Indian Solar Firms Step In As US Shuts Door On Chinese Imports

As Washington intensifies its crackdown on solar manufacturers with ties to Beijing, Indian companies are stepping in to seize the opportunity created by the exclusion of Chinese exports.

ReNew, one of India’s largest renewable energy giants is targeting the United States (US) market with plans to export solar components from its factories in India. Meanwhile, other Indian manufacturers are strategically investing in production facilities on American soil to meet the surging demand.

Sumant Sinha, CEO of ReNew, told the Financial Times that shifting away from Chinese supplies will inevitably create 'demand' for Indian solar components as the US continues its energy transition.

“There is a need for diversification, and India can actually become that plus one to China as far as the green tech supply chain is concerned,” Sinha emphasised.

Halting Output

In May, the Biden administration introduced a series of rules to strengthen tariffs on solar equipment in response to petitions filed by a coalition of seven US solar manufacturers.

A key decision was terminating a two-year reprieve on duty-free solar imports from Cambodia, Malaysia, Thailand, and Vietnam.

Chinese manufacturers used four Southeast Asian countries to establish operations, circumventing Obama-era import tariffs on solar modules. These countries collectively accounted for over 70 per cent of US solar module imports last year, according to BloombergNEF.

Last week, the US Department of Commerce released preliminary tariff estimates as high as 293 per cent on solar cell exports from these countries, which are the source of most US solar imports — often funneled through Chinese companies.

The impending decision has led Chinese solar firms to halt production in Southeast Asian factories, as rising US trade barriers create uncertainty for exports from the region.

Enter India

At a time when the White House is cracking down on unfair trade practices, developers and manufacturers are seeking new markets outside Southeast Asia that are not subject to these tariffs, and India is rapidly emerging as a key contender.

“There’s no modular manufacturer in India who is not thinking of exporting,” said Subrahmanyam Pulipaka, CEO of the National Solar Energy Federation of India, a lobbying group that includes major developers like Adani Group, Tata Power, and ReNew among its members.

US imports of Indian solar panels and cells surged to $1.8 billion last year, a dramatic rise from just $250 million in 2022, according to BloombergNEF, highlighting India's growing influence in the global solar supply chain.

Capitalising On The Inflation Reduction Act (IRA)

In August 2022, the US passed the Inflation Reduction Act (IRA), the most detailed policy document ever issued by a single country to target economic decarbonisation, with substantial incentives for renewable energy product manufacturing.

The IRA provides layered incentives for producing upstream solar photovoltaic (PV) components, such as polysilicon, ingots, wafers, and cells, alongside investment tax credits to spur capital investment.

The global response to the scheme has been remarkable, with companies vying to establish manufacturing facilities in the US. Indian PV manufacturers are eager to capitalise on this opportunity by forming joint ventures with their American counterparts.

For example, in July 2023, Canadian photovoltaic module manufacturer Heliene announced a $150 million joint venture with Premier Energies, India’s second-largest solar cell manufacturer, to establish a new factory in Minnesota, with production expected to commence by mid-2026.

In December 2023, Waaree Energies, India’s largest solar PV module producer, announced plans to establish its first US manufacturing facility in Brookshire, Texas. The factory is expected to have an initial annual capacity of 3 GW by the end of 2024, with plans to scale up to 5 GW by 2027, making it one of the largest solar module manufacturing facilities in the US.

Indian solar panel manufacturer Vikram Solar Ltd. is making significant investments in the US supply chain, planning to allocate $1.5 billion to launch a factory in Colorado this year. The company will expand with a second facility in 2025, producing crucial solar components such as cells, wafers, and ingots.

While the surge in Indian solar exports and manufacturing expansion is promising, a critical point remains: merely building new factories isn’t enough. In the rapidly evolving landscape of PV technology, it will be crucial for Indian manufacturers to plan and prepare for future upgrades.