IEEFA and JMK report looks at the growing interest among Indian PV manufacturers in the US market
Exports to the US continue to increase as 99% of exports from Indian PV companies in FY 2024 went to the North American nation
This trend is likely to grow according to the report, but it should not create a scarcity in the domestic market
A new research report from the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics says that India has the potential to replace Southeast Asian countries to become the leading PV exporting country to the US.
Analysts of the report titled Indian Solar PV Exports Surging provide numbers to back up their theory. In FY 2024, Indian PV manufacturers exported close to $2 billion worth of PV modules. Of this, 99% were shipped to the US market. In FY 2023, 97% went to the US. This was primarily due to lower domestic demand thanks to the delayed implementation of the Approved List of Models and Manufacturers (ALMM).
What also helps the Indian manufacturers is the US government’s tariffs on Chinese PV products, likely to be extended to those being exported by Chinese companies from Southeast Asia. India’s prospects of establishing itself as a leader in PV exports to the US are bright since the SEA nations of Vietnam, Cambodia, Malaysia and Thailand currently account for more than 3/4th of the US’ annual PV requirements.
Additionally, the report writers point out that PV manufacturing capacities planned under the US Inflation Reduction Act (IRA) are experiencing delays and may not materialize.
India is now transitioning from being a net importer to a net exporter of PV modules as its export value increased by more than 23 times between FY 2022 and FY 2024, according to the report writers.
It is not just the US; Indian manufacturers are moving beyond capturing more solar markets globally including South Africa, Somalia, Kenya, the UAE, Afghanistan, Nepal and Bangladesh.
Interest in export markets is growing among Indian companies as more PV manufacturers like Grew Energy, ReNew Power, Navitas Solar, Solex Energy, and Saatvik Solar are setting up supply chains abroad, beyond the 3 biggest ones, namely Waaree Energies, Adani Solar, and Vikram Solar. The 3 biggies exported more than half of their actual production in FY 2024. Some of these names are also planning to start PV manufacturing plants in the US.
Post COVID-19, several countries are taking a China Plus One approach and consider India as a viable option. This is an opportunity that Indian companies can exploit to diversify their revenue base and sell their products at a higher premium abroad.
“Despite increased logistics expenses, domestic manufacturers can achieve approximately 40-60% higher profit margins on PV module sales in developed nations like the US than in India,” reads the report. The Indian government can facilitate this by entering trade agreements with certain countries to ensure long-term offtake of Indian PV products.
Going forward, the report writers expect the annual module production of the Indian PV manufacturers in FY 2025 and FY 2026 to be 28 GW and 35 GW, respectively.
“After accounting for exports, the resultant supply by Indian PV manufacturers in the next two years will be only 21GW and 25GW, respectively, which is less than the requirement of approximately 30GW per annum to meet India’s 2030 renewable energy target,” it adds.
As exports bring in a premium for Indian PV manufacturers, the report writers caution that the demand and supply gap may impact distributed energy projects in India. This will also impact solar module prices, which is crucial for the sustenance of the residential rooftop solar segment.
The report adds, “Second, to truly establish the country as a global manufacturing hub in the long run, Indian PV manufacturers must focus on upstream backward integration. The government can facilitate this by increasing the incentives for manufacturing upstream PV components, such as cells, wafers, ingots and polysilicon. Rather than a combined production-linked incentive for integrated PV production, it should be delinked and disbursed separately for stage-wise production output.”
The complete report is available for free download on IEEFA’s website.