Macro Economy

Indian solar cells and modules manufacture 'obsolete', says MNRE

M Ramesh Chennai | Updated on January 09, 2018


At a time when the government of India is trying to decide on whether or not the Indian solar cells and modules manufacturers deserve protection by way of anti-dumping duty, the Ministry of New and Renewable Energy has said that the cell/module manufacturing capacity in the country is “obsolete”.

In a ‘concept note’ for supporting solar manufacture in India, the Ministry speaks of a “direct financial support” of Rs 11,000 crore and a ‘technology upgradation fund’, for solar manufacture.

The Ministry notes that the country has installed capacity for producing 3.1 GW of cells and 8.8 GW of modules (cells are used to make modules). However, “even this capacity is not being fully exploited because of obsolete technology,” the concept note says. Only 1.5 GW of cell manufacture and 3 GW of module manufacture is used.

It adds that the existing capacity is mainly of the conventional technology of multi-crystalline Al-BSF (Aluminium-Back Surface Field) solar cells, which have efficiency limitations and that very few players have ventured into the superior PERC (Passivated Emitter Rear Cell) technology. PER cells, which have a light reflecting layer on the rear, are more efficient and cost-effective.

The Ministry has said it would bring in a ‘Technology Upgradation Fund’, borrowing the concept from a scheme of the same name for textile industry. The TUF could be an interest subvention scheme (as it is for the textile industry) or capital subsidy for technology upgradation projects.

Apart from providing financial incentives for solar manufacture, the Ministry also proposes to “revive” the ‘domestic content requirement (DCR)’ scheme, which reserved a slice of the market for locally made cells and modules. The scheme was adjudged violative of global trade rules by the World Trade Organisation. Today, 1,436 MW of solar projects have been commissioned under the DCR and another 1,000 MW are under construction, but there won’t be any more. However, the government proposes to get central government-owned companies to set up 12,000 MW of projects using local-made products.

The concept note also speaks of capital subsidies to those who set up solar manufacturing capacities, with subsidies indexed to the levels of value addition. Conversely, they could also set up solar power plants to supply the electricity needed for the manufacture, with facilities to bank the power with the grid for later withdrawal.

Manufacture of solar panels (also called modules) start with polysilicon, which is made from silicon. Polysilicon is made into ingots, which are cut into wafers. Cells are made with wafers and a string of cells is a module. Today, only modules and cells are made in India, with imported material. At present, the only incentives available for manufacturing these is the Modified-Special Incentive Package Scheme, which is available to all electronic goods manufacturers and implemented by the Ministry of Electronics and Information Technology, but there have been few takers for the scheme.

However, a few companies have expressed desire to set up manufacturing facilities in India—notably, Trina Solar and Longi, both of China. “If these incentives are seriously implemented and there is clear market visibility of the next five years, then more manufacturers may decide to establish manufacturing units in India,” says Mercom, a renewable energy consultancy.

Published on December 18, 2017

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