India will perform better than competitive markets like China in new energy: Nuvama report – EQ
In Short : According to a report by Nuvama, India is expected to outperform competitive markets like China in the new energy sector. The report highlights India’s rapid advancements in renewable energy, supportive government policies, and increasing investments in green technology as key factors. This positions India to lead in the global transition to sustainable energy, outpacing even major players like China.
In Detail : India’s potential to become the lowest-cost green ammonia producer is a game-changer in the global energy market. According to a Nuvama report, this advantage is primarily due to India’s lower costs in solar photovoltaic (PV) and wind energy, which are 16-44 percent and 17-40 percent lower, respectively, compared to global averages. The potential reduction in India’s finance costs, currently around 10 percent compared to the global range of 4-8 percent, could further enhance its competitiveness, making it a formidable player in the green ammonia market.
NITI Aayog suggests that India’s green ammonia (G-NH3) production costs could be approximately 29 percent lower than China’s and 43 percent lower than Australia’s by 2030.
Many Indian companies, including Reliance Industries (RIL), are set to play a pivotal role in India’s new energy journey. RIL plans to commission the first train of its solar PV manufacturing by the end of FY25, scaling up to a massive 20GW by CY26. RIL has secured Production Linked Incentives (PLIs) for both solar modules and green hydrogen (GH2) production, amounting to a total of USD 0.7 billion. These incentives are expected to cover 18 percent of the GH2 value chain, positioning RIL as a key beneficiary of India’s green energy policies.
The Indian government’s commitment to bolstering domestic solar module manufacturing is evident through its Solar PV Modules PLI-Tranche II, which has allocated Rs 140 billion for 39.6 GW of domestic capacity. This initiative is set to add 48GW of solar module manufacturing capacity over the next three years, with 7.4GW expected to be operational by October 2024, 16.8GW by April 2025, and the remaining 15.4GW by April 2026.
The PLI scheme is instrumental in making India one of the lowest-cost producers of solar modules, currently 23 percent cheaper than the global average and 6 percent lower than China.
The allocation of 6GW each to RIL and IndoSolar for end-to-end PWCM (polysilicon, wafers, cells, and modules) manufacturing capacity marks a milestone in India’s energy sector. This development will lead to the establishment of India’s first-ever polysilicon manufacturing unit, which is expected to substantially reduce overall module costs. With polysilicon currently accounting for one-third of the total module cost and enjoying around 70 percent margins, this move is set to revolutionize the domestic solar manufacturing landscape.
While India is making strides in the new energy sector, China faces challenges in its lithium-ion battery market. Despite a 14 percent year-on-year drop in lithium-ion battery prices in 2023, China’s manufacturing capacity is expected to exceed demand by 3.6 times by the end of CY24. This oversupply is likely to keep battery prices under pressure, potentially benefiting global electric vehicle manufacturers but posing challenges for Chinese producers.
The recent crash in input prices across the value chain, coupled with India’s PLI rollouts for modules, electrolyzers, and batteries, has enhanced the country’s economies of scale. Solar module prices have reached all-time lows, dropping 49 percent year-on-year as of August 2024, while lithium-ion battery prices have slid 14 percent year-on-year.
These developments, along with ongoing government initiatives, are expected to accelerate India’s timeline for achieving round-the-clock renewable energy at a green hydrogen cost of USD 1/kg, ahead of the original CY30 target.
