Indian Solar Module Makers Must Revise Cost and Become Competitive: Interview
Growing Scale Conducive to India Developing Indigenous Solar Module Tech
May 12, 2023
With expanding scale of domestic module manufacturing, the industry is incentivized to develop indigenous technologies and know-how, which China currently dominates, Puneet Gupta, Chief Technology Officer at Adani Solar, commented on the sidelines of the Mercom India Renewable Summit 2023.
Gupta added that Indian module manufacturers need to reduce their costs to sustain the current surge in exports to the U.S., primarily driven by the extant geopolitical circumstances.
Below are some excerpts from the interview.
What is the current solar module manufacturing capability of Adani Solar?
Currently, we have about 4 GW of module manufacturing capacity already operating. And out of that, 2 GW was created specifically for PERC and 2 GW for TOPCon.
There isn’t much difference between the two technologies in terms of module-making. So, we are utilizing the 2 GW TOPCon module facility right now to make PERC modules.
And once our cell line is ready by the end of the year, we will convert it to start making TOPCon modules.
So, by the end of the year, we will have 2 GW each of PERC and TOPCon module capacity.
Are you also utilizing modules solely for your projects or supplying them to other developers?
We are agnostic about who uses our product as we are an independent business unit with our profit center.
So, wherever we get the highest price, we sell it. We leverage the market positions to figure out who our customers will be.
We also sell it to Adani Green Energy, but they are not the dominant customer.
Is the rising solar module exports sustainable, or is India benefiting from the current geopolitical scenario?
So, it is not that we are technologically superior. It is a utilization of the current market conditions where most of the Indian module players are tapping into the opportunity. This will change as time passes and once the U.S. starts its production.
The Indian players need to revise the cost structure and become competitive.
Technologically we are not that far behind the Chinese. On average, our module may be 5 Wp or 1 bin lower than the Chinese modules on, say, comparative PERC technology.
But cost-wise, I think most Indian players are not there yet. Indian module players must utilize the current window to ensure that the cost structure is rationalized to either compete with the Chinese in the U.S. or be able to sell in India.
What is that one big factor that is making our cost structure uncompetitive?
There is not one big factor. The process costs are okay, but the bill of materials (BOM) is where India needs to do a lot better. Once BOMs are manufactured in India, the cost will start falling.
Due to its scale, China has a massive lead in developing new cells and module technology. Can PLI change that in India’s favor?
Each company wants to spend 2-8% of its revenue on R&D. Most Indian module manufacturing companies are small. But if we consider the aggregate revenue of these companies to be, say, $20 billion in the future, then the R&D budget at 2% is a substantial amount of money. This will allow us to build a test pilot line in the facilities.
But at $20 million in revenue, the resources don’t amount to much. There is not a whole lot of module-level research.
Module technologies are more challenging to be innovated in universities. They don’t have testing facilities. It would be best to have a formal testing facility for module technologies.
Companies can do it like how we develop all our products. We develop and test them, and they go through our internal testing and verification before certification.
More prominent companies are doing this, but we are still catching up with China because the scale is much bigger there.
How much time do we need to catch up with China in developing indigenous module technology?
Companies need scale to justify the cost of R&D investment. The private sector must do more than look for government support.
University research will follow if the industry can spend dollars on R&D and push the envelope. If university research is an incremental innovation and not a breakthrough development, it is easier for the industry to adopt it.
And this is where the government continuously supports and promotes industry and university research.
The Chinese industry took off and almost killed the industry in the West because of this model. The government takes a central role and seeds it with a lot of money in the universities and companies. And then, they create this whole ecosystem to achieve the next technological frontier.
Besides the modules, India also depends on importing production lines to make these cells and modules. What can we do to become self-sufficient?
Most of these machines need a lot of spare and replacement parts and upgrades.
When you have a 100 GW ecosystem running in the country, there is enough incentive for people to build these machines.
Even big companies like Applied Materials and others are now seriously starting to think about India. India can provide equipment for the rest of the world.
Making modules in the U.S. is expensive as their operating costs are very high because module making is labor intensive. That is where the Inflation Reduction Act comes in, but manufacturing can’t be sustained if you remove the subsidy.
India can start providing capital equipment to the rest of the world because of low labor costs. So, in that framework, the Western companies that have gone out of business can come to India and manufacture module-making equipment.
Moreover, if module manufacturing takes hold in India, which is likely because of the scale, everybody will need their manufacturing upgraded in five to 10 years. Once you have achieved a 200 GW scale, you need many spare parts or even line upgrades after 5-10 years.
(Note: Sections of the interview have been paraphrased for better reading. Check out the video for a full chat)