India seeks its own solar industry to counter China
Until recently, one of India’s biggest renewable energy developers focused on building massive solar farms using cheap panels imported from China.
Now, in a steep turn, ReNew Energy Global PLC and its compatriots plan to manufacture the panels and components on their own, as part of an all-out campaign by India to break China’s lock on the chain. solar supply.
India, the world’s third-largest carbon emitter after China and the United States, plans to tackle climate change with a massive increase in renewable energy. But he wants to create his own domestic solar industry to do so, to avoid becoming more dependent on a key regional rival.
“If we continue to import only solar modules from China, then we are trading a type of energy dependence – on oil from the outside – towards solar modules that also come from outside,” Sumant said. Sinha, Chairman and CEO of ReNew. .
At the COP26 climate conference last month in Glasgow, Indian Prime Minister Narendra Modi said the country would phase out net carbon emissions by 2070. He also pledged that India would meet half of its needs. energies with renewables by 2030, bolstering a previous plan that called for solar capacity to triple to nearly 300 gigawatts over the next decade, or about 40% of what the whole world has installed currently.
Challenging China in solar is risky, both for manufacturers and for countries’ ambitious renewable energy goals. China currently manufactures up to three-quarters of the ingredients the world needs for its solar panels, from raw polysilicon to the ubiquitous black panels themselves, according to estimates by energy consulting firm Wood Mackenzie.
Previous solar tariffs collected by India were too low and short lived to be effective. If India’s current plans go awry, costs for solar panels inside the country could skyrocket, factories could hemorrhage money, and solar developers could run out of supplies.
In the United States, some solar power makers have been pushing to increase the scope of the country’s tariffs on modules made by Chinese companies, although this effort was recently rejected by the U.S. Department of Commerce. The European Solar Energy Manufacturing Association lobbied for support and investment in the region’s economic stimulus packages; its objective is to build an industry capable of supplying three quarters of Europe’s solar needs.
India’s plans are among the most aggressive and ambitious, and the rest of the world is watching them closely, analysts say.
To boost its domestic industry, the Indian government is implementing high import tariffs for solar power and promising hundreds of millions of dollars in subsidies to companies that build factories in their country. It also bans the purchase of Chinese panels for new solar projects for at least the next few months, measures that have made it more profitable for many domestic developers like ReNew to source from home rather than buy them overseas. .
The Goldman Sachs-backed company, which went public on the Nasdaq in August, plans to have its first solar panel plant in the state of Gujarat by the end of next year. He also asked for $ 260 million in aid from the Indian government to expand into manufacturing the fine polysilicon wafers that go into these panels.
India’s efforts have gained momentum in recent months, after the Covid-19 pandemic pushed up freight and raw material costs, delaying the construction of solar power plants and increasing the cost of importing solar products.
âWe would like to control the supply chain,â said Manoj Upadhyay, CEO of Acme Solar Holdings Ltd., a large Indian solar developer offering to invest in panel manufacturing facilities.
Meanwhile, relations with China have deteriorated sharply following a border skirmish last year that killed at least 20 Indians and four Chinese soldiers. When the Indian government launched a self-sufficiency campaign in the middle of last year to encourage domestic industry, solar power was one of the targets.
“After seeing what happened during the pandemic, it becomes imperative that we become self-sufficient in this area,” said Vijay Kumar Saraswat, member of NITI Aayog, a government think tank developing policies to support solar manufacturing. .
Some companies are going into manufacturing in India because of the tariffs the country is lifting, which will increase the cost of imported panels by 40%. The American manufacturer First Solar Inc.
saw an opportunity in India’s expected huge demand for solar power, but calculated it would be taken off the market if it didn’t open a factory there. In July, he announced plans for a $ 684 million, 3.3 gigawatt plant in Tamil Nadu. Most of that will be funded by a loan from the US International Development Finance Corporation, the development agency said last week.
âIf we wanted to deal with India as a market, it would have been impossible with rights,â said Mark Widmar, CEO of First Solar.
More than a dozen companies have asked for help from the Indian government to build around 19 gigawatts of solar panel capacity by 2023, in addition to around 10 gigawatts currently, according to clean energy consultant Mercom Capital Group. They plan for an additional 34 gigawatts of capacity to manufacture polysilicon and other building blocks for these panels, a move that could put India in control of the entire solar supply chain.
Among the candidates are Coal India, a state-controlled company Ltd.
, one of the largest coal producers in the world, the conglomerate Adani Group and Reliance Industries,
whose CEO and India’s richest man Mukesh Ambani announced in June a plan to invest $ 10 billion in a green energy complex.
But as other countries, including the United States, have discovered, it is difficult to launch a domestic solar industry that can compete with China, which supports its solar producers with cheap electricity and others. advantages.
China had around 240 gigawatts of solar panel manufacturing capacity in 2020, according to Wood Mackenzie estimates, nearly 10 times what India is expected to have when its round of government-backed factory builds is completed.
âThe Chinese have been very aggressive in terms of scale, technological development and price and it’s really hard to compete with them. So why would you want to? said Tim Buckley, who tracks energy financing in South Asia at the nonprofit Institute for Energy Economics and Financial Analysis. âYou are fighting with, indeed, the Chinese government. “
Write to Phred Dvorak at [email protected]
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