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There is much debate about how the macro environment, such as the US election and monetary policy changes in major countries, will affect the fight against climate change. However, a key aspect of achieving clean energy goals is the development of a risk-free global supply chain that can supply both materials and components to support rapidly expanding demand.
Clean energy supply chains are long, complex, and capital-intensive. Even if some parts of the supply chain are manufactured domestically, relocating all stages of production to Western countries poses a huge industrial challenge.
India is in a much better position than the US or EU to reproduce many of the variables that help Chinese producers dominate green industries. These variables include land prices, electricity rates, permitting schedules, construction schedules, construction costs, labor costs, and supply chain procurement (just to name a few). It is in the geopolitical interests of major economies to help India achieve the scale, efficiency, and expertise needed to compete effectively with China. The US, EU and India urgently need to come together on a free trade agreement on clean energy.
Countries such as Mexico and Vietnam are just the first step in diversifying, with a focus on assembling parts to assemble products such as solar modules and battery packs. The risk of disruption is related to the production of intermediate products (polysilicon, wafers, ingots, photovoltaic cells, battery cathodes, anodes, cells, etc.), the technology and processed minerals required to produce these intermediate products, and even From mining and processing the ores needed as raw materials. Many are technically complex, capital- and time-intensive, and energy- and emissions-intensive.
India has already begun to integrate backwards through initiatives such as alternative battery chemistries and production-linked incentive schemes for integrated solar manufacturing facilities. It will also launch a “Critical Minerals Mission” to encourage investment in the mining and processing of critical minerals.
According to the IEA, to meet 2030 international emissions targets, the global manufacturing capacity needed for solar modules will increase to 651GW, wind turbines to 400GW, hydrogen electrolyzers to 167GW and EV batteries to 5099GWh. There is a need. According to a recent statement from the Ministry of New and Renewable Energy, India has already increased its solar module manufacturing capacity by 27 times over the past decade to 67GW, accounting for 10% of global demand. The government is offering financial incentives to companies that install 1.5GW of capacity in electrolyzers, a key technology for producing green hydrogen from water. The battery manufacturing project will create a minimum of 120 GWh of manufacturing capacity by 2030, increasing India’s share of global battery manufacturing capacity tenfold from 0.2% currently to 2% by 2030. .
According to the report, China is the primary investor in much of the clean energy manufacturing investment in Southeast Asian countries, likely with the aim of circumventing trade barriers. In contrast, the majority of investments in India’s clean energy manufacturing ecosystem come from a diverse investor base, primarily from India but also from the US, Japan, etc. This will help India establish itself as a reliable source of clean energy equipment.
At the end of the day, quality and price matter. As the CEO of a company involved in both manufacturing solar modules and cells and their use in power generation, I am confident that Indian-made modules, cells, batteries and electrolysers meet the highest international standards. I can say it. Exports from India to the US and EU are increasing.
Price competition is even more difficult. Industry estimates suggest that Chinese suppliers’ production costs are 15 to 25 percent lower than other international companies across technologies such as solar modules, cells, batteries, electrolyzers, and wind turbines. However, Chinese suppliers offer their products at almost 40-50% of the prices offered by players from other countries. This discrepancy has triggered a flurry of non-tariff barriers, anti-dumping duties and investigations in several markets, including the US, India and the EU.
Clean energy is an area ripe for increased international cooperation. Building domestic supply chain capacity has the potential to bring enormous economic benefits to host countries, but it also has the potential to drive domestic manufacturers towards international competitiveness (particularly with subsidies, which require a large investment of time and resources). multiple hubs are essential to leverage the strengths of each. Innovate faster and reduce costs across the board.
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