According to reports, Adani Green Energy has deferred its plans for manufacturing polysilicon, the basic material of solar panels and modules, in absence of promised incentives from the government.
Adani’s 1,200 MW panel-cum-module manufacturing unit is the largest in the country but is facing a huge hurdle. “The module manufacturing unit is running at only 40% capacity because of lack of demand,” said a person close to the development. “All the investment has been made,” said the source. “The company is fully committed to manufacturing polysilicon and a team of 3,500 will be directly responsible for it. But production cannot start unless there is clarity from the government on how the capacity we produce will be absorbed.”
About a year ago, Adani Green Energy had announced that it would take up making polysilicon once its solar module manufacturing unit was complete. However, the scale of polysilicon manufacturing already achieved in countries such as China and Malaysia would make local production uncompetitive, unless supported by incentives and subsidy.
For more than a year now, the government “has been saying it will come out with a scheme for PSUs to buy locally-made capacity for their solar projects, but nothing has been done. There is no clarity on policy,” said the source. “The second phase of Adani Green’s solar manufacturing programme has been put on hold,” the source said. “We don’t know when it will start.” Adani Green Energy declined to comment.
So far, polysilicon is not manufactured in India at all, but imported, which makes locally-produced solar modules significantly more expensive and less popular. Barely 10-12% of the modules developers use are local, though India has embarked on an ambitious solar energy programme, with a target of 100,000 MW of capacity by 2022. India’s total module manufacturing capacity is estimated at 5,286 MW at present. Initially, the government had sought to encourage local solar manufacturing.
Separate domestic content requirement (DCR) auctions were held, where projects were awarded at tariffs much higher than at regular auctions. However, with the World Trade Organization (WTO) upholding a US complaint against this practice last year, DCR auctions are hardly held. “DCR auctions are being cancelled left and right,” the person quoted above said.