Saibaba Vutukuri, CEO, Vikram Solar expresses his views at the 2nd Edition of Conference cum Exhibition on ‘Aatmanirbhar Bharat’ – Self Reliance for Renewable Energy Manufacturing.
There is no better time than today for the solar industry as far as the manufacturing is concerned, it is clear that the solar market is going to be beyond 30 GW, maybe going up to 50 – 100GW, because fundamentally the cost of generating solar energy is the cheapest among all source of energies and it is going to come down even more due to technological and increase in efficiency.
If substantial innovations like perovskite happen, the cost of generating energy through solar can come down as low as Rs 1.50 or even lower in 5-7 years down the line. This brings in strong economic base for the industry to grow in a much larger pace. In the past 10 years India has developed in the solar market size phenomenally and increased up to 35-40 GW of solar energy capacity, however we have not done so well in development of manufacturing capacity, we still import about 85- 90 per cent including components and our value addition is about 10 – 15 per cent at the most.
In the last 10-12 years our competing countries like China have taken a different strategy and have gone into manufacturing and technology in their own market only, when the prices came down to a certain level they dumped their modules into other markets, today they are the largest single market in the world as far as solar sector is concerned, and became the largest solar manufacturer in the world with close to 100GW of manufacturing capacity. China has built the ecosystem, their large domestic market is supporting them in terms of growth of the industry and they have taken the leadership because of the huge scale.
The introduction of PLI scheme, it doesn’t mean Indian manufacturers can compete with China. India’s cost of manufacturing is competitive but input costs are very high, that makes us uncompetitive. Also, the support that the Chinese government is providing to the companies are so high that they are getting 15 per cent incentive to export from the country, free lands, free salaries to the employees for couple of years, soft loans, with those, they are able to dump their products into the markets. India need to levy 40 per cent BCD to create barrier to grow the domestic solar manufacturing market in India.
Right China is 25-30 per cent cheaper in terms of pricing compared to India and if it hits 10 per cent lower, then they will probably start dumping their modules again in India. BCD is single most important factor to help the solar manufacturing industry to grow, and the BCD has to be sustainable. India needs to bring a policy frame work, clearly defining the policy, defined measures such as ALMM, BCD, or domestic market like CPSU scheme, etc for the next 10 years or so.
The PLI is very encouraging, we appreciate Govt of India for promoting so many process in policy frame work including entry barriers, creating domestic market by positive schemes by CPSU, Solar pumps and rooftops schemes are phenomenal, but the industry want certainty for growth. It is crucial to bring in the certainty for manufacturing policy and regulations.
China has about 100GW manufacturing capacity and each chain of manufactures have about 10-15 GW of manufacturing capacity, they have also built a robust ecosystem. It will take India at least 10 years to be able to compete with China in terms of scale and technology, therefore it is very important to create entry barriers and to create domestic market for consumption.
The introduction of the PLI scheme is very important for the industry, but it gives you only 3-4 per cent benefit, it doesn’t give you a 10-20 per cent benefit. Price differential between India and China is 25-30 per cent. We need to have a debate, if vertical integration should be done among players, or each player should specialize in a single component. If we talk about China, the module is dominated by one player, the cell is dominated by another player and so on and each one of them has a scale of 25-30GW. It makes much more sense than fragmented manufacturing.
It is a great time for Indian manufacturing. We are happy about the developments at the policy front, we were waiting for 10-12 years for this. At Vikram Solar, we are building about 3-4 GW capacity in the next 2-3 years, we have already increased our capacity from 1 GW to 2 GW in the last one year, and we are doing backward integration through solar cells, wafers and ingots.
What should be the vision in terms of Indian industry competitiveness perspective? Where should India aspire to get to in the next 5-10 year, to be competitive with or without BCD, even in the export market and what has to be done?
Vikram Solar has been exporting about 20-25 per cent of our capacity to the USA for past 5-6 years, we have been able to sell to the US because of some barriers for Chinese products, and because of the barriers, the price differential is still about 5-6 per cent. We can do very well in the international market, if we get an export incentive of 6-8 per cent.
How are the panelists thinking about the technology road map, which technology they are interested and excited about? As we are making big investments in the manufacturing industry, what steps are we taking keeping in mind the technology obsolescence while planning this CapEx?
It is important to use the technology that are mainstream. There have been various technologies like direct wafers, solar paints, etc, but none of them have taken off in the past 5-10 years. The mainstream technology is crystalline silicon, which has seen an incremental efficient and no substantial or transformational efficiency as of now in this industry. The ideal root for technological advancement is crystalline silicon with N-type TOPCon in the near future and Tandem solar cell will also be an important development for the industry. Next we need to observe is perovskite as they are going to be a game changer for the solar industry. Perovskites are more conducive and compatible with crystalline silicon. Another important aspect, when it comes to modules and cells is that the life of the technology is not more than 2-3 years. The output of the modules has been increasing from 330Wp – 530Wp and there are announcements of 630-640Wp output in the solar industry. The integration and planning of Capex in the solar industry will have to be based on technological changes. It is very important from a policy point of view to have a scheme in place to make sure the companies investing in technological advancement will be able to continue their efforts.