The race for green energy has begun. India, driven by rising electricity demand and an effort to reduce dependence on China, is rapidly producing solar panels, fueling a booming but uncertain market.
At the Adani Group’s factory in Mundra, in the western state of Gujarat, assembly lines produce photovoltaic panels 24 hours a day.
Up to 10,000 come off the line every day, most of them sent straight to Khavda, further north, where the Indian conglomerate is putting the finishing touches on what will be the world’s largest solar farm.
But Adani Solar CEO Muralee Krishnan says business is “actually lagging.”
“Our capacity must be fully utilized; we must work 48 hours a day.”
The intensity is matched by other major producers in the world’s most populous country.
At the Tata conglomerate factory in Tirunelveli, in the southern state of Tamil Nadu, 4,000 mostly female employees also work non-stop shifts.
“They operate 24/7 so you get better yield, better efficiency and better productivity,” says Praveer Sinha, CEO of Tata Power.
“You can’t stop the production line… there is a rush to produce to maximize output.”
With the twin imperatives of development and lower CO2 emissions, India has set itself ambitious renewable energy targets.
Last year it said half of its electricity generation capacity was now ‘green’, five years ahead of the timeline set out in the Paris Agreement on cutting emissions.
But 75 percent of electricity is still generated by coal-fired power stations, with inflexible operations and long-term coal power purchase agreements hindering the uptake of renewable energy.
– ‘Making in India’ –
There are signs of change.
Last year, coal-fired electricity generation fell three percent, only the second full-year decline in half a decade, according to the Center for Research on Energy and Clean Air.
The renewable capacity of 230 gigawatts (GW) is expected to increase to 500 GW by 2030, including 280 GW of solar energy.
But Prime Minister Narendra Modi has imposed another restriction on the industry: ‘Make in India’.
This means that there is no question of importing solar panels from China, which supplies 90 percent of the world market.
All public procurement requires ‘local’ production, which India supports with significant subsidies that have attracted major companies.
Tata, a pioneer in solar panels since the 1990s, is joined by Adani and Reliance, which have built state-of-the-art, highly automated factories.
“The quality of the product is very, very crucial,” says Ashish Khanna, CEO of Adani Green Energy.
“When you build a project of this size, you also have to be very comfortable with the supply chain. We cannot have any disruption or interruption in that particular process.”
But for the time being, the technology and raw materials still come from China.
And Beijing has complained to the World Trade Organization about subsidies and restrictions on its solar panels.
The solar energy is so intense that Adani is considering silicon mining to secure a key raw material, company insiders say, and there are suggestions that Tata Power is eyeing internal production of silicon wafers.
– ‘A huge market’ –
Growth in the sector is already staggering, with solar energy production capacity expected to soon exceed 125 GW, according to consultancy Wood Mackenzie.
But that is a tripling of current domestic demand, according to Wood Mackenzie analyst Yana Hryshko.
Government incentives have been “very effective in encouraging factory announcements, but the industry is now seeing warning signs of rapid overcapacity,” Hryshko said in a report last year.
The long-term sustainability of the sector may therefore depend on exports, with some companies already targeting global markets.
“Solar is a huge market: the world will see it double in four years, from 2,000 GW to 4,000 GW,” said Ashish Khanna, head of the International Solar Alliance.
“The question now is: Will Indian manufacturers be globally competitive compared to China?”
Tejpreet Chopra, of private power company Bharat Light and Power, points out that “the problem is that it is cheaper to import from China than to buy locally”.
And the level of production in China “is so much higher that it is very difficult to match,” he added.
The sector is also facing “geopolitical” headwinds due to US President Donald Trump’s tariffs, with Chopra adding that these make it “very difficult to sell to the United States”.
Despite these challenges, the head of Tata Power, which does not yet export, remains confident that his company has a bright future.
“We are confident,” said Praveer Sinha, “that solar energy will play a very important role in India’s renewable space.”
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