How much does it cost to set up a 1 GW integrated solar module manufacturing plant?
Solar power is one of the fastest-growing renewable energy sources worldwide, and with the decreasing costs of solar panels and increasing demand, many investors are interested in the solar manufacturing industry. However, setting up an integrated solar module manufacturing plant is not an easy task and requires significant investment.
According to industry standards, the capital cost for setting up 1 GW of backward integrated solar panel manufacturing capacity, right from the manufacturing-grade silica, works out to INR32bn. However, only three companies with a total of 12 GW capacities have shown interest in building a complete integrated model that would attract an investment of INR384bn.
Backward integration is not only expensive but also technology and energy-intensive, which is why many players are not interested in venturing into integrated solar manufacturing and prefer to focus on the upstream chain of module manufacturing. In China, 500 GW of cell and module manufacturing capacities are expected to come up by the end of 2022, posing tough competition for an undeveloped domestic manufacturing segment.
The cost breakdown across segments shows that cell and balance of module (BOM) components account for the major share of module costs, of which cell contributes 60%. Raw material cost accounts for 80% of the total cell manufacturing cost, within which the major contributor is the wafer, accounting for 56% of the overall cost. Polysilicon accounts for 32% of wafer manufacturing costs, which, along with other materials, account for 60% of the cost share.
In conclusion, the solar manufacturing industry is an attractive investment opportunity, with an estimated INR730-750bn investment opportunity over the next 3-4 years. However, setting up an integrated solar module manufacturing plant requires significant investment and is not an easy task.
Table: Capital expenditure for 1 GW manufacturing capacity
| Segment | Capital Expenditure (INR bn) |
|---|---|
| M.G. Silica | 3.20 |
| Poly Silicon | 13.60 |
| Wafer | 6.40 |
| Cell | 6.40 |
| Module | 2.40 |
| Total | 32.00 |
Table: Module manufacturing costs
| Cost Component | Percentage Share |
|---|---|
| Cell | 60% |
| Balance of Module (BOM) | 32% |
| Other Material | 2% |
| Energy | 1% |
| Labour | 1% |
| Other Costs | 4% |
Table: Ingot/Wafer manufacturing costs
| Cost Component | Percentage Share |
|---|---|
| Polysilicon | 32% |
| Other Materials | 28% |
| Other Expenses | 23% |
| Energy | 13% |
| Depreciation | 2% |
| Labour | 2% |
Table summarizing the cost of setting up a polysilicon manufacturing plant:
| Cost Component | Percentage of Overall Cost |
|---|---|
| Raw Material | 38% |
| Other Material | 28% |
| Energy and Depreciation | 10% each |
| Labor, Maintenance, and Other Expenses | 14% |
The cost of domestically manufactured polysilicon is estimated to be around INR 823/kg. A polysilicon plant of 10,000 TPA capacity can produce around 2.4 GW of PV modules per annum. The Trichlorosilane (TCS) Siemens CVD3 technology is typically used to manufacture polysilicon. Raw material is the biggest cost contributor at 38%, followed by other material at 28%. Energy and depreciation are also significant cost components, each accounting for 10% of the overall cost. Labor, maintenance, and other expenses make up the remaining 14%.