Solar investments to hit $500 bn next year: ISA ex-DG

Ajay Mathur, former Director General of the ISA, believes $500 billion is likely to be invested in solar sector this year. “As far as investments are concerned, last year we saw approximately $400 billion come into solar (space)...we expect it to cross $500 billion today, a 20-25% increase in the investments in the sector,” Mathur says.

Currently the solar supply chain is highly concentrated and dependent on China. “The global demand for solar was at about 400GW in 2023, and of this 400 GW, 97% of the wafers came from China. (Around) 80-82% of solar modules came from China. This (thus) creates a problem of concentration,” he says.

Noting that demand for solar modules in Africa primarily relies on shipments from China, however, over 3-4 years, supply disruptions have resulted in regular shortages, with no modules available every two months. The Ukraine war has further constrained gas supplies, leaving African nations uncertain about whether to rely on gas or solar energy.

“We see this supply chain issue as a major problem in the future when we see the solar demand increasing by 3x by 2030 in the next six years at the very minimum. The upper range can be as high as 8x if the electric or hydrogen cars come as planned,” Mathur adds.

Mathur emphasises the need for geographic diversification in solar module manufacturing to create resilient supply chains and reduce reliance on China. India, with its established solar module industry, provides a model for emerging markets like Nigeria, where similar facilities are now taking shape.

Mathur highlights that such efforts create investment opportunities and position Africa as a potential hub for electric two-wheelers powered by locally assembled solar modules. Importing solar cells for regional manufacturing, he argues, offers a practical economic strategy for expanding solar energy and electric mobility.

Mathur, however, highlights that China’s significant overcapacity in solar cell production, nearly double global demand, poses a major competitive threat to international private players. To maintain market share, Chinese manufacturers have begun undercutting prices, with some offering solar cells at ₹6 to ₹10 per watt, far below the sustainable cost of ₹20 per watt needed to cover operating expenses. This aggressive pricing strategy raises concerns about the long-term sustainability of the global solar industry.

“We saw [in order] to remain alive these Chinese (manufacturers) were quoting at Rs. 10 or even some at Rs. 6 per watt. This creates an issue…in the long run.

To remain competitive, manufacturers in countries like India require incentives. India’s Performance Linked Incentive (PLI) scheme supports short-term competitiveness in the global market, while a 40% import duty on Chinese solar imports further aids domestic production efforts.

However, Mathur asserts that these measures are still insufficient to eliminate the Chinese monopoly, which is reinforced by their ability to offer the lowest prices.

“Even (after a 40% import duty), you are merely paying Rs. 14 which is still lower than the Rs. 20, that we had calculated. This is an existential problem as far as new capacity creation is concerned…We are (thus) looking at a challenging way ahead,” Mathur says.

With the PLI scheme, India’s solar cell production capacity is expected to reach 40 GW by next year, up from the present capacity of 7 GW. Much of this production is exported to meet high demand in the U.S., where imports from China are restricted due to labour concerns. Mathur claims that the PLI, combined with the import duty, helps make Indian cells competitively priced.

He adds that increasing production alone is not enough, India also needs to focus on developing storage solutions and ensuring that solar energy can meet base load demands for consistent, round-the-clock, carbon-free power. Strengthening both solar production and storage infrastructure will support sustainable growth for private and public players in India.

Addressing the disparities in solar energy reporting globally, while OECD countries have relatively robust data, Mathur says reporting from larger and smaller developing nations remains inadequate. Collaboration with the Ministry of Energy, the national focal point, will enhance data collection on applications, energy production, and funding.

ISA's technology report will focus on advancements in solar module manufacturing, specifically highlighting the shift towards HJT (Heterojunction Technology) solar modules, which offer improved efficiency compared to the currently dominant TopCON technology. The report is expected to discuss the emergence of multi-layered solar cells embedded with semiconductor chips, an area in which tech companies are increasingly investing, with these innovations anticipated to enter the market soon.