SOPS FOR SOLAR MANUFACTURING

Today, 26 February 2025 I read a news item in the New Indian Express that the government is considering introducing incentive for domestic manufacturing of solar PV equipment.  MNRE is in discussion with “stakeholders” for incentivising domestic manufacturing of polysilicon, ingots and wafers to reduce dependence on Chinese solar manufacturing “equipment”.

As per the Ministry of New and Renewable Energy, the government is in discussions with the stakeholders regarding incentivisation of domestic manufacturing of ingots, wafers, and polysilicon. This move aims to reduce the country's dependence on Chinese solar manufacturing “equipment”.  Government is planning to provide incentives of $ one billion capital subsidy to strengthening its solar manufacturing industry of wafers and ingots which are among the weakest segments of India’s solar industry.  The plan is expected to be presented to the cabinet committee soon. A report by the Global Trade Research Initiative (GTRI), published in October 2024, said India, like the US and European Union (EU), is reliant on China for its solar industry. The report said China's export curbs on critical solar production equipment, introduced in January, have made it even more challenging for solar cell manufacturing units.

I was perturbed a lot by this news.  First we all know that the government introduced PLI scheme for solar manufacturing first in 2019 and a second tranche in 2021 for giving production incentives for manufacture of polysilicon, ingots, wafers, cells and modules and identified three entities for implementation of fully integrated plant for producing poly, ingots and wafers which would be converted to cells and modules.  These entities were supposed to put up their facilities by next year and start producing polysilicon to modules of 10 GW capacities each.  However, from the above news it appears that no efforts have been made by them in this direction.  (I had read that Adani Solar had successfully commissioned a 2 GW ingot growth and wafer slicing facility as a first step to achieve their target of 10 GW by next year.  The equipment for these facilities was imported from China).  When the PLI scheme was announced, I had felt that this may not be adequate as the entities were expected to make full investments and establish the production facilities.  They would get the government incentives only when they start producing poly, ingots, wafers cells and modules.  This means that the entities have to be bold enough to make investments first and then wait for governmental incentives.  With the uncertainty in governmental policy decisions which could change if there is a change in the government or other pressures, I had thought that actual investments would not be forthcoming.  The Chinese have also played havoc in that they have put up huge capacities at each stage and have flooded the market with cheap products with prices many times lower than their own cost of production just to smother attempts outside China to enter these areas. Even in the United States where the government had assured generous capital subsidy, till now there is no capacity established for producing ingots and wafers though there is a noticeable increase in capacity for modules manufacture because US government is insisting on local production.  The same story exists in our country also as the government has specified use of locally produced modules in their schemes which they are now extending to cells also.

To encourage local manufacture, a few years back government levied duties on import of modules.  However, the local producers could not meet the demand and hence, many projects could not be implemented.  Moreover, the cost of projects and therefore the cost of electricity generated shot up. This forced the government to reduce import duties to meet commitment of having 50% of green energy by 2030.  Thus, there is uncertainty about the protection that the government can give to local manufacturers to establish capacities by announcing incentivisation like the PLI scheme or the present capital incentive.  Thus there is so much uncertainty in the country for establishing local manufacturing.   It is now well established that Indian industrialists are pusillanimous.  All these years we have seen big announcements made by many including big industrial houses for establishing mega projects for solar PV.  However, till now no facilities have been established.  I have become a pessimist and firmly believe that whatever the government announces and promises, nobody would come forward to invest in Solar PV.  Our ambition of becoming Atmanirbhar in PV materials will not fructify.  The Chinese are also using all their vile scheming to prevent local manufacture.

Some terms used in the present announcement are also confusing.  Thus, there is a mention of MNRE discussing with “stakeholders” about incentivising local PV production. I wonder who these stakeholders are.  There can be many stakeholders starting from investors, suppliers of equipment, raw materials, consumables, plant owners and managers including workers, local governments and utilities owners, buyers of products etc. etc.  So, with whom is MNRE discussing. For all that we know even Chinese will be stakeholders and they may have to be consulted!  The present distrust that we have with the Chinese makes the situation further difficult.  I may recall here that Saudi Arabia and Oman have announced that they will put up huge polysilicon factories in collaboration with the Chinese.  We cannot imagine such collaborations in our country with the government not allowing Chinese investments in the country.

Again, when the announcement says “equipment” does this mean capital equipment (like polysilicon CVD reactors, crystal growing furnaces and wire saws) or modules and downstream balance of equipment?  I think that it is production equipment that is meant here.  We know that the Chinese are having hegemony in production of capital equipment like CVD reactors, crystal growing furnaces, wire saws and the various consumables required in the manufacture.  Today’s announcement states that  China's export curbs on critical solar production equipment, introduced in January, have made it even more challenging for solar cell manufacturing units.  This means that they will not supply all the above equipment to India and others who want to produce polysilicon, ingots and wafers.  In such a scenario, the question is how this challenge is to be tackled.

I had written about this perplexing scenario almost a year back in my article here: https://www.linkedin.com/pulse/nurturing-indian-silicon-photovoltaic-material-against-h-s-hgspc/?trackingId=GmlLJfo3Ki%2Baa0wL%2FEUGOw%3D%3D.  I had suggested “The Government should also form a technical committee comprising industrial leaders, technocrats, experts in silicon from India and abroad and academics (no bureaucrats!) to monitor the developments in the field and give timely suggestions. This committee should also set up an R & D facility to study all aspects of silicon manufacture, particularly, poly, ingots, wafers and cells which are the most expensive stages of manufacture.”

I think my pleas are falling on deaf ears.  I have hands on knowledge of silicon production.  So far no body has approached me to help the country in this endeavour.  If somebody asks me I would suggest that the one billion dollar that the government plans to give as incentive should be spent on a dedicated national silicon facility NSF which will develop technologies and equipment for the PV industry.   Though it would be owned by the government, it should be administered by a set of professionals selected from industries who have a stake in this field be it equipment manufacturers, chemical equipment specialists, special purpose machine manufacturers, vacuum equipment manufacturers, electrical, electronics, mechanical and control specialists and the like whose task is to make equipment required for various stages of silicon wafer manufacture in the country.  NSF would also be tasked to establish production facilities for silicon material starting from polysilicon through ingots and wafers and the raw materials and consumables required for production.  It should seek help from experts in the country and abroad in achieving its goals. It should be run as a mission with rigid targets and deadlines.