IEEFA – New paradigms of global solar supply chain, Oct23

The report discusses the changing paradigm of the global solar power supply chain due to key policies promoting local manufacturing in the United States and the European Union. It mentions that India, with its aggressive expansion of solar PV manufacturing capacity, is likely to maintain momentum in exports to the US and Europe until 2025. However, once local module manufacturing develops in the US and Europe, India will need to explore other export markets such as Africa and South America. Some Indian manufacturers are planning to set up module production lines in the US to take advantage of the Inflation Reduction Act (IRA), while also building cell and ingot/wafer lines in India. The IRA and similar policies are expected to influence future iterations of the production-linked incentive scheme in India. The article highlights that China currently holds around 80-90% of global PV manufacturing infrastructure, but with the increasing global installation of solar, there is a need to increase PV manufacturing capacity in other regions. The COVID-19 pandemic and supply chain disruptions have prompted countries like India, the US, and Europe to develop their domestic PV manufacturing ecosystems for self-sustenance and insulation from global shocks. The Inflation Reduction Act (IRA) in the US, passed in August 2022, targets economic decarbonization and provides incentives for the manufacture of renewable energy products such as solar PV modules. Many companies worldwide are looking to set up manufacturing facilities in the US under this scheme. Similarly, the European Union is also working on a detailed incentive bill for PV manufacturing capacity. The US and the EU are expected to play a crucial role in the growth of the Indian PV manufacturing sector and its exports. The US has been the largest export destination for Indian PV products, but Indian exports to the US may experience a decline from 2027 onwards as manufacturing capacities increase domestically under the IRA.