China, India expedite renewables expansion amid geopolitical uncertainties

China and India are accelerating renewable energy expansion as geopolitical tensions increase the demand for non-fossil fuel sources of energy, despite worries the new trade tariff regime may disrupt supply chains and exports prospects, industry experts said.

In May, China's monthly solar and wind installation capacities reached 93 GW and 26 GW, up 388% and 801% year over year, respectively, official data showed. Meanwhile, in April, India installed 3.33 GW of renewables capacity, up three times from the same month a year ago India's Central Electricity Authority data showed.

Yet, as populous developing countries with increasing energy demand, both China and India have high dependencies on crude oil and natural gas imports.

"Uncertainty creates volatility... it also increases the price and cost of oil... and makes non-fossil fuel sources of energy more competitive," Sumant Sinha, co-chair of the World Economic Forum's Alliance of CEO Climate Leaders, told Platts, part of S&P Global Commodity Insights, underscoring the growing demand for renewable energy.

However, Sinha pointed out the "dust had yet to settle" on the US trade tariffs that could lead to a new world order for renewables supply chains and prices globally.

Mainland China is set to produce 434.96 GW modules in 2025, seen rising to 496.83 GW by 2028, according to data from Commodity Insights. India is expected to produce 36.17 GW of modules in 2025, which is likely to rise to 63.08 GW by 2028.

Members from the industry said the large capacity of renewable components around the world may be bearish for prices. However, tariffs and other trade restrictions imposed on certain countries could raise the cost of renewable components in those places, whereas in other destinations, it may fall.

Both China and India aim to leverage their relatively low manufacturing costs and export cleantech products to the rest of the world. While China has held a position of dominance, the tariffs could impact its trade.

On the other hand, India is still not self-sufficient in its own domestic demand of solar panels and modules and currently relies on imports from China. In the longer term, it hopes to gain where China may find barriers and make inroads, industry members said, adding, the opportunities had yet to manifest itself.

China's struggles

"Under the current geopolitical situation, India is a 'fellow patient' facing the same pains and taking the same pills as us, but, at the same time, it is also one of our biggest competitors," a Beijing-based cleantech investment manager told Platts.

The manager mentioned that, like the US and EU, India has planned to gradually cut dependency on imports from China, adding that they can also export the excess products to the US, where both China and four major Southeast Asian exporters (i.e. Cambodia, Thailand, Malaysia and Vietnam) faced much higher tariffs and anti-dumping duties.

"Some Chinese manufacturers have to cede some of their 'territories' to India in the next few years, because of the trade barriers set by certain importing countries," the manager said. "However, Chinese producers are also actively seeking new markets, such as the Middle East, Australia and Japan."

The manager said Australia and Japan may also impose rules to reduce dependencies on made-in-China products, which could be an added issue. The Middle East is more friendly to China, but geopolitical tensions have made business opportunities in these markets unpredictable, the manager added.

Industry participants told Platts that, if the Iran-Israel conflict reignites, the potential closure of the Strait of Hormuz would not only impede China's cleantech exports to the Middle East but also the import of critical raw materials.

"Iran alone contributes to about 15% of China's soda ash imports, while the demand for soda ash for photovoltaic glass production accounts for 20% of the total domestic demand," a local solar manufacturer said.

India's strategies

India has been importing solar PV cells, modules, polysilicon and wafers from China, and the government has been using tariff and non-tariff measures to regulate the flow of imports while building the industry up with incentives.

The country cut the customs duty on imported solar cells and modules in its fiscal 2025-26 budget in February. While the duty on solar cells was cut from 25% to 20%, for modules it was lowered from 40% to 20%, as India needed more components.

"All of our modules, of course, are going to come from domestic sources... cells will increasingly start coming from domestic sources," Sinha, also the chairman and CEO of Indian renewables firm ReNew, said.

"There is still some time -- two to four years -- but you'll start seeing more and more localization happening. By 2030, I would imagine we would be fully localized on cells as well. And hopefully, the same will happen in wafers and polysilicon at some point in time."

Sinha added that the final shape of the Inflation Reduction Act and how the reciprocal tariff negotiations would be concluded would also impact India's opportunities.