Many solar modules produced in India do not meet the required efficiency criteria of converting 21% of solar energy into electricity, which is a crucial benchmark towards achieving India's ambitious target of 500 GW of renewable energy capacity by 2030.
The government is taking measures to strengthen the quality standards set by the Approved List of Module Manufacturers (ALMM), which was introduced in 2019 to ensure manufacturers comply with high-quality standards. The ALMM enables the sourcing of equipment for government-supported plans and projects that provide power to electrical distribution companies. Manufacturers and solar modules certified by the Bureau of Indian Standards (BIS) and the Ministry of New and Renewable Energy are included in the list, with the aim of reducing dependency on imported solar modules.
In March, the implementation of the Approved List of Module Manufacturers (ALMM) for government-backed projects was postponed until April 2024 due to a shortage of modules and concerns about the potential escalation of solar power rates. Union Minister for New and Renewable Energy, Raj Kumar Singh, mentioned in an interview that this extension aims to support projects that were delayed due to the impact of the Covid-19 pandemic and the shortage of modules. He further stated that once these extensions are over, there will likely be an increase in projects. The minister highlighted the issue of insufficient module capacity with the required efficiency, stating that out of the 22 GW, nearly 13 GW consists of lower efficiency modules.
The combined capacity for solar photovoltaic module manufacturing in India is approximately 22.4 GW per year, according to ALMM. However, the total grid-scale efficiency of modules with 21% or higher is only 9 GW, as cells with 22% and 23% efficiency, which are required for such modules, account for just 1.5 GW of manufacturing capacity. This limitation arises due to the need to import the remaining cells. Additionally, with 52 GW of solar projects currently under construction, there is a significant demand for high-efficiency modules in the country.
Singh, who holds the portfolio of both Minister of New and Renewable Energy and Minister of Power, emphasized the significance of maintaining low costs for renewable energy in India's pursuit of international competitiveness in green hydrogen production from renewable sources. He described ALMM as a quality control mechanism rather than a non-tariff barrier and mentioned plans to make changes to the ALMM scheme. He stated that the purpose of the quality control process is to prevent the use of obsolete products and technologies, and ALMM will not allow the use of outdated technology. He further added that a minimum efficiency level will not be permitted after one year of ALMM implementation, indicating the commitment to ensure high-quality solar modules in the market.
According to Singh, the proposed revisions to ALMM are currently under review, and the updated norms are expected to be announced within six weeks. He emphasized that obsolete technology and modules will not be included in ALMM, indicating a commitment to ensure that only high-quality solar modules are included in the approved list.
As part of efforts to reduce imports from China, the government announced on March 9, 2021, that starting April 1, 2022, a 40% basic customs tax (BCD) would be levied on imported solar PV modules, and a 25% BCD on imported solar PV cells. Currently, there are 91 module manufacturers on the approved list.
Furthermore, the government has proposed two tranches of the production-linked incentive (PLI) scheme. In the Union Budget for 2022-23, an additional 19,500 crore has been allocated for the solar PLI plan, with a focus on high-efficiency modules and fully integrated manufacturing units covering polysilicon to solar PV modules. The first tranche allocation under the PLI scheme was 4,500 crores.
As per the government's plan, a manufacturing capacity of 7.4 GW is expected to be operational by October 2024, followed by 16.8 GW by April 2025. The remaining 15.4 GW capacity is targeted to be online by April 2026 under the incentive system.
