India's Solar Energy Transition

India has been heavily reliant on Chinese imports for its solar energy sector but is now shifting towards self-reliance. The country added 25.3 GW of new module capacity in 2024, almost doubling its manufacturing strength. This transformation is primarily driven by the Production-Linked Incentive (PLI) scheme, which encourages investment in domestic production and innovation, such as the adoption of TOPCon cells. However, challenges remain as India still imported nearly 66 GW of solar modules and cells in 2024, indicating a continued dependency.

Challenges in Solar Manufacturing

• Despite increased module production, upstream integration is limited with just 2 GW of wafer capacity.
• The focus on polysilicon and wafer production is crucial to truly eliminate foreign dependence.

Investment in Clean Energy

Between the first nine months of FY2025, clean energy has attracted $3.4 billion in foreign investment, comprising over 80% of all power sector inflows. Competitive auctions have reduced tariffs, making renewable power among the cheapest electricity sources in India.

Barriers to Investment

• DISCOMs face challenges with unpaid dues.
• Contract renegotiations post-auctions in some states raise investor concerns.
• 60 GW of renewable projects are hindered by inadequate transmission infrastructure.
• Curtailment issues increase financial and operational risks, raising the cost of capital.

National Green Hydrogen Mission

The mission aims to produce 5 million metric tonnes of green hydrogen by 2030, with pilot projects in steel, refining, and transportation. Current production costs are high, necessitating potential subsidies or regulatory mandates for commercial viability.

Challenges for Green Hydrogen

• Current production costs range from $4.1 to $5.0 per kg, higher than conventional hydrogen.
• Projected cost reduction to $2.4 per kg by 2030 requires strategic incentives.
• Infrastructure for storage, transport, and applications is underdeveloped.
• Uncertainty in demand and supply creates investment hesitancy.

Recommendations

• Ensure protection of contractual agreements in the power sector.
• Expansion of transmission networks must align with generation capacity.
• Address curtailment risks with clearer frameworks and compensation strategies.
• Develop realistic timelines and strategies for demand creation in green hydrogen.

If these challenges are effectively addressed, India could serve as a model for other nations facing similar energy transition complexities.