The Adani Group, which built its energy empire on coal, is building an entire solar supply chain starting with local manufacturing of ingots, wafers, cells and panels, and soon polysilicon. It is also building a solar park in Khavda, in western India, which will cover an area five times larger than that of Paris.

The group’s goal reflects India’s dual goals: aggressively pursuing its renewable energy goals while reducing its dependence on Chinese imports, goals that are often in conflict with each other.

India wants to install 500 gigawatts of renewable energy capacity by 2030, but it is only two-fifths of the way there. Solar energy represents almost half of the country’s renewable mix. Even though India has managed to start building solar panels within its borders, the raw materials are mainly imported from China.

At the same time, India requires domestic solar developers to buy panels from licensed Indian manufacturers that sell for almost twice as much as Chinese panels and are often of inferior quality.

This tension presents opportunities for companies with deep pockets, such as the $200 billion Adani Group, that can afford to undertake huge investments throughout the supply chain.

“We are playing the whole energy game,” said Sagar Adani, who oversees the group’s renewable energy business and is Gautam Adani’s nephew.

India has long had tense relations with its neighbor. Relations between the countries hit an all-time low in 2020 after clashes between Indian and Chinese troops along the Himalayan border turned deadly. Since then, India has stepped up its efforts to develop local production in new technology sectors.

In 2022, India imposed tariffs of 40% on solar panels and 25% on solar cells to discourage imports from China. In April, the country mandated that Indian solar power producers buy from an approved list of domestic solar panel manufacturers, including Adani’s Mundra factory. Similar rules for solar cells could come into force in 2026.

India has offered nearly $3 billion in subsidies to the solar manufacturing industry, but undermining China’s dominance poses a daunting challenge. China’s share of all stages of solar panel manufacturing exceeds 80% globally, according to the International Energy Agency, an intergovernmental organization based in Paris. Wood Mackenzie estimates that China invested $130 billion in the solar industry last year.

Adani Enterprises, the group’s flagship company, began manufacturing the wafers and ingots used to make solar cells and panels earlier this year, making it the first Indian company to do so. The facility in Mundra, a small port town on India’s west coast, is capable of producing ingots and wafers to power about half of its current 4-gigawatt panel production. China’s wafer production capacity is more than 300 times that of India.

By the end of the year, the country will set a timetable for investment in the manufacturing of polysilicon, the high-purity silicon that makes up the building block of solar panels. India does not currently produce this material.

But safeguarding the energy supply chain from China deprives Indian solar developers of cheap, technologically advanced panels and other raw materials, slowing the development of renewable energy.

Analysts say India is at far risk of missing its goal of having 500 gigawatts of renewable capacity by 2030, with many placing a significant portion of the blame on the country’s insistence on localizing its energy chain. ‘supply. Wood Mackenzie estimates that India could manage to install just 375 gigawatts by the deadline.

“The government’s intention is to make everything in India,” said Nikhil Nigania, an analyst at Bernstein, who follows Adani Green Energy and ReNew Power, another renewable energy company in India. to allow imports to arrive. The public pays more because you don’t import, you use expensive national modules.

The most commonly available Indian-made panels cost about 18 cents per watt, about twice the price of China-made panels, according to August data from BloombergNEF. Panels represent approximately 40% of the cost of developing a solar farm.

Beyond panels, other parts of the supply chain will be harder and more expensive to replicate in India.

JMK Research & Analytics and the Institute for Energy Economics and Financial Analysis estimate that the cost of developing polysilicon for 1 gigawatt of solar power in India would be around $130 million, more than double the cost in China, in largely because of greater industrial power. price.

Sagar Adani acknowledges that using Indian components can make projects more expensive and that Adani does not use them when it does not make commercial sense. “That’s why we buy outside,” he said. “Because they are much cheaper than what we produce here today.”

Adani Green Energy continues to buy panels from China and Southeast Asia, as well as Adani Enterprises, depending on what the rules allow. The requirement to source locally does not apply to private projects, and import contracts for projects with the government that predate the new rule are exempt. Meanwhile, most of Adani’s panel production is sold in the United States.

India’s tougher stance on China has sometimes frustrated companies trying to help India compete with its neighbor, including Adani.

The company’s factory in Mundra has hundreds of workers clad in blue protective gear manufacturing missile-shaped ingots that are the building blocks of solar panels. It relies largely on Chinese equipment to manufacture them.

India’s projected increase in electricity demand adds another challenge to the country’s efforts to add renewable energy while weaning itself off Chinese imports. India’s per capita electricity consumption is a third of the global average, according to government estimates, but is expected to rise to fuel its economic engine.

“If we add so much coal-based thermal power capacity, all the decarbonization efforts going on around the world will all be neutralized or negative simply because of India,” Sagar Adani said.

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