Solar module availability and affordability issues persist after ALMM reinstatement: Industry, ET EnergyWorld

Mumbai: Two months after the restoration of the Approved List of Models and Manufacturers (ALMM), issues with availability and affordability of solar modules persist, industry players said.

“It has been two months since the ALMM reversal and the challenges related to availability and affordability still persist. On average, the cost of N-type DCR modules in the domestic market is around Rs 22 per Wp (watt peak) for a module size of 545-550 Wp, while non-DCR modules that use Chinese cells cost around Rs 15,” said Sarthak Sengupta, Head of Procurement, Amplus Solar ETEnergyWorld.

He added that the imported modules, even after adding the basic customs duty of 44 per cent and surcharge, cost an average of Rs 12 crore, while the availability and affordability of N-Type/Topcon modules is an even bigger challenge.

According to Ashish Agarwal, head of solar at BluPine Energy, it is too early to comment on the impact of the reinstatement of ALMM on domestic supplies and prices as the deadline passed two months ago.

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“However, during these two months, we have seen a significant increase in the number of orders received by domestic module manufacturers. Suppliers are already saying that if future production capacity is not locked down soon, they may not be able to deliver on time as their factories are fully booked,” he added.

The government has reinstated the Approved Model and Manufacturer List (ALMM) effective April 1, 2024. The policy applies to all projects except utility projects for which power purchase agreements were signed before July 2021 and behind-the-meter projects.

With the reinstatement of the ALMM, solar companies will be required to source modules from domestic manufacturers registered under the ALMM.

According to Vikram V, vice president and joint head of corporate ratings at ICRA, the cost of sourcing modules from domestic OEMs using imported solar cells will be around Rs 19-20 cents per watt.

“This remains relatively high compared to the cost of imported modules of 15 cents/watt (after import duty). However, the feasibility of solar power projects using modules from domestic OEMs remains sufficient, given the prevailing tender tariff of Rs 2.5-2.7 per unit,” Vikram added.

Apart from the increase in project costs, the unavailability of modules in the domestic market has a direct impact on working capital costs, added Sengupta of Amplus Solar.

“Suppliers are reluctant to commit to more than 20-25 MW of modules at a time, and this confidence has not yet been practically tested. When larger projects require 200-300 MW of modules, we are forced to use three to four different suppliers and endure long lead times for availability. This not only increases the project cost but also affects the project schedule,” he said.

He added that the current challenges related to the availability of competitively priced, more efficient photovoltaic modules under the ALMM system will likely have a negative impact on the development plans for solar-based renewable energy sources, especially in the C&I segment.

BluPine Energy’s Agarwal said that compared to Chinese manufacturers, the performance of domestic OEMs is not on par with the Chinese ones and that in some areas, such as manufacturing processes and quality control, they are still not far behind.

He added that there are no significant efficiency issues when it comes to module manufacturing. He said the ecosystem in India has been in existence for almost 20 to 30 years and companies like BHEL, BEL have been manufacturing modules for almost two decades.

“Even private sector players have been in the industry for over 10 to 15 years. So, I don’t see any major challenges here. However, the volumes are not that high and the processes are nascent, but they will be sorted out once the market improves,” he said.

Many Indian manufacturers not only supply the Indian market but also export their products to European and American markets.

India has exported modules worth $1.8 billion by 2023. Despite the rush by Indian developers to buy modules from China, Indian module manufacturers still managed to export modules worth $1.8 billion off-site, reflecting their quality and capabilities, he added.

Ashish Kumar Saxena, purchasing director at AMPIN Energy Transition, said there is still a significant gap between module and solar cell production, which requires continued reliance on imports from China for solar cells. While most of the bills of materials (BOMs) for production are also imported from China, due to price and quality considerations.

“Despite using the same raw materials, the toll and conversion costs of cells into modules in India are still high. As a result, domestically produced modules are 7 to 8 per cent more expensive than imported ones,” Saxena said.

He added that most OEMs in India are currently producing P-type PERC modules, while N-type modules are still in the stabilization phase.

“Indian OEMs face challenges in meeting global quality standards as continuous process improvements are needed to meet international standards,” he said.

Major photovoltaic cell manufacturers such as China’s Longi and Jinko have shown interest in setting up manufacturing plants in India.

“To bridge the huge demand-supply gap in domestic production, there is a need to significantly increase volumes, which continues to be a major challenge, and achieving the required scale and stabilising it at the international level without charging unrealistic premiums seems like a distant goal, especially in the roofing segment,” Sengupta said.

The government continues to support efforts to expand domestic production capacity. However, this support should not interfere with meeting annual targets for increasing renewable energy capacity, he added.

“Until domestic production meets the expected standards and is able to produce advanced modules, we need to reassess the issue of reviving ALMM, at least in the private PPA market where consumers face space and cost constraints,” he said.

BluPine Energy’s Agarwal said that in preparation for the ALMM, the company began purchasing domestic modules last year.

“While there were some issues with the initial batches, deliveries have since become fairly consistent. We no longer have any quality or delivery issues from domestic OEMs. So we are hopeful that as production ramps up, this issue will disappear,” he added.

According to a government press release dated February 5, 2024, the installed production capacity of solar modules in the country is about 50 GW. The installed production capacity of solar cells is about 6 GW.

He added that in the last five years, the country has imported solar cells and modules worth $11,171 million, which is about 0.4 per cent of India’s total merchandise imports during the same period.

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