Ahmedabad
The business is anticipated to become unprofitable for smaller players as India’s solar module production is probably going to enter the dreaded “oversupply” zone because the country goals to double its capability to 165 gigawatts (GW) by 202, experts and manufacturers say.
At the tip of FY24, India had an installed solar module capability of 70 GW. This segment is currently led by Waaree Energies (13 GW), Vikram Solar (4 GW), Renew Power (6 GW), Mundra Solar (4 GW), Premier Energies (4 GW), Saatvik Green Energy Pvt Ltd (4 GW) amongst others. Over the following three years, i.e. by 2027, this capability is anticipated to double and reach over 165 GW.
Aggressive expansion
Experts imagine that India is entering an “oversupply zone” when it comes to the production of solar modules. “The rapid increase in power expected in 2025–2027 raises the specter of oversupply in the solar energy market. Aggressive expansion may outpace actual increases in energy demand, leading to excess capacity. While oversupply can depress prices and accelerate adoption, it can also create challenges in maintaining profitability and market balance, especially for smaller players in the segment,” says Atanu Mukherjee, CEO of Dastur Energy, an organization that conceptualizes, designs and develops clean energy solutions in the sector of coal transformation and management.
“In an oversupply scenario, market competitive dynamics may shift in favor of larger, more resourceful players. Thanks to economies of scale, advanced production capabilities and stronger market positions, these companies can exert significant price pressure. “Smaller players, constrained by higher operating costs and limited resources, may find it difficult to sustain their operations and maintain market share,” he added.
In 2025-27, Reliance Industries (20 GW), Waaree Energies (20 GW), Vikram Solar (15 GW), Renew Power (12 GW), Premier Energies (10 GW) and Mundra Solar (10 GW) are expected to lead GW). fee for setting additional power of photovoltaic modules. “With manufacturers announcing an additional 90 GW of solar module capacity, we believe module production capacity is heading into an oversupply zone, potentially making the business less profitable for some smaller players,” a recent report by Kotak Institutional Equities said.
“By analyzing major Chinese and U.S. solar companies, we find that Chinese companies have the largest scale and are the most vertically integrated, but their margins are impacted by excess capacity, which offsets any benefits from vertical integration and has led to record low realizations. While Indian companies are currently benefiting from trade and non-trade barriers and lower production capacity, large capacity expansion by all Indian players could lead to a similar situation locally,” the report added.
India’s solar module manufacturing capability has witnessed phenomenal growth from 4.2 GW to 39.5 GW at the tip of FY2023, at a CAGR of 45.3 percent
Solar module manufacturing capability in India has witnessed phenomenal growth to 39.5 GW in FY17 from 4.2 GW in FY23, at a CAGR of 45.3%.
In FY24, power output increased further to 70 GW. Ahmedabad-based Grew Energy Pvt Ltd, which plans to arrange plants with a solar module capability of over 4 GW, believes smaller players will face challenges due to increased competition and access to raw materials.
“Smaller players within the solar module segment may face challenges. Larger producers with economies of scale and higher access to capital can compete with smaller players on price and performance. Secondly, smaller producers may find it difficult to secure raw materials at competitive prices compared to larger players who can negotiate higher deals due to larger volumes,” says Vinay Thadani, CEO and director at Grew Energy, a Chiripal Group company based in Gujarat solar energy company.
A collective journey
Solar module manufacturers imagine there’ll still be opportunities for smaller players in the event that they differentiate themselves with innovation, area of interest markets and a give attention to quality over quantity. Prashant Mathur, CEO, Saatvik Green Energy Ltd: “For smaller players in the solar module segment, the evolving landscape creates challenges but also opens doors for innovation and niche opportunities. As operations become increasingly competitive, players with a strong emphasis on efficiency, product quality and customer-centric solutions will thrive. Smaller manufacturers could establish partnerships, advanced technologies or specialized markets such as rooftop solar or hybrid systems, ensuring their suitability and profitability. The expansion of the solar energy sector is a collective journey. Instead of being intimidated by competition, companies should embrace agility, invest in innovation and align their strategies with India’s long-term sustainability goals.”
“Targeted subsidies, access to affordable financing and tax incentives can help smaller producers remain competitive,” said Atanu Mukherjee of Dastur Energy. “These measures can offset unfavorable costs and encourage innovation,” he added.
