New Delhi [India], January 8 (ANI): India's solar sector is poised for exponential growth over the next decade, as the country aims to reach 500GW of renewable energy capacity by 2030. A report by Kotak Institutional Equities says that India's solar energy capacity will reach 214 GW by 2030 from 82GW now.
Solar capacity addition will be driven by PM Surya Muft Bijli Yojana (rooftop solar), PM-KUSUM scheme (solar pumps), captive industrial additions and utility level additions.
"We expect India's solar capacity to reach 214GW by FY2030 from 82GW in FY2024, driven by (1) utility level additions, (2) rooftop solar, (3) solar pumps and (4) captive industrial addition." says the report
India's total energy capacity addition is expected to reach 641GW by FY2030 from 442GW, as of FY2024. The report estimates that approximately 66% of the incremental addition will come from solar energy.
India has 70GW of installed capacity of solar modules and 7GW of solar cell capacity, as of FY2024. Solar cell capacity worth 84GW is expected to be added over the next three years. However, given the longer lead time requirement the actual capacity could be substantially lower than what has been announced.
With the government's focus on renewable energy additions, India's installed capacity will double over the next 11 years and 90 per cent of the incremental addition will come from renewables. Additionally, any pickup in the National Green Hydrogen Mission will provide a further upside to the demand estimates.
The measures taken by the union government like multiple trade and non-trade barriers and production-linked incentive (PLI) schemes have benefitted increased domestic production of solar cells and modules by Indian solar manufacturing companies.
Similarly, the imposition of 50 per cent tariffs on Chinese solar imports by US and the implementation of the Uyghur Forced Labor Prevention Act in June 2022 (UFLP Act) have an impact.
These measures have been key to the Indian solar manufacturing sector's exponential growth. Sustenance of such policies over the medium term is key to ensuring the scaling up of the industry
The report adds that on evaluating the unit economics and return profile of the current seven manufacturing options available to the Indian companies, near margins and return profiles are attractive across most categories.
The current valuation of Indian solar manufacturing companies implies that the sector will continue to see exponential growth over the medium term. However, with large capacity expansion plans announced by many players over the medium term, the margins and return ratio will normalize in future.
But over the medium term integrated Indian manufacturers (from ingot to module) and companies with local US manufacturing presence will have superior profitability and higher utilization.
The report however cautioned that over-capacity will remain a key risk for the Indian Solar Industry. "We expect heightened competitive intensity to start impacting margins from 2028". Says the report (ANI)