Solar module manufacturing could become unviable for smaller players due to oversupply

Ahmedabad

Operations are expected to become unviable for smaller entities, as India’s solar module manufacturing is likely to step into the dreaded “oversupply” zone, as the country targets to double its capacity to 165 Gigawatt (GW) by 202, say experts and manufacturers.

At the end of FY24 , India had 70 GW of installed solar module manufacturing capacity. This segment is currently being led by Waaree Energies (13 GW), Vikram Solar (4 GW), Renew Power (6 GW), Mundra Solar (4GW), Premier Energies (4 GW), Saatvik Green Energy Pvt Ltd (4 GW) among others. In the next three years, i.e. by 2027, this capacity is expected to double to over 165 GW.

Aggressive expansion

Experts believe that India is heading into an “oversupply zone” as far as solar module manufacturing is concerned. “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. While oversupply can drive down prices and accelerate adoption, it can also create challenges for maintaining profitability and market balance, particularly for smaller players in the segment,” says Atanu Mukherjee, CEO of Dastur Energy, a company that conceptualises, designs and develops clean energy transition and carbon management solutions.

“In an oversupply scenario, the competitive dynamics of the market could shift in favour of larger, more resourceful players. With economies of scale, advanced manufacturing capabilities, and stronger market positioning, these companies may exert significant pricing pressure. Smaller players, constrained by higher operational costs and limited resources, could struggle to sustain their operations and maintain market share,” he added.

Between 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 the charge in setting up additional solar module capacities. “With 90GW additional solar module capacity addition announcements already made (by manufacturers), we think module manufacturing capacity is heading into an oversupply zone, which could potentially make operations less viable for some smaller players,” states a recent report by Kotak Institutional Equities.

“On analysing the major Chinese and US solar companies, we find that Chinese companies have the largest scale and are most vertically integrated, but their margins are impacted due to overcapacity, which offsets any benefits of vertical integration and has led to record low realisations. While Indian companies currently enjoy benefits of trade and non-trade barriers along with lower capacity, large capacity expansions by all Indian players could lead to a similar situation locally,” the report added.

India’s solar module manufacturing capacity witnessed a phenomenal increase, from 4.2GW to 39.5GW at end-FY2023 at a CAGR of 45.3 percent

India’s solar module manufacturing capacity witnessed a phenomenal increase, to 39.5GW in FY17 from 4.2GW in FY23, at a CAGR of 45.3 per cent.

IThe capacity has further increased to 70GW in FY24. Ahmedabad-based Grew Energy Pvt Ltd, which is planning to set up facilities with over 4 GW of solar module manufacturing capacity, feels that smaller players will face challenges with regard to increased competition and access to raw materials.

“Smaller players in the solar module segment might face challenges. Larger manufacturers with economies of scale and better access to capital might outcompete smaller players on price and efficiency. Secondly, smaller manufacturers might struggle with securing raw materials at competitive prices compared to larger players who can negotiate better deals due to their higher volumes,” says Vinay Thadani, CEO and Director at Grew Energy, a solar energy arm of Gujarat-based Chiripal Group.

Collective journey

Solar module manufacturers feel that smaller players will continue to have opportunities if they differentiate themselves through innovation, niche markets, and focusing on quality over quantity. Prashant Mathur, CEO of Saatvik Green Energy Ltd, “For smaller players in the solar module segment, the evolving landscape poses challenges but also opens doors for innovation and niche opportunities. As operations become more competitive, players with a strong focus on efficiency, product quality, and customer-centric solutions will thrive. Smaller manufacturers could explore collaborations, advanced technologies, or specialised markets like rooftop solar or hybrid systems, ensuring their relevance and profitability. The solar sector’s expansion is a collective journey. Rather than 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 manufacturers remain competitive,” said Atanu Mukherjee from Dastur Energy. “These measures can offset their cost disadvantages and encourage innovation,” he added.

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