PLI for Polysilicon Scheme – Government Moves to Fill India’s Solar Manufacturing Gap

PLI for Polysilicon Latest News

• The Ministry of New and Renewable Energy is preparing a Production Linked Incentive scheme for polysilicon manufacturing, aiming to fill a critical gap in India’s solar supply chain where the country relies entirely on imports.

The Solar Manufacturing Value Chain

• Solar photovoltaic manufacturing involves a sequence of stages, moving from raw material to the finished panel:
  • Polysilicon: High-purity silicon, the starting point of the chain, produced through a chemical and refining process.
  • Ingots: Polysilicon is melted and formed into solid blocks.
  • Wafers: Ingots are sliced into thin wafers.
  • Solar cells: Wafers are processed into cells that convert sunlight into electricity.
  • Modules or panels: Cells are assembled into finished solar panels.
• The first three stages form the upstream segment, while cells and modules constitute the downstream segment.

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India’s Position in the Chain

• India has expanded rapidly at the downstream end but remains weak upstream:
  • Solar module manufacturing capacity: More than 213 GW per annum.
  • Solar cell manufacturing capacity: Around 32 GW.
  • Ingot and wafer capacity: Limited, though expected to reach 80 GW by June 2028.
  • Polysilicon capacity: Effectively nil, with complete dependence on imports, primarily from China.
• This imbalance means that even as India builds large module capacity, the foundational raw material continues to come from abroad, leaving the supply chain exposed to external disruption.

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Importance of Polysilicon

• It is the starting material for crystalline silicon solar cells, which dominate the global market.
• Complete import dependence creates strategic vulnerability, especially given the concentration of global supply in China.
• Any disruption in polysilicon supply can stall the entire downstream chain, regardless of domestic module capacity.
• High-purity polysilicon is also used in the semiconductor industry, making it relevant to India’s chip manufacturing ambitions.
• Because polysilicon production is essentially a chemical and refining process rather than a conventional electronics activity, the government is considering treating it as an independent industry rather than merely a part of the solar value chain.

News Summary: Proposed PLI for Polysilicon

• The Ministry of New and Renewable Energy (MNRE) is working on a dedicated Production Linked Incentive (PLI) scheme for polysilicon manufacturing. The proposed scheme aims to: 
  • Promote domestic polysilicon manufacturing, where investments have not materialised despite existing incentives. 
  • Support more than 10 GW of manufacturing capacity. 
  • Operate separately from the existing PLI scheme for solar PV modules. 
• The scheme’s size and structure have not yet been disclosed, and its announcement has been delayed. 

Need for a Separate Scheme

• The existing Solar PV Module PLI covers the entire value chain, from polysilicon, ingots and wafers to solar cells and modules. 
• However, implementation has been uneven: 
  • Solar cell and module manufacturing have expanded significantly. 
  • Some ingot manufacturing capacity has been established. 
  • No commercial polysilicon manufacturing has materialised. 
• The government believes polysilicon requires a separate policy because: 
  • It is a chemical refining industry rather than conventional manufacturing. 
  • It has strategic importance beyond solar, particularly for semiconductors. 

Expansion of India’s Solar Manufacturing Ecosystem

• Solar cell manufacturing capacity is expected to increase from 32 GW to around 100 GW within a year. 
• Ingot and wafer manufacturing capacity is projected to reach at least 80 GW by June 2028. 
• An Approved List of Models and Manufacturers (ALMM) has been introduced for ingots and wafers. 
• Expanding upstream manufacturing has become essential as India tightens domestic sourcing requirements for solar cells. 

Round-the-Clock (RE-RTC) Renewable Energy

• SECI’s latest RE-RTC tender discovered a tariff of Rs. 5.25/unit. The project provides: 
  • 90% assured power availability in every time block. 
  • Around 50% daytime solar generation, with the remaining supply met through other renewable sources and energy storage. 
• Officials noted that: 
  • The tariff is approaching nuclear power tariffs. 
  • Developers are confident of supplying electricity at this inflation-resistant price for the next 25 years. 

Impact on DISCOMs

• Lower renewable energy prices are helping distribution companies reduce procurement costs. Over the past three years: 
  • Average power purchase costs have either declined or remained stable after rising sharply earlier. 
  • Combining solar, wind, storage and RE-RTC could reduce average procurement costs from around Rs. 5.20/unit to Rs. 4.85/unit. 
• Lower electricity costs are expected to: 
  • Improve industrial competitiveness. 
  • Support data centre growth. 
  • Accelerate India’s green transition. 

Broader Clean Energy Push

• Officials also highlighted the following initiatives:
  • India has crossed 300 GW of non-fossil fuel power capacity and aims to reach 500 GW by 2030. 
  • Green ammonia is being supplied to fertiliser plants, while green hydrogen is being supplied to oil refineries to create early demand. 
  • Green methanol pilots are underway in shipping, supported by a SECI tender for 5 lakh tonnes to aggregate demand. 
• Pilot projects are also underway in: 
  • Transport. 
  • Steel (Direct Reduced Iron plants). 
• India is expanding cross-border energy cooperation through: 
  • Solar projects with Bhutan. 
  • Discussions on a regional South Asian electricity market. 

Significance of the Polysilicon Push

• Import substitution: Reduces dependence on China for a critical raw material. 
• Supply chain security: Improves resilience against geopolitical and trade disruptions. 
• Semiconductor ecosystem: High-purity polysilicon supports India’s semiconductor ambitions. 
• Higher domestic value addition: Increases manufacturing value retained within India. 
• Energy security: Strengthens the foundation of India’s renewable energy transition. 

Key Challenges

• Capital intensity: Large investments and long gestation periods. 
• High energy consumption: Refining polysilicon is energy-intensive and costly. 
• Technology dependence: Advanced purification technology is controlled by a limited number of global firms. 
• Competition from China: Chinese manufacturers benefit from economies of scale and lower production costs, making domestic competitiveness difficult without sustained policy support. 
• Environmental concerns: Manufacturing requires careful management of chemical by-products and emissions.

Source: IE | Down to Earth