Solar developers in Gujarat brace for higher costs with DCR rollout

Ahmedabad: If you are planning to install solar rooftop panels, you may have to spend a little more now. Effective from June, solar projects connected through net-metering and open-access arrangements can use only domestically manufactured solar cells. Even as the move is aimed at improving self-reliance and reducing Chinese import-dependence by encouraging local manufacturing, the transition for developers, consumers and several small manufacturers will be far from painless.Industry sources said that the immediate impact is likely to be higher installation costs, tighter supply and increased pressure on companies that depend on imported solar cells.According to industry estimates, India has an installed capacity of 25GW for solar cell manufacturing, against an annual demand of roughly 50GW. “The policy is directionally positive because the govt wants to build a self-reliant solar manufacturing ecosystem, but there are practical challenges the industry will have to navigate in the near term,” said Jaideep Malaviya, a solar energy consultant.“Demand for domestically manufactured solar cells is already rising sharply, but India still does not have adequate production capacity to fully meet the expected requirement. This creates a classic Catch-22 situation. On one hand, imported solar cells continue to be cheaper, while domestic manufacturing remains relatively expensive. On the other hand, the transition towards self-reliance had to begin at some stage,” he said. “The govt should also carefully assess whether the country is sufficiently geared up with raw materials and manufacturing capacity to meet these ambitious targets. At present, demand is likely to outstrip production for some time.”The impact could be felt across Gujarat’s large commercial and industrial solar market. The state is among the country’s biggest adopters of captive and open-access solar power, with manufacturing units, chemical plants and engineering companies increasingly relying on renewable energy to reduce electricity costs.Industry executives say the economics of solar projects will continue to remain attractive over the long term, but some projects may witness recalibration of costs and payback periods as developers adjust to the new sourcing framework.“While several solar cell manufacturing facilities have been announced and many new players are entering the market, actual domestic manufacturing capacity is still under development. Setting up a cell manufacturing plant is a time-intensive process and, on average, it takes close to a year for a new facility to become operational,” said Piyush Variya, co-founder of Sunora Solar. “During this transition period, a large number of solar manufacturing companies could face pressure in terms of production utilisation, finances and workforce management.”Rooftop solar installers are also closely watching the transition. While demand from households is expected to remain strong under govt-supported schemes, installers anticipate that customers may become more sensitive to pricing if equipment costs rise.Variya added that the sharp price difference between DCR-compliant and non-DCR products is also impacting project economics, particularly in the commercial and industrial (C&I) and ground-mounted solar segments. “Project execution has slowed in some areas because higher equipment costs directly affect viability. This, in turn, impacts investments, employment generation and overall industry momentum,” he said.