Three days into office and US President Donald Trump is shaking things up with a flurry of executive orders, with far-reaching consequences for businesses and people at home as well as across the world.
Uncertainty now looms over Indian solar module manufacturers who were setting up plants in the US, as the Trump administration has paused the disbursal of funds under the Inflation Reduction Act (IRA), 2022.
IPO-bound Vikram Solar in an exclusive interview to Moneycontrol said it may scrap its plan to set up a 3 GW manufacturing unit in Colorado, Navitas Solar said it has put on hold a 1.2 GW plant in the Midwest.
Touted as the most aggressive climate action in the history of the US, the IRA offered tax credits as high as 30 percent and incentives for domestic production of items such as solar modules to accelerate the transition to a clean energy economy.
Trump takes the sunshine away
Haryana-based Saatvik Solar, which in 2023 announced a manufacturing unit in the US, too, has decided to wait and watch.
Domestic brokerage firm Kotak Institutional Equities said Waaree Energies Ltd and Premier Energies are at risk following Trump’s IRA move.
The Act, rolled out by the Biden administration in 2022, attracted several Indian solar manufacturers such as Waaree Energies, Vikram Solar, Premier Energies, Saatvik Solar and Navitas Solar to “Make in USA”.
With the Trump administration temporarily halting funds, Indian companies are now rethinking their plans to set up units in the US.
Vikram Solar chairman and managing director Gyanesh Chaudhary said the firm’s solar cell and module manufacturing unit in the US was to get operational in FY27.
When asked if the company would go ahead with the plant if the IRA were to be repealed, he said, “Currently, we are also keeping a close watch on the new government taking over in the US. Like with all business decisions, the plan is contingent on various factors including the fate of the IRA.”
Responding to Moneycontrol queries, Amit Paithankar, whole-time director and CEO of Waaree Energies, said incentives didn’t form the core of the company’s investment strategy. “Waaree continues to have a positive outlook on the American market, and we intend to stay invested in the US market for the long term,” he said.
Paithankar said manufacturing in the US would allow the company to make solar panels in America for the American market. “Our investments and manufacturing plans are predicated upon the intrinsic strength and growth in the market. Incentives do not form the core of investment thesis; they are good to have not must have," he said.
While Vikram Solar, Navitas Solar, Premier Energies and Saatvik Solar were yet to infuse capital in their US units, Waaree Energies announced the commencement of commercial production of solar modules at its advanced 1.6 GW manufacturing facility in Brookshire, Texas on January 23.
Future tense
Gujarat-based Navitas Solar said along with its local partners, it was looking up to the IRA but put the manufacturing unit plan on hold when the US went to polls.
“IRA incentives are surely important and our local partners in the USA were also looking at them if we plan to finalise our set-up of manufacturing there. Since the last couple of quarters, we had put our plans on hold and wanted to wait for policy clarity at the federal level,” director Vineet Mittal told Moneycontrol. “We will continue to wait till the final outcome is clear and only then we will take any final capital commitment call.”
Saatvik Green Energy CEO Prashant Mathur said a clear and consistent policy framework that addressed the interests of international manufacturers would play a critical role in shaping their strategy.
"The US solar industry is on our radar, but a strong policy alignment that promotes both international collaboration and local development will be critical in finalising our strategy, which is yet anticipated," he told Moneycontrol.
The Trump administration’s move will impact both Independent Power Producers (IPPs) in the US and domestic module manufacturers, Kotak Institutional Equities has said.
“While the halt is temporary, it can potentially turn into a complete repeal of IRA incentives, which will negatively impact Indian solar manufacturers like Waaree and Premier," the brokerage said in a note.
Kotak said it had not factored in any impact on Premier and Waaree yet, since the measures were temporary.
A scenario analysis suggested that a complete repeal of IRA would result in a cut to Waaree's price target to Rs 2,000 from Rs 2,500 and Premier to Rs 580 from Rs 770.
The IRA also spurred exports of solar modules from India to the US. According to the Institute of Energy Economics and Financial Analysis (IEEFA), the export of Indian photovoltaic (PV) modules rose more than 23 times between fiscal 2022 and FY2024, primarily to the US.
The US accounted for more than 97 percent of India’s exports in FY23 and in FY24.
The brokerage said that Waaree was more vulnerable than Premier in the near term, as it was India's largest solar exporter with a 44 percent share and generating nearly 60 percent of its FY24 revenue from US exports, compared to only 14 percent for Premier.
Premier Energies did not respond to the queries sent by Moneycontrol till the time of publishing of this report.
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