MNRE Announces ALMM Plans For Wafer Manufacturing

Moving ahead on one of its most successful domestic manufacturing outcomes so first, the government, through the Ministry of New and Renewable Energy  has now moved to the next step in backward integration of solar. Wafer manufacturing. Linked to both wafers and polysilicon manufacturing, the latest draft plans, which call for stakeholder feedback by Oct 11, seek to complete the solar manufacturing cycle in India by 2028.

If it does come to pass in time, it will be be a remarkable 7 year period between 2021 when ALMM was launched, and 2028, that India has a complete solar manufacturing set up domestically, after depending on Chinese imports for as high as 95% of its requirements in the past decade.  The ALMM scheme has been cited as one of the most effective non-tariff initiatives by the government to nurture domesric industry, by providing protection from foreign competition as well as a ready market for their output by mandating ALMM approved modules on most government backed solar projects in India. 

In the draft amenedment to the (Approved list of Module Manufacturers )ALMM order, released on Sept 12, MNRE has proposed :
-  A new ALMM List-III for wafers to be created, effective from June 1, 2028 .

-  The list will however be issued only if it contains at least three independent wafer manufacturing units with a combined annual capacity of at least 15 GW. Perhaps a move to detract from any accusations of profiteering by a few dominant manufacturers, as seen in the cell manufacturing process initially. At this stage, this list looks certain to have both Reliance and Adani group making the cut, making it even more important from an optics perspective to have 2 or more other groups deliver by the deadline, especially allotees under the PLI scheme.   

-By combining a corresponding ingot manufacturing facility for all eligible manufactirers of wafers, the MNRE has effectively tried to close the loop completely on imports.

While proposing to make domestic sourcing of modules that use domesrically produced cells and wafers by June 2028, the ministry provides key exemptions to avoid any disruptions.  

●     Projects with bids before "Cut-Off Date": Projects where the last date for bid submission falls on or before the "Cut-Off Date" will be exempt from using ALMM-listed wafers. The "Cut-Off Date" is defined as one month after the first ALMM List-III for wafers is issued. This exemption applies regardless of the project's commissioning date.

●     Existing Exemptions: Projects that are already exempt from using ALMM-listed solar cells will automatically be exempt from the wafer requirement.

●     Thin-Film Technology: Thin-film solar PV modules manufactured in an integrated unit and already on ALMM List-I are considered to be in deemed compliance with the ALMM wafer and cell requirements.

Thus,  effective June 1, 2028, only those solar PV modules that use ALMM-listed cells and wafers will remain on the main ALMM List-I.

Conclusion:

The MNRE move was certainly expected, although the timelines will daunt many players, who have barely started to reach a size where they can consider further investments into expanding their manufacturing capabilities. With industry still dependent on Chinese support for manufacturing as well, the experience with cell manufacturing has shown that it will not be a good idea to take such support for granted even on commercial terms. Cell making domesrically has been plagued by delays and managing challenges with transitioning technology to India, leading to much higher rates domestically. If these proices donot correct over the next two years significantly vis a vis Chinese rates, a further premium on domestically produced wafers will only hurt the Indian consumer market further. Relatively competitive solar costs vis historical costs and dropping storage costs have ensured momentum has not been lost on solar capacity addition. But a further gap between Indian and Chinese import prices due to hgher proced wafers in India will hurt growth. Critical spaces like Green Hydrogen production, are however likely to be insulated from these moves, as has been done by exempting them from ALMM requirements for now.          

The full order can be viewed here.