Governmental announcements often trigger significant movements in stock prices, creating ripples across various sectors. Similarly, the PM-Surya Ghar: Muft Bijli Yojana has sparked anticipation and opportunity in India’s solar panel industry. Let’s explore how this scheme will influence the sector and impact associated stocks.
The Government’s Strategic Move
The PM-Surya Ghar initiative, announced by the Prime Minister, aims to provide free electricity to one crore households in India by facilitating the installation of solar panels on rooftops. This provides a subsidy to every individual who opts to adopt solar power. Subsidy for residential households will be Rs. 30,000/—per kW up to 2 kW and Rs. 18,000/—per kW for additional capacity up to 3 kW. Total Subsidy for systems larger than 3 KW is capped at Rs 78,000.
| Capacity | Subsidy (Rs) |
| 1kW | 30,000 |
| +1kW (2kW) | 30,000 |
| +1kW (3kW) | 18,000 |
| Total | 78,000 |
The Group Housing Society/ Resident Welfare Association subsidy is Rs 18,000 per kW for shared facilities, including EV charging, up to 500 kW capacity (@3 kW per house). This ambitious scheme not only addresses energy accessibility but also sets the stage for a surge in demand for solar-related products.
Understanding the Scheme’s Implications
The scheme offers subsidies to households opting for solar panel installations, making solar energy a financially viable option for many. By leveraging India’s abundant sunlight, even economically disadvantaged households can harness solar power to meet their energy needs. It not only reduces electricity bills but also contributes to environmental sustainability. The scheme will also influence the solar market in India as the subsidy will create a huge demand for solar panels, affecting the stock prices of companies that manufacture solar panels or related products.
Challenges and Geopolitical Considerations
Despite India’s abundant sunlight, challenges persist in achieving self-sufficiency in solar panel production. With China dominating key stages of the supply chain, India faces dependency issues. However, recent developments, such as domestic manufacturing initiatives and export growth, indicate a shift towards self-reliance.
China’s Dominance in Solar Panel Manufacturing
China has established itself as a solar energy superpower, controlling over 80% of the global solar supply chain. In 2023 alone, China invested more than $130 billion into its solar industry, significantly widening the technology and cost gap with other countries. This dominance is attributed to China’s advanced technology, low costs, and comprehensive control over the entire supply chain, from raw materials like polysilicon to the final panel product.
China’s strategic advantage is further solidified by its plans to build more than 1,000 GW of N-type cell capacity, which is the next-generation technology after P-type and is 17 times more than the rest of the world combined. This massive capacity is sufficient to meet the world’s annual solar demand for the next decade. China already has an upper edge with its 77.8% global distribution share, although India stood at a worldwide share of 1.9% as of 2019. It might change soon, as the subsidy on solar panels and demand through the International Solar Alliance puts India’s solar market in better shape.
Geopolitics also plays a vital role in the growth. As the political tension between the USA and China grows, and the USA is gradually cutting its ties with China, India is opening a window for exporting solar panels to the USA. In FY 2023, India exported around $1 billion worth of PV modules to the USA, around 97% of the global module exports from India. This number is expected to grow, creating opportunities for investors and entrepreneurs.
Shifting Power Dynamics
The global solar power market is projected to grow from $234.86 billion in 2022 to $373.84 billion by 2029. As countries strive to reduce their dependency on fossil fuels and minimize carbon emissions, the demand for renewable energy sources like solar power is increasing. This growth presents an opportunity for countries like India to develop their solar panel manufacturing capabilities and reduce reliance on imports, particularly from China.
India’s PM-Surya Ghar scheme is a strategic move to boost domestic solar panel production and use. By offering subsidies and promoting rooftop installations, the scheme aims to make solar energy accessible to a broader population segment. This initiative could stimulate local manufacturing and create a more self-reliant solar industry in India.
As with the current scale at which India produces solar panels, it costs roughly around $0.21 per watt, but importing it from China costs just $0.15 per watt. It might not sound much, but the effect is substantial when you look at the complete price.
| Cost per watt (USD) | Cost for 3 kW (USD) | Cost for 3 kW (INR)(03-04-2024) |
| $0.21 | $630 | ₹52,544 |
| $0.15 | $450 | ₹37,530 |
Considering India is a price-sensitive market, this difference in cost can bring a company to its knees. Hence, India is trying to achieve economies of scale to reach the $0.15 mark on the production front to reduce its dependency on China for solar panels.
However, despite considerable module expansion plans, overseas markets, including India, are still expected to depend on China for wafers and cells in the next three years. Thanks to strong production-linked incentive (PLI) incentives, India is anticipated to overtake Southeast Asia as the second-largest module production region by 2025. Yet, it will continue to lag behind China regarding technology and scale.
Opportunities for Investors and Entrepreneurs
The PM-Surya Ghar initiative unveils many opportunities for investors and entrepreneurs keen on tapping into India’s solar energy potential. Here’s a breakdown of key opportunities:
- Investment Potential: Companies involved in solar panel manufacturing, financing, and ancillary services stand to benefit from the scheme’s implementation. Investors can strategically position themselves in stocks of companies contributing to the solar value chain.
- Entrepreneurial Ventures: The scheme allows entrepreneurs to venture into solar panel manufacturing, distribution, financing, and insurance sectors. With government support and rising demand, startups and existing businesses can thrive in this burgeoning industry.
Addressing Supply Chain Dynamics
To fully grasp the PM-Surya Ghar scheme’s implications, understanding the solar panel supply chain is essential. From sourcing raw materials like polysilicon to manufacturing solar cells and panels, each step presents opportunities for investment and innovation.
Investment Strategies
Investors eyeing the solar panel industry should analyze companies involved in polysilicon production, wafer manufacturing, solar cell production, and module assembly. Investors can make informed decisions by identifying firms contributing to India’s solar energy goals and global competitiveness.
Just like the introduction of ethanol in fuel increased the demand for companies dealing in sugarcane, companies making solar panels and dealing with installations may see a surge in demand, as PM-Surya Ghar: Muft Bijli Yojana not only reinforces them but the International Solar Alliance also supports such businesses.
Conclusion
The PM-Surya Ghar: Muft Bijli Yojana marks a significant milestone in India’s transition towards sustainable energy solutions. As the solar panel industry gears up to meet rising demand, investors and entrepreneurs have a unique opportunity to capitalize on this growth trajectory. By aligning investments with India’s renewable energy ambitions, stakeholders can drive economic prosperity and foster environmental stewardship.
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FAQs
What is the PM-Surya Ghar: Muft Bijli Yojana?
The PM-Surya Ghar: Muft Bijli Yojana is a governmental initiative that aims to provide free electricity to one crore households in India by subsidizing installing solar panels on rooftops.
How does the subsidy work under this scheme?
The subsidy for residential households is Rs. 30,000 per kW for up to 2 kW and Rs. 18,000 per kW for additional capacity up to 3 kW, with a total subsidy cap of Rs. 78,000 for systems larger than 3 kW.
What impact does the scheme have on India’s solar panel industry?
The scheme is expected to surge demand for solar-related products, stimulate local manufacturing, and create a more self-reliant solar industry in India.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.