up, solar PV module imports will decline and it will help establish India as a reliable exporter, the IEA projected.

Growing demand

The IEA report projects that the annual electricity demand growth of around 5 per cent puts India behind only China and the US in terms of electricity consumption by 2050 in all scenarios.

China is the largest electricity consumer in the world, and a demand growth of over 2 per cent on average per year to 2050 means that it uses twice or more electricity as any other country, by 2050.

Rising temperatures in India has led to growing use of air conditioners, with electricity consumption from space cooling increasing 21 per cent during 2019-2022. At present, nearly 10 per cent of electricity demand comes from space cooling requirements.

“Fuelled by its geographic and meteorological conditions, air conditioner ownership in India has been steadily rising with growing incomes, tripling since 2010 to reach 24 units per 100 households,”the report projected.

Residential electricity demand from cooling increases ninefold in the STEPS by 2050. By 2050, India’s total electricity demand from residential air conditioners in the STEPS exceeds total electricity consumption in the whole of Africa today.

Under APS, however, electricity demand for air conditioners is nearly 15 per cent lower in 2050 as it is in the STEPS as a result of increased use of energy-efficient air conditioners and thermal insulation in buildings. This reduction itself is larger than the total electricity generation by several countries today, such as that of the Netherlands, it added.

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