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Mumbai: Two months since the Approved List of Models and Manufacturers (ALMM) was reinstated, the challenges of availability and affordability of solar modules continue to persist, according to industry stakeholders.
“It has been two months of ALMM reversal, and the challenges of availability and affordability continue to persist. On an average, the cost for N-type DCR modules in the domestic market is about Rs 22 per Wp (watt peak) for a module size of 545-550 Wp. and non-DCR modules that use Chinese cells cost about Rs 15,” Sarthak Sengupta, Head, Procurement, Amplus Solar told ETEnergyWorld.
He said that imported modules, meanwhile, even after adding 44 per cent basic customs duty and surcharge, were priced at Rs 12 on average whereas the availability and affordability of N-Type/Topcon modules is even more challenging.
According to Ashish Agarwal, head – solar business, BluPine Energy, it is too early to comment definitively on the impact of the ALMM restoration on domestic supply and pricing, as the deadline expired two months ago.
“However, within these two months, we have observed a significant increase in the number of orders received by domestic module manufacturers. There is already chatter among suppliers that if future capacities are not blocked soon, they may not be able to deliver on time as their factories are getting fully booked,” he added.
The government reinstated the Approved List of Models and Manufacturers (ALMM) effective from 1 April, 2024. The policy applies to all projects except utility projects with power purchase agreements signed before July 2021 and behind-the-meter projects.
With the reinstatement of ALMM, the solar power developers are required to source modules from domestic manufacturers registered under ALMM.
According to Vikram V, vice-president, co-group head – corporate ratings, ICRA, the cost of sourcing modules from domestic OEMs using imported solar PV cells is expected to be about Rs 19-20 cents per Watt.
“This remains relatively high compared to the cost of imported modules at 15 cents/watt (after accounting for the import duty). Nonetheless, the viability of solar power projects using modules from domestic OEMs remains adequate considering the prevailing bid tariff of Rs 2.5-2.7 per unit,” added Vikram.
Apart from the increase in project costs due to this, there is a direct impact on working capital cost due to the unavailability of modules in the domestic market, added Amplus Solar’s Sengupta.
“Suppliers are unwilling to commit more than 20-25 MW of modules at a time and that assurance is also yet to be practically tested. When larger projects demand 200-300 MW of modules, we are forced to source from three to four different suppliers and endure long wait times for availability. This not only escalates project costs but also impacts the project timelines,” he said.
He added that at present, the challenges with availability of cost competitive higher efficiency solar modules under the ALMM regime is likely to have an adverse impact on the growth plans of solar based renewable capacities, particularly in the C&I segment.
BluPine Energy’s Agarwal said that compared to Chinese manufacturers, the performance of domestic OEMs is not at par and they do lack in certain areas such as manufacturing processes, and quality control still, they are not too far behind.
He added that as far as module manufacturing is concerned, there are no significant capability issues. He said that the ecosystem in India has been existing for almost 20 to 30 years now with companies such as BHEL, BEL, manufacturing modules for nearly two decades.
“Even private sector players have been in the business for over 10 to 15 years. So, I don’t see any major challenges here. But, the volumes are not that high, and there are teething issues with the processes, but these will get sorted out as the market picks up,” he said.
A lot of Indian manufacturers are not only supplying to India but also exporting to European and American markets.
By 2023, India exported modules worth $1.8 billion. Despite a rush by Indian developers to buy modules from China, Indian module manufacturers still managed to export $1.8 billion worth of modules offsite, reflecting their quality and capability, he added.
Ashish Kumar Saxena, chief procurement officer, AMPIN Energy Transition, said that there is still a significant gap between module and solar cell production, necessitating continued reliance on imports from China for solar cells. While most Bill of Materials (BOM) for manufacturing are also imported from China, driven by pricing and quality considerations.
“Despite using the same raw materials, the tolling and conversion costs from cell to module in India are still high. This results in domestically produced modules being 7 per cent to 8 per cent more expensive than imported ones,” said Saxena.
He said that most OEMs in India were currently producing P-type PERC modules, with N-type modules still in the stabilization phase.
“Indian OEMs are facing challenges in meeting global quality standards, as ongoing process improvements are needed to match international benchmarks,” he said.
Tier-1 solar photovoltaic manufacturers such as China’s Longi and Jinko, have shown interest in establishing manufacturing operations in India.
“Substantial quantity addition is needed to close the huge demand-supply gap in domestic production remains a considerable challenge, and achieving the necessary scale and stabilization of the same to international standard without charging unrealistic premium appears to be a distant goal, especially for the rooftop segment,” said Sengupta.
The government continues to support efforts to enhance domestic manufacturing capabilities. However, this support should not hinder yearly renewable energy capacity addition targets, he added.
“Until domestic manufacturing meets expected standards and can produce advanced modules, we must re-evaluate the restoration of the ALMM, at least for the private PPA market where the consumers are struggling with space constraints and cost competencies,” he said.
BluPine Energy’s Agarwal said that in preparation for the ALMM, the company started procuring domestic modules last year.
“Although there were some issues with the first few batches, the supply has become quite consistent since then. We no longer face any quality or supply challenges from domestic OEMs. So, we hope that as manufacturing picks up, this problem will disappear,” he added.
According to a government press release dated 5 February 2024, the installed solar module manufacturing capacity in the country is about 50 GW. While the installed solar cell manufacturing capacity is about 6 GW.
It added that $11,171 million of solar cells and modules have been imported into the country in the last five years, which is about 0.4 per cent of total India’s merchandise imports during the same period.
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