Will India’s plans for polysilicon production get real this time?

The Indian Renewable Development Agency, the financing arm of the central government’s Ministry of New and Renewable Energy, has released a list of 18 bidders for its Production-Linked Incentive (PLI) scheme. Four applicants are each proposing a 4 GW solar factory that is fully integrated from polysilicon production through wafer, solar cell and module manufacturing: Reliance New Energy, Adani Infrastructure, Jindal India Solar and Shirdi Sai Electricals.

The PLI scheme, which was approved by the central government in April, has a budget of INR4,500 crore (US$611 million) to promote 10 GW of integrated solar manufacturing capacity in India with an expected direct investment of around INR17,200 crore (US$2.33 billion).

The four bidders for a fully integrated solar factory

• Reliance New Energy Solar Ltd is a wholly-owned subsidiary of Reliance Industries Limited (RIL), the largest corporation in India’s private sector with activities in oil, gas, petrochemicals, textiles, infrastructure, power and financial services. At its annual general meeting in June, RIL chairman Mukesh Ambani announced the company’s big entry into the green energy space: It is planning to set up four giga factories for solar modules, storage batteries, electrolyzers and fuel cells in Jamnagar in the state of Gujarat with a total investment of INR60,000 crore (US$8.14 billion) within three years. In mid-September Indian media reported that RIL is in talks with China-based Hualu Engineering and Technology Co., Ltd. about building a polysilicon plant.
• Adani Infrastructure & Developers Pvt Ltd is a member of the logistics conglomerate Adani Group. Adani has already been active in the solar industry since its subsidiary Adani Mundra Solar PV Ltd opened a 1.5 GW solar cell and module factory near Adani’s port in Mundra in the state of Gujarat in late 2016. Original plans for an adjacent polysilicon plant were put on hold in 2017.
• Jindal India Solar Energy Ltd is a new entrant in the Indian solar industry. The company was incorporated in December 2020 and acquired by Jindal Poly Films Ltd, a manufacturer of polyester, polypropylene and other films, in August 2021.
• Shirdi Sai Electricals Limited (SSEL) is one of India’s largest transformer manufacturers and distribution line contractors. The company has also been engaged in the solar business via its subsidiary Ilios Power Pvt Ltd, an engineering, procurement and construction company for residential, commercial and industrial solar projects.

Challenges in the competition with Chinese polysilicon manufacturers

Establishing polysilicon and wafer production in India to reduce the dependence from Chinese suppliers has been discussed for years. As early as 2010, The Who’s Who of Solar Silicon Production described a dozen polysilicon projects in the country, among them one of Reliance Industries in Jamnagar. However, most of those projects did not proceed beyond the drawing board or were simply castles in the air. Lanco Solar started construction of a mini plant with a production capacity of 1,800 metric tons (MT) in 2011, but the facility has not come on stream.

What has changed since then is the size of the domestic solar market: While new PV installations in India were as low as 60 MW in 2010, the annual scale is now close to 10 GW (with the exception of 2020 when the Covid-19 pandemic stymied growth). That volume is equivalent to a polysilicon production capacity of 30,000 MT and will further increase in the coming years.

One of the challenges potential polysilicon manufacturers face in India is unreliable electricity supply. In the Global Competitiveness Report 2019 of the World Economic Forum, India only ranks 108^th among 141 economies in the quality of electricity supply. The solution to this challenge is a captive power plant, but it increases the capital expenditure for the factory.

There is still some room to move, though: Even if polysilicon manufacturing costs in India should be $3/kg higher than those of Chinese competitors that profit from low-cost electricity provided by coal-fired power plants, this difference would only translate into 0.9 $Cents per watt at a specific silicon consumption of 3 grams per watt. The cost advantages of a fully integrated solar factory as well as saved freight costs could possibly compensate for this difference.

Nevertheless, it will be a tough game for Indian new entrants for another reason: Their Chinese competitors have gained a large lead in production experience over the last decade.

Update

On November 12 Shirdi Sai Electricals disclosed that it received the Letter of Award from the Indian Renewable Energy Development Agency (IREDA) for setting up its integrated 4 GW polysilicon-to-module factory under the PLI scheme. According to a list on IREDA's website, further successful bidders were Jindal India Solar Energy and Reliance New Energy Solar.

In a second version updated on December 2, however, Jindal India Solar completely dropped out of the list because the company was not able to provide the necessary bank guarantee. The PLI beneficiaries are now Shirdi Sai Electricals, Reliance New Energy and Adani Infrastructure.