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| Author | Alan Tu, Robin Song |
| Updated | November 08, 2024 |
With the push for global energy transition and policy incentives, India's renewable energy has rapidly progressed. As one of the world's top five PV markets, India's PV demand is experiencing substantial growth driven by supportive policies and massive power needs. According to the National Energy Plan (NEP) 2023, India aims to achieve a PV installed capacity of 186 GW by 2026-2027 and to reach 365 GW by 2032. Such a vast PV generation capacity will require corresponding energy storage systems to maintain grid stability, making storage technology a crucial element in the current energy transition.
Since the government reinstated the ALMM mandate in April, India's domestic demand has been primarily met by importing cells and assembling into modules. Utility-scale ground-mounted projects have been driven India's installations, and market demand will likely rise further in 2024 and 2025 under government-led tenders.
Meanwhile, India’s energy storage demand is also picking up. According to the NEP 2023, India's storage demand is projected to reach a total capacity of 73.93 GW and an energy storage capacity of 411.4 GWh by 2031 and 2032, with 175.18 GWh from pumped storage hydropower (PSH) and 236.22 GWh from mainstream electrochemical energy storage, ensuring a stable supply of renewable energy.
The Indian government has skillfully balanced policies to protect local developers and manufacturers. The production-linked incentive (PLI) scheme provides subsidies to encourage manufacturers' integration into the industry chain. Simultaneously, measures such as the ALMM, anti-dumping investigations on Chinese cells and modules, and import tariffs on BoMs have been implemented to mitigate the adverse impact of imports. The two-pronged strategy boosts local manufacturing and safeguards the localization of the PV and energy storage supply chain.
The rise of local manufacturing aligns with India’s target of energy self-sufficiency and enhances the resilience of the industrial supply chain.
The Indian government approved the PLI scheme on April 7, 2021, providing incentives to boost local high-efficiency module manufacturing. The scheme accumulates capacities of 48,337 MW in the first two rounds of auction and will complete construction within 3 to 5 years, a key factor of local production in India.
India's local manufacturing ecosystem has roots extending beyond recent years, as major manufacturers have experience producing cells and modules. According to InfoLink statistics, nameplate module capacity under planning is expected to reach 70 GW by the end of 2024, while many new expansion plans for cell were added in the past two years. Although the expansion timelines remain long, the new cell capacity can supply certain local demand when it emerges.
Despite the significant planned capacities, local manufacturing continues to face challenges. Most Indian manufacturers face labor shortages, insufficient manufacturing experience, and issues related to Chinese visas, making it unlikely to bring large scale of capacity online in the short term.
PV technology has long been a highlight for manufacturers looking to expand production capacity. The global market share of n-type high-efficiency products was about 25% in 2023. With the rising n-type penetration, its market share will reach nearly 80% in 2024, with TOPCon technology making up 70%. TOPCon, as current mainstream technique, still requires cost reduction and efficiency improvement.
India is also actively developing TOPCon technology amid the clear technological direction, with all Tier-1 manufacturers planning for TOPCon cells or modules. However, given the lengthy depreciation cycle associated with upgrading production lines, Tier-2 and Tier-3 peers are generally reluctant to follow suit. As a compromise, most manufacturers operate 10 BB production lines to produce PERC and TOPCon. This approach requires less investment while meeting market demand for technology pathways.
Another key consideration for manufacturers is the format. In 2024, cell and module makers continue to explore various rectangular wafers, including 182mm, 183.75mm, and the currently promoted 210RN (182×210mm). India is keeping pace with China's trend in format iterations to ensure its production expansion maintains a competitive edge.
As India's renewable energy grows, demand for energy storage is increasing, driving various technologies forward. PSH and lithium-ion battery energy storage systems (Li-BESS) are the most prominent solutions in India. The industry is also exploring additional technologies to support this growth.
2024 marks a key year for Li-BESS in India, with installations expected to exceed 1 GWh and the first 100 MWh-scale battery project going into operation.
Li-ion batteries are favored in the electrochemical storage market due to their high energy density, long lifespan, and stable performance. There are two main types:
1. Lithium iron phosphate (LFP)
LFP batteries hold over 90% of the global storage market due to their high safety, thermal stability, and lower cost. With an energy density of 150-170 Wh/kg, LFP batteries are less dense than ternary lithium battery but are 20-30% cheaper and have a longer cycle life, making them suitable for long-term storage.
2. Ternary lithium battery (NCM/NCA)
With an energy density of 240-280 Wh/kg, ternary lithium batteries are better for applications requiring high energy density, like electric vehicles. However, higher costs, lower safety and lifespan limit their use in utility-scale storage, declining its market share in storage applications.
A shift toward large capacity lithium cells began in 2023, with 300 Ah+ cells replacing older 280 Ah models. Companies are exploring cells exceeding 500 Ah, as falling lithium carbonate prices and competitive pricing drive demand for cells with larger capacity. 300 Ah+ cells held nearly 30% of the global market share in the first half of 2024, projected to reach 50% by year-end, with India expected to follow this trend.
With fossil fuel peak regulation and frequency adjustment phasing out, the need for long-duration storage is growing to offset the cost of grid upgrades and stabilize renewable energy output. While PSH remains the traditional solution, included in India’s national plan and started tenders, it is limited by terrain, high costs, and lengthy payback periods. India’s market will likely require alternative technologies. For 4 to 12-hour storage, redox flow batteries (RFB) are well-suited, while compressed air or hydrogen storage could meet seasonal needs over 12-hour storage. Tender information from 2024 shows the industry is exploring auxiliary technologies like flow batteries.
The rapid growth in India’s solar and storage markets presents both opportunities and challenges for companies. As global demand increases, India’s future development will depend on supportive policies and innovation.
While declining Li-ion battery costs are fueling demand, India's market will need diverse technical solutions to meet rising long-term storage needs. Flow batteries, compressed air, and other technologies may play key roles in specific applications.
Overall, India’s renewable energy market is transforming, and companies must adapt to shifts in policy, technology, and demand.
Database contains the global lithium-ion battery market supply and demand analysis, focusing on the cell segment in the ESS sector. We compile detailed data on various businesses' capacity, production, and shipments, as well as segmenting the market applications such as FTM, BTM-C&I, and BTM-Residential.
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