Solar Module Manufacturing Faces Uncertain Future Amidst Oversupply Concerns.

The rapid expansion of solar module manufacturing capacity in India could render operations unviable for smaller players, with industry experts warning of a looming oversupply in the market between 2025 and 2027.

At the end of FY24, India’s installed solar module manufacturing capacity stood at 70 GW. Leading players in this space include Waaree Energies (13 GW), Vikram Solar (4 GW), Renew Power (6 GW), Mundra Solar (4 GW), Premier Energies (4 GW), and Saatvik Green Energy Pvt Ltd (4 GW). With the sector expected to double its capacity to 165 GW by 2027, concerns about market saturation have intensified.

Aggressive Expansion Raises Concerns

Experts believe India is heading into an oversupply zone in solar module manufacturing. “The rapid capacity additions anticipated between 2025 and 2027 raise the spectre of oversupply in the solar market. Aggressive expansion could outpace the actual growth in energy demand, leading to surplus capacity,” said Atanu Mukherjee, CEO of Dastur Energy, a firm specializing in clean energy transition and carbon management solutions.

Mukherjee further noted that in an oversupply scenario, larger players with economies of scale and advanced manufacturing capabilities are likely to dominate, putting immense pressure on smaller manufacturers. “Smaller players, constrained by higher operational costs and limited resources, could struggle to sustain their operations and maintain market share,” he added.

Capacity Additions by Major Players

Between 2025 and 2027, significant capacity additions are expected from industry giants like 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). According to a report by Kotak Institutional Equities, “With 90 GW of additional solar module capacity announcements already made, the market is heading into an oversupply zone, which could potentially make operations less viable for some smaller players.”

Lessons from Global Markets

Analyzing the dynamics in China and the US, the report highlights that Chinese companies, despite their vertical integration, have suffered from overcapacity, resulting in record-low realizations. Indian manufacturers currently benefit from trade barriers and lower capacity, but rapid expansion could lead to similar challenges.

India’s solar module manufacturing capacity has grown significantly over the past few years. The capacity rose from 4.2 GW in FY17 to 39.5 GW in FY23, registering a CAGR of 45.3 percent. By FY24, the capacity further increased to 70 GW.

Challenges for Smaller Players

Ahmedabad-based Grew Energy Pvt Ltd plans to set up over 4 GW of solar module manufacturing capacity. Vinay Thadani, CEO and Director of Grew Energy, expressed concerns about smaller players facing challenges in competing with larger manufacturers. “Larger manufacturers have better access to capital and raw materials, which enables them to outcompete smaller players on price and efficiency,” Thadani said.

Opportunities Through Innovation

Despite these challenges, industry leaders believe smaller players can carve out a niche by focusing on innovation and specialized markets. Prashant Mathur, CEO of Saatvik Green Energy Ltd, said, “For smaller players, the evolving landscape poses challenges but also opens doors for innovation. Players with a strong focus on efficiency, product quality, and customer-centric solutions will thrive.”

Mathur suggested that smaller manufacturers explore collaborations, advanced technologies, and niche markets like rooftop solar or hybrid systems to remain competitive.

Policy Support for Smaller Manufacturers

Atanu Mukherjee emphasized the importance of targeted subsidies, affordable financing, and tax incentives to help smaller players remain competitive. “These measures can offset cost disadvantages and encourage innovation,” he noted.

India’s solar sector is on a collective journey toward sustainability. Smaller players can survive and thrive by embracing agility, investing in innovation, and aligning their strategies with India’s long-term sustainability goals.

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