Challenges for Solar Energy Production

Why in news?

Recently, India made a remarkable progress in its clean energy transition by achieving 50% of its installed electricity capacity from non-fossil fuel sources five years ahead of its 2030 target under the Paris Agreement.

What is solar energy?

• Definition – Solar energy is a renewable and sustainable form of power derived from the radiant energy of the sun.
• Technology used – Photovoltaic cells and solar thermal systems.
• Photovoltaic (pv) cells – It convert sunlight directly into electricity by utilizing the photoelectric effect.

What are the challenges for India?

• Dependent on imports – India depends on imports for nearly 80% of its solar equipment.
• China’s dominance – India still relies on China for over 50% of its solar cells and modules,
• India also sources from Southeast Asian partners such as Vietnam and Malaysia which also often rely on Chinese raw materials like polysilicon and wafers.

• Lack of capacity – It lacks manufacturing strength in components like polysilicon and ingots, and efforts to build local capacity.
• Insufficient policies – The Production Linked Incentive (PLI) scheme  still heavily rely on Chinese equipment suppliers.
  • One Indian solar company lists all seventeen of its supply chain partners as Chinese firms.
• Outdated technology – Indian manufacturers had the capacity to produce only 3 GW of solar cells and 9-10 GW of solar panels, far below the country’s needs.
• High production cost – India’s higher energy costs and lower labour productivity makes solar module manufacturing more expensive in the country.
• Unintentional consequences – National Solar Mission accidentally incentivised reliance on cheaper imports over supporting domestic manufacturing.
• Lack of global support – Government support manufacturers through the Domestic Content Requirement and safeguard duties.
• But it has faced challenges including World Trade Organization disputes and practical implementation issues, leading to inconsistent support.

How India can diversify its supply chains?

• Strengthening domestic manufacturing – India needs to develop an integrated manufacturing supply chain from silica mining to module assembly to achieve true self-reliance.
• Robust policy support & investment – Government-assisted projects to source India-made modules, is another vital step.
• These efforts require consistent, long-term planning and sufficient funding, especially for capital-intensive upstream production.
• Diversifying international cooperation – India should actively seek collaborations with a variety of partners, such as the United States, European Union, and Japan.
  • For instance, the US Development Finance Corporation has already lent nearly $1 billion for solar cell and module production in India but diplomatic tensions delayed it.
• These partnerships can offer concessional financing, advanced technologies and expertise moving beyond simple reliance on a single source.
  • For example, green hydrogen, offshore wind technology can be applied from other nations.
• Research and development – Investment in domestic R&D is also vital for technological self-reliance and global competitiveness.
• Strategic balancing – The non-aligned foreign policy of India can be leveraged to strategically engage with both the US and China.

What lies ahead?

• Balancing affordability with innovation could be done to serve national interests without succumbing to external pressures.
• More strategic approach could allow India to capitalise on the competitive aspects of US-China climate policies to negotiate mutually beneficial terms.

Reference

Down to Earth| India’s Solar Energy Strategy