HomePower R&D ›Strong Demand Outlook for Domestic Solar OEMs Aided by Policy Measures: Report

Strong Demand Outlook for Domestic Solar OEMs Aided by Policy Measures: Report

The business prospects for the domestic solar original equipment manufacturers (OEMs) will remain strong aided by several policy measures over the medium-term, predicted by the credit rating agency ICRA Ratings.

February 21, 2022. By Manu Tayal

The business prospects for the domestic solar original equipment manufacturers (OEMs) will remain strong aided by several policy measures over the medium-term, predicted by the credit rating agency ICRA Ratings.

As a result, many of the domestic OEMs have announced sizeable capital expenditure to augment the cell and module capacity, including the capex for integrated facilities under the PLI scheme by winning bidders, added the rating agency in its report.

However, the timely commissioning and ramp-up of on-going capex in the module manufacturing value chain remain critical in the near to medium term. As a result, the adequacy of the modules from the domestic OEMs to meet the demand in utility and non-utility segment, as well as the quality of such modules, remains monitorable, ICRA further said.

Explaining further, GirishKumar Kadam, Senior Vice President & Co-Group Head, Corporate Rating, ICRA, said that, “the policy focus by the Government of India (GoI) in the renewable energy (RE) sector remains strong as also evident from the policy target of 500 GW of non-fossil fuel-based capacity by CY 2030 as well as policy direction in the energy transition with net-zero emission target by 2070. In this context, capacity addition in solar energy segment within the RE is expected to remain significant with about 65-70% share by FY 2030, given the relatively lower execution challenges in the solar segment.”

“The GoI has a solid policy focus to encourage the domestic manufacturing for photovoltaic (PV) modules through various policy measures announced in last 2-3 year period such as notification of approved list of module manufacturers (ALMM) w.e.f. April 2021, imposition of basic customs duty (BCD) on imported cells & modules w.e.f. April 2022, award of manufacturing linked PPAs for an aggregate capacity of 12 GW, ongoing implementation of production linked incentive (PLI) scheme as well as that of various central schemes announced earlier, requiring the use of domestic modules. Further, ALMM list has only domestic solar OEMs and there remains an uncertainty for inclusion of foreign solar OEMs as of now,” he added.

Given the strong response for the PLI scheme for solar modules, the scheme outlay has been further increased to Rs 240 billion from Rs 45 billion earlier. This is expected to support the setting up of additional cell and module manufacturing capacity of up to 40 GW, estimated ICRA.

Given that the import dependency for the OEMs is expected to continue for sourcing of key components, the pricing behaviour for polysilicon and cells in China thus remains a key monitorable, going forward, it added.

“As a result, OEMs based on imported cells remain exposed to volatility in cell /module price levels. Based on an imported module price level of 27 cents/watt for Mono PERC modules and cell price at 15 cents/watt, the cost of module from such domestic OEMs is expected to be lower by 10-11% post April 2022, assuming the applicable BCD on imported cells/modules. However, the extent of discount will reduce, if the prices of imported cells and modules reduce from the prevailing level. From the viability perspective in case of OEMs with integrated facilities, the scale of operations, pace of technology adoption with the emerging trends in key markets such as in China/Europe as well as module price movement remain the critical factors,” said Vikram V., Vice President & Sector Head – Corporate Ratings, ICRA.
Please share! Email Buffer Digg Facebook Google LinkedIn Pinterest Reddit Twitter
If you want to cooperate with us and would like to reuse some of our content,
please contact: contact@energetica-india.net.
 
 
Next events
 
 
Last interviews
 
Follow us