Commissioning Dates For Solar PLI Schemes Extended By 2 Years

India's two solar PLI schemes sought to back the production of domestic module making capacity of 8737 MW initially, that was increased in phase 2 with a 39,600 MW target. A full backward integration push from modules to polysilicon was planned under these. The two schemes, that came out in April 2021 and  September 2022 respectively, have now allowed an extension of upto two years for plant commissioning dates.

The extension was a foregone conclusion, after the delays caused by both refusal to issue VIsas to Chinese technicians and restrictions on machinery exports by China itself during 2022-24. With Visa issues finally being sorted out this year, firms are hopeful of moving ahead with these projects now. However, with no extension in the end date for these schemes, of March 2030 and March 2032 respectively, PLI winning firms have that much of a narrower window to make the most of the incentives on offer. 

According to a response from the MNRE in parliament, the schemes have so far led to  18.5 GW Modules, 9.7 GW Cells, 2.2 GW Ingot-Wafer Production, with Phase 1 closest to completion.

The PLI phase 1 (outlay of Rs 4500 crores) that targeted high efficiency module making capacity was won by Reliance New Energy, Adani Infrastructure and Shirdi Sai Electricals. The scheme had a commissioning deadline of December 2024, a target that has been met only by Adani Infrastructure, with Reliance barely starting production in the current quarter, and Shirdi Sai Electricals  getting there now. Not surprising, considering the relative experience of the three players in the business. 

PLI Phase 2 Most Delayed

PLI 2, (outlay of Rs 19500 crores) that targeted a much more ambitious expansion right upto polysilicon manufacturing, is where worries remain, with deadlines passing quickly with limited progress. Cells-Modules  had a deadline of June this year, while wafers-cells- modules has a December 2025 deadline to target. The deadline for polysilicon to modules is March 2026. A pointer to progress is the announcement by the government earlier this month of a possible ALMM expansion to cover Wafers, from June 2028, over two years after the March deadline for wafers manufacturing under the PLI scheme. That should make it clear to everyone that the government expects actual wafer manufacturing progress only by that period, and that too with some caveats, considering the condition it has added on at least 3 manufacturers with a combined capacity of 15 GW by then. The PLI 2 scheme has a much wider spectrum of firms involved, with the only distinguishing factor being the minimum commitment of over a GW of capacity in all cases, that ruled out smaller players. 

Battery PLI Also Delayed

It is noteworthy that the third PLI for the sector, namely the Advanced Chemistry Cell battery Storage  or National Programme on Advanced Chemistry Cell (ACC) Battery Storage—was approved by the Union Cabinet on 12 May 2021. A targeted capacity of  50 GWh of energy storage manufacturing was to be in place by December 2024. Even this scheme has failed to fire on time, and even a 2 year extension will leave players very little time till the end of the scheme on Dec 2029 to avail of the incentives.  With an outlay of Rs 18,100, the scheme is a key cog in India's push for self reliance in green energy.

Conclusion

With a total outlay of Rs 42,100 between the three schemes, the incentives involved are no trivial amounts for the firms involved. However, what has changed since 2021-22, when these schemes were launched is that the domestic market has expanded significantly, almost tripling from an annual solar capacity addition of over 12 GW to 35 GW in FY 2025, and possibly 45 GW this financial year (FY25-26). That has given players outside the PLI list an opportunity to do well too, reducing the impact of the scheme somewhat. The delays in execution have meant a further possibility of actual outflows under the schemes  that are linked to sales being much lower, as overall solar module capacity has crossed 100 GW, while cell capacity is also racing towards 50 GW soon. That is good, because it means the PLI schemes have not led to any market distortions, but have been more like catalysts for speeding up production capacities. However, the toughest challenge remains to be covered ahead, namely the polysilicon and wafer manufacturing capacities, besides the even bigger challenge of a significant energy storage manufacturing ability inside the country. For now, China remains the biggest seller of storage solutions to firms in the country, with projects right upto 2027 committed to China made cells and storage solutions.