The draft amendment to the Approved List of Models and Manufacturers (ALMM) Order issued by the Ministry of New and Renewable Energy (MNRE) will help boost domestic manufacturing of solar photovoltaic (PV) cells substantially in years to come.
As per the draft, the government will introduce a List-II of approved solar PV cells. Effective April 1, 2026, all projects will need to source modules from List-I, manufactured using cells sourced from List-II. Indeed, tenders submitted after the final order must use List-II cells, and existing modules on List-I must comply with List-II requirements by April 1, 2026, or risk being delisted.
Currently, India’s domestic cell manufacturing capacity is insufficient to support domestic demand, resulting in heavy dependence on imports. According to recent data, cell imports were up 13% on-quarter in the Q2 2024. Of the imports, China accounted for 94%, followed by Vietnam (3%) and Cambodia (2%). China and Southeast Asia import prices averaged around USD 0.047/W and USD 0.13/W, respectively. The reliance on imports highlights the need for India to develop its domestic cell manufacturing capacity.
Figure: Solar cells – import volume and prices
Source: Bridge to India – CRISIL MI&A Research
Note: 1. *CIF prices
2. Imports data is based on the sample data that may be subset of the total quantum.
Meanwhile, the technology for solar cells is in a significant transition. In 2023, N-type TOPCon (Tunnel Oxide Passivated Contact) cells accounted for 52% of global shipments, surpassing the PERC (Passivated Emitter and Rear Contact) technology. TOPCon offers higher efficiency (22.3-22.8%), better bifaciality (80% versus 70%), and a better temperature coefficient than PERC. As TOPCon scales up, PERC is expected to be phased out by 2028. The price gap between Chinese PERC and TOPCon modules has narrowed to USD 0.01/Wp, making TOPCon a more attractive option.
Of the 94 listed entities under the ALMM Order List-I, 13 manufacturers offer TOPCon modules and, as on August 28, 2024, over half of these have integrated TOPCon cell manufacturing. Hence, the amendment to the ALMM Order is expected to safeguard domestic investment commitments for solar cell manufacturing. However, given the shift towards TOPCon, more manufacturers need to upgrade from P-Type to N-Type cell manufacturing to ensure that the industry’s technological ask is met.
As of June 2024, India’s domestic cell capacity was 7.5 GW, with an expected 32 GW to be added by the end of fiscal 2026. The module-manufacturing capacity, on the other hand, was much higher at 71 GW as of June 2024. This indicates a transient mismatch between solar cell and module manufacturing capacities until the cell manufacturing base scales up. Having said that, imported cell-based modules will remain lucrative compared with producing from an export perspective.
Domestic mono-crystalline solar modules utilise imported cells and are priced around USD 0.14 per watt – a 50% premium compared with imported modules. Modules that use domestic cells are expected to be even more expensive, with prices at least 50% higher than those using imported cells. Therefore, until sufficient domestic manufacturing capacity is established, the use of domestic modules with domestic cells could lead to a significant increase in domestic tariffs by around INR 0.30 to INR 0.75 per unit.
The government’s mandate for domestically manufactured solar PV cells aims to reduce import dependence and foster local production, while ensuring quality of the cells and reliability of manufacturers. While the transition may pose some challenges, including a potential increase in domestic tariffs, the long-term benefits of a robust domestic industry will outweigh the costs. With significant cell capacity addition expected in the next two years, India’s domestic market will be well-served, while module production using imported cells can continue to cater to the export markets.
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