Solar module manufacturing could become unviable for smaller players due to oversupply

ahmedabad

As India aims to double production capacity to 165 gigawatts (GW) by 202, the country’s solar module manufacturing could enter a dreaded “oversupply” zone, experts and manufacturers say. It is expected to be so high that it will be impossible for small businesses to operate.

At the end of FY24, India had 70 GW of installed solar module manufacturing capacity. This segment is currently led by Waaree Energies (13 GW), Vikram Solar (4 GW), Renew Power (6 GW), Mundra Solar (4 GW), Premier Energies (4 GW) and Saatvik Green Energy Pvt Ltd (4 GW). I am leading. Among other things. Over the next three years, i.e. by 2027, this capacity is expected to double to more than 165 GW.

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Experts believe that India is entering the ‘oversupply zone’ as far as solar module manufacturing is concerned. “Rapid capacity additions expected between 2025 and 2027 raise concerns of oversupply in the solar PV market. Aggressive expansion will outpace actual energy demand growth, leading to excess capacity.” “While oversupply could drive down prices and accelerate adoption, it could also pose challenges to profitability and maintaining market balance, especially for smaller companies in this sector.” Dastur Energy, a company that conceptualizes, designs and develops clean energy said Atanu Mukherjee, CEO. Migration and carbon management solutions.

“In an oversupply scenario, the competitive dynamics of the market could change in favor of larger and more resourceful players. Due to their market position, smaller companies are constrained by higher operating costs and limited resources to maintain operations and gain market share. “It can be difficult to maintain,” he added.

Expected additions from 2025 to 2027 led by Reliance Industries (20GW), Waaree Energies (20GW), Vikram Solar (15GW), Renew Power (12GW), Premier Energies (10GW) and Mundra Solar (10GW) Fees when setting the solar module capacity. A recent report from Kotak Institutional Equities says, “With 90 GW of solar module capacity additions already announced (by manufacturers), module manufacturing capacity is entering the oversupply zone. We believe this could make it difficult for some small businesses to operate.”

“An analysis of leading solar companies in China and the United States shows that Chinese companies are the largest and most vertically integrated, but their margins are affected by excess capacity and the benefits of vertical integration are diminished. Offsetting this, we find that realization rates are at record lows.”Indian companies currently benefit from trade and non-trade barriers, along with reduced production capacity, but large-scale capacity expansion by Indian companies across the board. could lead to a similar situation locally,” the report added.

India’s solar module manufacturing capacity witnessed a phenomenal increase from 4.2 GW to 39.5 GW by the end of FY2023 at a CAGR of 45.3%.

India’s solar module manufacturing capacity has increased tremendously from 4.2GW in FY23 to 39.5GW in FY2017, with a CAGR of 45.3%.

Capacity was further increased to 70GW in FY2014. Ahmedabad-based Grew Energy Pvt Ltd plans to set up a facility with a capacity of over 4GW to manufacture solar modules, but feels that smaller companies will face challenges in terms of increased competition and access to raw materials. There is.

“Small companies in the solar module space may face challenges. Large manufacturers with economies of scale and better access to capital may be able to beat smaller companies on price and efficiency. Second, small manufacturers can get better deals due to their larger production volumes. They may have a hard time securing raw materials at competitive prices compared to the larger companies they can negotiate with,” said the CEO of Glu Energy, the solar energy arm of the Gujarat-based Chilipal Group. Vinay Thadani, CEO and Director, said: .

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Solar module makers feel there are still opportunities for smaller companies if they can differentiate themselves through innovation, niche markets, and a focus on quality over quantity. Prashant Mathur, CEO, Saatvik Green Energy Ltd. As business competition increases, companies that focus on efficiency, product quality, and customer-centric solutions will thrive. Small manufacturers may be able to develop collaborations, advanced technologies, or specialized markets such as rooftop solar and hybrid systems to ensure their relevance and profitability. Expanding the solar power sector is a collective effort. Rather than fearing competition, companies need to embrace agility, invest in innovation and align their strategies with India’s long-term sustainability goals. ”

“Targeted subsidies, access to affordable financing, and tax incentives can help small manufacturers stay competitive,” said Atanu Mukherjee of Dastur Energy. “These measures can offset cost disadvantages and encourage innovation,” he added.