How ALMM Is Reshaping Solar Economics for Indian Businesses

If you have spoken to a solar EPC in the last few months and felt like the quote was higher than what you expected six months ago, you’re not imagining it. You’re seeing the real-world effect of a policy called ALMM (the Approved List of Models and Manufacturers) tightening at exactly the moment industrial and commercial demand for solar is at its highest.

With the implementation of the Approved List of Models and Manufacturers (ALMM) and the government’s push toward domestically manufactured cells and modules, project costs have risen, procurement timelines have become more complicated, and businesses are finding that quotations they received a few months ago no longer reflect today’s reality.

For some companies, the immediate reaction has been to delay investment and wait for prices to fall. But looking at solar purely through the lens of upfront cost misses the larger picture.

This article breaks down what ALMM actually is, why it’s pushing up costs, what that means in real rupees for businesses, and despite the higher upfront number, why solar still makes overwhelming financial sense. We will also cover what you can do about the cost increase, because there are real, practical levers available, not just “wait and see.”

What Is ALMM, Actually?

The Approved List of Models and Manufacturers was introduced by the Ministry of New and Renewable Energy to ensure that solar projects use products manufactured by approved suppliers that meet prescribed quality standards. Initially, the focus was on modules. But the scope of the policy has steadily expanded. With the introduction of ALMM List-II and the growing emphasis on domestically manufactured cells, the government is attempting to localize a larger share of the solar value chain. ALMM was first introduced in 2019 and has grown in scope since:

List-I (Modules): Covers solar PV module manufacturers and models. This has existed since 2021 and has recently been updated.
List-II (Solar Cells): Where List-I only checked that the module was assembled by an approved Indian manufacturer, List-II goes a layer deeper; it mandates that the solar cells inside the module also come from an approved domestic cell manufacturer. This closes a loophole where a panel could be “Made in India” on the label while the actual cells inside were imported.
List-III (Ingots and Wafers): Scheduled to come into force from June 1, 2028, pushing domestic content requirements even further upstream into the raw materials of the supply chain.

The critical date for most businesses right now is June 1, 2026, the day List-II became mandatory. MNRE confirmed this deadline would hold despite industry requests for an extension, with only narrow, case-by-case relief for projects that had already installed modules or made significant on-ground progress before that date.

For any project that is mandated to use ALMM, net-metering connections, open-access power projects, and anything tied to a government scheme or subsidy, modules must now come from List I, and the cells inside those modules must come from List II.

Why is the government doing this?

It isn’t an arbitrary cost-raising exercise. The logic is straightforward industrial policy:

Closing the assembly-only loophole. India built enormous module assembly capacity (around 120 GW), but its solar cell manufacturing capacity lagged far behind (around 30 GW). A panel could be technically “Indian-made” while 80–90% of its value was imported, mostly from China. List-II forces real backward integration, not just final assembly.
Energy and supply chain security of single-source dependency is a risk the Indian government wanted to mitigate.
Quality assurance. Every ALMM-listed product goes through MNRE-recognised testing and BIS certification, which raises the baseline reliability of what gets installed.
Building a genuine domestic industry. More demand for Indian-made cells is to encourage the homegrown industry expansion, jobs, and innovation.

Viewed from a national perspective, the strategy makes sense. But transitions rarely happen without friction, and that friction is being felt most acutely by commercial and industrial consumers.

How ALMM Is Actually Hitting the Solar Industry

The core problem: demand has outrun supply. This is the single most important number to understand: India’s domestic solar cell manufacturing capacity is roughly 30 GW per year, while India’s module capacity is 210 GW. ALMM List-II forces every compliant module to draw from that much smaller 30 GW cell pool. The result is a straightforward supply squeeze.

Industry bodies asked MNRE for a phased rollout (proposing an extension to October 2026) specifically because they could see this mismatch coming. MNRE held firm on the June 1, 2026 date, offering only case-by-case relief for projects already at an advanced stage.

Three places this hits your project: procurement, timeline, and cost

Procurement: fewer suppliers, more verification work. Every module has to be checked at two levels: is the module on List-I, and is the cell inside it on List-II? Verification has to happen model-by-model, not just brand-by-brand, because ALMM listings are specific to exact product variants and can change between revisions. Procurement teams now need active compliance tracking just to avoid getting caught out by a list update mid-project.

Time delay: With every manufacturer rushing to get cells and modules tested and listed before and after the deadline, testing and certification agencies are facing a genuine bottleneck. Industry estimates point to certification delays of six to nine months in some cases.

Cost: Multiple industry pricing trackers in 2026 show DCR-compliant (domestically-sourced cell + module) panels carrying a meaningful premium over non-DCR equivalents:

Module-level price gaps are commonly cited in the range of ₹8–₹10 per watt for fully DCR/ALMM-II compliant product versus non-compliant equivalents.
At the percentage level, industry pricing guides put DCR modules roughly 12–18% more expensive than comparable non-DCR imported modules before import duties are factored in.

At a project level, this routinely shifts total turnkey cost by lakhs of rupees on a mid-sized rooftop plant, and tens of lakhs to over a crore on a multi-megawatt installation.

Case Study: What This Actually Costs a Business

Let’s put real numbers against a real-sized project; a 500 kW rooftop solar installation, the kind of system a mid-sized factory, warehouse, or industrial unit in India would typically install to offset its grid electricity bill.

(Note: the figures below are illustrative, built from current industry pricing ranges, and should be validated against your own EPC quotation. Horizon’s team will run exact numbers for your specific site, tariff, and roof condition.)

The cost comparison

	Before ALMM-II tightening	After ALMM-II tightening (June 2026 onward)
All-in turnkey cost per watt	~₹38/W	~₹44/W
Total project cost (500 kW)	₹1.90 Crore	₹2.20 Crore
Extra cost from compliance	—	₹30 lakh (≈16% increase)

That ₹30 lakh isn’t a rounding error. For a mid-sized industrial unit, that’s a meaningful capital outlay decision, and it’s exactly why business owners are hesitating right now.

What does that extra cost do to your payback period

	Before	After
Annual generation (500 kW, ~1,550 kWh/kWp/yr)	7,75,000 kWh	7,75,000 kWh
Annual savings at ₹8/unit grid tariff	₹62 lakh	₹62 lakh
Simple payback period	~3.1 years	~3.5 years

The honest takeaway: the ALMM-driven price increase stretches your payback period by roughly 5 to 6 months, not years. That’s a real cost, but it’s far short of derailing the investment case.

The 25-year picture

With module degradation of around 0.5% per year, and no fuel costs, the same 500 kW system over its full life (conservatively assuming your grid tariff never rises a single rupee over 25 years, which it almost certainly will):

	Before	After
Total capex	₹1.90 Cr	₹2.20 Cr
Lifetime gross savings (25 yrs, flat tariff)	₹14.6 Cr	₹14.6 Cr
Net lifetime savings	₹12.7 Cr	₹12.4 Cr
ROI multiple (savings ÷ capex)	7.7x	6.6x

Even absorbing the full ALMM-driven cost increase, this project still returns more than 6 times its capital cost over its lifetime, on conservative, flat-tariff assumptions. If your grid tariff rises even modestly over 25 years, the real multiple is higher still.

The policy makes solar more expensive to install, but it does not make solar a bad investment. It moves the breakeven point from just over 3 years to just under 3.6 years, on an asset that then keeps paying you for another two decades.

What Can Businesses Actually Do About the Extra Cost?

You can’t change MNRE policy, and waiting for prices to come back down isn’t a reliable strategy. Domestic cell capacity will scale up over the coming years, but in the near term, demand from the mandatory deadline is, if anything, pushing prices up further, not down. So the real question is: how do you absorb or restructure the extra cost rather than letting it stall your decision?

Financing is the most direct lever you have. The ₹30 lakh increase in our case study isn’t a recurring cost; it’s a one-time capital ask. You can spread that over a structured loan tenure, rather than funding it entirely from working capital.
RESCO model (Renewable Energy Service Company) arrangement removes the capital question entirely. A developer owns and finances the plant on your roof or premises; you simply sign a power purchase agreement and pay for the electricity you consume, at a rate below your current grid tariff, with no upfront investment.
Right-size and re-sequence the project. Not every system needs to be built in one shot. Phasing a larger installation, or right-sizing it to your actual peak load rather than your full roof capacity, reduces the investment.
Lock your module specification early. Module prices are genuinely volatile right now; a quotation in one month can be 12–15% off from the market rate a few months later, purely from ALMM-driven supply movement. Locking the exact brand, model, and wattage into your contract (not just a price) protects you from a surprise later in the project.
Don’t conflate “more expensive” with “bad timing.” Some businesses are tempted to wait, hoping prices ease. But certification backlogs and the structural cell-supply shortage mean near-term prices are more likely to stay firm or rise further before domestic capacity scales out meaningfully. Every month spent waiting is also a month of grid electricity bills that solar would have offset. The cost of inaction has a number too, it’s just less visible than the capex number.

How Horizon Renewable Power Helps You Navigate This

We guarantee quality, not just compliance. Every module we specify is verified against the current ALMM List-I and List-II at the time of procurement. With list revisions happening multiple times a year, that distinction matters.

We help you finance the gap. Through our banking partners, we structure financing so the ALMM-driven cost increase becomes a manageable EMI.

We show you exactly what your money buys. Our 3D modelling process maps your actual site, your actual roof, and your actual load profile before a single rupee is committed. You see precisely how many watts of capacity, what generation profile, and what payback period your specific investment produces.

We protect the ROI we promise you, for the life of the plant. A solar plant’s 25-year return depends on it actually being maintained at the performance level it was designed for. We don’t disappear after commissioning; ongoing operations and maintenance keep your plant in tip top condition.

Yes, the policy environment has made solar more expensive. But, it has not made solar a worse investment! The underlying math, even in our conservative case study, still returns more than six times its capital cost over its lifetime. The businesses that come out ahead are the ones that treat the ALMM increase as a financing and planning problem to be solved, not a reason to wait.

If you want to see what these numbers look like for your specific facility, get in touch with Horizon Renewable Power for a free site assessment and a transparent, ALMM-compliant proposal – to the rupee and the watt.