Polysilicon: India's production potential and solar module manufacturing the road ahead

The renewable energy sector is taking its big stage in the global energy mix. India with its ambitious clean energy targets has a lot to do as it goes ahead. Out of the total installed capacity of 174.53 GW, solar power contributes 63.3 GW.

Being a tropical country with an abundance of Sunlight it's obvious and clear that solar energy would be leading the pack of India’s clean energy targets. Talking of solar energy Polysilicon can’t be left out of the discussion. 

Polysilicon is a critical raw material used in the production of solar cells, which in turn are used in solar panels or modules. It is a high-purity form of silicon, which is the second most abundant element in the earth's crust, after oxygen. 

Polysilicon is used to make wafers that form the base of solar cells, and it accounts for about 50% of the total cost of solar modules.

India’s production potential 

In the Indian context, the production potential of polysilicon is limited as India does not have any significant reserves of silicon or a well-developed supply chain for polysilicon production. As a result, India is heavily reliant on imports of polysilicon, which account for about 80% of the total demand.

However, India has made significant strides in solar power generation in recent years, with the country being ranked fifth in the world in terms of installed solar capacity as of 2021. 

With the Indian government's ambitious target of achieving 450 GW of renewable energy capacity by 2030, there is an increasing focus on developing domestic solar manufacturing capacity, including polysilicon production.

To achieve this goal, the Indian government has announced various initiatives, such as the production-linked incentive (PLI) scheme, to promote domestic manufacturing of solar equipment, including polysilicon. Under the PLI scheme, the government has allocated INR 4,500 crore to incentivize domestic production of high-efficiency solar photovoltaic (PV) modules and polysilicon.

The players in the business 

The polysilicon sector in India is still in its nascent stage, and there are only a few players in the market. Here are some of the major players in the Indian polysilicon sector:

• Tata Chemicals - Tata Chemicals is a prominent player in the Indian polysilicon sector. In 2011, the company established a polysilicon manufacturing plant in Gujarat. However, due to the global oversupply of polysilicon, the plant remained underutilized, and the company had to take a write-off of INR 1,000 crore (approximately $137 million) in 2015. Currently, Tata Chemicals is exploring opportunities to diversify its business and move away from the polysilicon sector.

• Hindalco Industries - Hindalco Industries is a subsidiary of the Aditya Birla Group and is one of the largest producers of aluminum in India. The company has been exploring opportunities to diversify its business and has announced plans to set up a 500 MW solar power plant in the state of Rajasthan. Hindalco is also looking to enter the polysilicon sector by setting up a manufacturing plant in India.

• Gujarat Fluorochemicals Limited (GFL) - GFL is a diversified chemical company and one of the largest producers of fluorochemicals in India. The company entered the polysilicon sector in 2011 by setting up a manufacturing plant in Gujarat. However, due to the oversupply of polysilicon, the company had to take a write-off of INR 685 crore (approximately $94 million) in 2015. Currently, GFL is focusing on expanding its specialty chemicals business and is not planning to make any investments in the polysilicon sector.

• Bharat Heavy Electricals Limited (BHEL) - BHEL is a public sector company that manufactures power generation equipment, such as turbines, generators, and boilers. The company has announced plans to diversify its business by entering the solar sector. BHEL is planning to set up a polysilicon manufacturing plant in partnership with an international company.

• Reliance Industries Limited (RIL): RIL has announced plans to invest around 17,500 crore rupees (approximately $2.4 billion) to set up a new polysilicon facility. The facility will be located in the state of Gujarat and will manufacture materials used in the production of solar panels. The new facility will help India reduce its dependence on imports of polysilicon, which is currently sourced primarily from China. By setting up its own facility, RIL will be able to manufacture polysilicon locally, thereby reducing the cost of solar panel production and making solar energy more affordable for Indian consumers.

RIL is also investing in other renewable energy projects, such as solar and wind power plants, as well as energy storage solutions. The company is also exploring opportunities in the hydrogen fuel cell space, which has the potential to become a key source of clean energy in the future.

Apart from that in 2021, Adani Green Energy announced plans to set up a polysilicon manufacturing facility in Gujarat with an annual production capacity of 10,000 metric tons. This would represent a significant increase in India's current polysilicon production capacity, which is estimated to be around 2,500 metric tons per year.

Road ahead 

Indian polysilicon sector is still facing challenges due to oversupply in the global market, which has led to low prices and reduced demand.  The development of a significant domestic polysilicon production capacity in India could have a transformative impact on the solar module manufacturing industry in the country.

Currently, the high cost of importing polysilicon increases the cost of producing solar modules, making them less competitive in the global market. With domestic production of polysilicon, the cost of producing solar modules will reduce, making them more cost-competitive in the global market.

Furthermore, the development of a domestic polysilicon production capacity could also help to address the issue of supply chain disruptions that have arisen due to the COVID-19 pandemic. With a reliable domestic source of polysilicon, Indian solar module manufacturers would be less vulnerable to disruptions in the global supply chain. With the increasing focus on renewable energy and the Indian government's push towards a cleaner energy mix, there may be opportunities for growth in the future.