India’s Solar Industry which is already reeling under policy uncertainty, is set to be dealt another body blow

solar panel project

In the period from March – May ’17, India’s solar industry witnessed a fall in Solar tariffs of close to 25% .

In the period from June – August ’17, India’s solar industry started experiencing DISCOMS reneging on their PPA commitments.

In the period from Sept – November ’17, India’s Solar Industry has witnessed an increase in Solar Modules prices of close to 25%.

As we approach December ’17 – and upto March ’18-  the Industry would wait with bated breath to see how far the gap widens in India’s Solar ‘Revolution’ and its ground level ‘Reality’, and how many participants in this Race fall by the wayside as the Government readies to deal the industry another body-blow with the levy of Anti-Dumping Duty on the import of Solar modules.

In the  500 MW bid invited for by SECI at Rajasthan’s Bhadla solar park – a 10,000-hectare facility on the edge of the Thar desert prices of Solar power crashed to a record low of Rs. 2.44/ kWh, to surpass Coal as the cheapest source of electricity, which sells power at an average price of Rs. 3.20/kWh.

6 months later, and there are strong rumors that M/s ACME Solar Holdings Pvt. Ltd. which had quoted the price of Rs. 2.44/ kWh for 200 MW of the tendered capacity, has withdrawn its bid for executing the said project at Bhadla’s Solar Park as prices of Solar modules have seen an unprecedented increase in Module prices from the anticipated levels of $0.27 cents/ Wp to a 15 month high of $0.39 cents/ Wp for December shipments of modules.

This price is expected to increase even further, as an environmental crackdown in China coincided with an annual lull in polysilicon output, according to Jenny Chase, head solar analyst at Bloomberg New Energy Finance. Refiners in China typically cut back polysilicon production during the summer for routine maintenance. Solar manufacturers anticipate the seasonal slowdown, but it was exacerbated this year when China’s Ministry of Environmental Protection shut down several plants that make metallurgical silicon, a partially refined polysilicon that other companies further purify for use in solar cells.

These two events led to a polysilicon shortage that drove prices in China from $14 to $19 a kilogram over the past four months, according to Guelph, Ontario-based Canadian Solar, which has most of its manufacturing in China.

And now the NDA government is expected to impose an anti-dumping duty (ADD) on imported solar panels in order to boost sales of locally made ones. This is bound to increase the costs of setting up power plants as 89% of the solar panels used in India are imported, mostly from China, Taiwan, and Malaysia whose products are around 10% cheaper than locally made ones.

“If the anti-dumping duty is imposed—which is likely, very strongly likely—then it will make life easier for domestic producers (of solar panels),” said Amit Kumar, a partner at consulting firm PwC, who focuses on the renewables sector. An ADD of, say, 25% will allow a similar hike in prices of local products, too, bringing down the homegrown firms’ losses, Kumar added.

However this isn’t good news for India’s solar power producers who have anyway been struggling over the past 2 months with Chennai customs stalling the clearance of Solar panels – classifying them as “DC Generators” and levying a 7.5% duty on the import of Solar modules, which have for the past 7 years been imported under the HSN Code 8541 and been exempt from the levy of any Customs Duty.

India’s solar growth has further been impacted by flat power demand, as the government struggles to incentivise manufacturing, and the rapid pace at which the centre and states were holding auctions for solar projects has slowed significantly as developers struggle to sign PPAs for tenders they have already secured and EPCs struggle to execute projects which they have already been awarded.

As a result the sector is lagging India’s target of installing 100 gigawatts (GW, or 1,000 megawatts) of plants by 2022.

The ADD is likely to make projects even less viable. Developers are already being forced to quote low tariffs to win the few available projects, risking low returns, and an increase in costs due to the duties would add even more pressure.

The basic math for setting up a solar plant is that 1MW costs around Rs6 crore, according to Rupesh Sankhe, senior analyst at Reliance Securities, a brokerage. His estimate is that if a developer wants a return on investment of around 14%, then the tariff needs to be in the range of between Rs4.5 and Rs5 per kWh. “If they come below Rs3 (per kWh), then the return will be zero,” Sankhe said. “No matter what they do, they won’t make profits.”

With the levy of a significant Anti dumping duty the math of Solar being a profitable investment would stop making any sense, and the offtakers for power would reduce even further.  “If the duty is very sharp, the tariff will go up very sharply and…the discoms (distribution companies) will not buy the power. Then the solar sector will come down dramatically,” said Sunil Jain, CEO of Hero Future Energies

There are an approximate 11 GW of solar projects in the pipeline as per industry sources at the time of publishing this article, and they would all be undeniably jeopardised by the levy of a provisional duty or Anti-Dumping Duty. Further, projects which are yet to be auctioned and assigned to power producers, which are estimated to be ~3 GW would also be hit, and India’s Sunrise Industry would be clouded by pollution emanating from the burning of a desire to make India a global leader in an industry before it’s due time.

A group of tech enthusiasts who are tracking latest developments in CleanTech with special focus on Energy Storage and Electric Mobility

About Energy Log Staff

A group of tech enthusiasts who are tracking latest developments in CleanTech with special focus on Energy Storage and Electric Mobility

View all posts by Energy Log Staff →

21 Comments on “India’s Solar Industry which is already reeling under policy uncertainty, is set to be dealt another body blow”

  1. Hello, i think that i saw you visited my weblog so i came to “return the favor”.I’m attempting
    to find things to enhance my site!I suppose its ok to use some of
    your ideas!!

  2. Awesome Ьlog! Do you have any recommendations for aspiring writers?
    I’m planning tо start my own website soon but I’m a little
    lost on everythіng. Ꮃould you suggest starting with a frеe platform like WordPress or go for a paid option? There are so many options out there that I’m completeⅼy confused ..
    Any tips? Thanks!

  3. My brother ѕuggеsted I migһt like this web site. He was entirelү right.

    Tһіs ⲣost truly made my day. You can not
    imagіne simply how much time I had spent for this information! Thanks!

  4. І think this is one of the most vital information for me.
    And i am glad reading your article. But ԝant to remark on feᴡ general
    things, The site styⅼe is іdeаl, the artіcles is really
    exсellent : D. Good job, cheers

  5. It’s аctually а ⅽool and useful рiece of info. І am happy
    that you simply ѕhared this useful information with us.
    Pleɑse stay us up to date like this. Thank you for sһaring.

  6. Ƭhis ɗesign is wicked! You օbviously know how to keep a reаder entertained.
    Вetween your wit and your videos, I was almost moved to
    start my own blog (well, almost…HaHa!) Wonderful job. I rеally enjoyed what you
    had to say, and more tһan that, hⲟw уou presented it.
    Тoo cool!

  7. Helⅼо there, I discovered yߋսr blog by the usе
    of Google even as searching for a comparable subjеct, ʏoսr weƄ site came սp, it seеms
    to be good. I’ve bⲟokmarked it іn my google bookmarks.
    Hi there, simplʏ became аware of your blog thru Google, and located that
    it’s really informative. I’m gօnna watch out
    for brᥙssels. I will be grateful in the evеnt you
    continue this in future. А lot of otheг people will be benefited from yߋur writіng.

    Cheers!

  8. Hi there tօ every , since I am actually eager of reading this
    blog’s post to be updated on a regular basis. It carries fastidious informatiօn.

  9. you aгe in reality a excеllent webmastеr. The websitе loading velocity
    is amazing. It sort of feeⅼs that үou’re doing any unique
    trick. Furthermore, The contents are masterwork. you һave done a fantastic аctіvity on this topic!

  10. Usually Ι don’t learn article on blogs, but I would like to say
    that this write-սp very forceɗ me to tаke a look at
    and do so! Your writing tastе has been amazed me. Thank you, quite nice
    article.

  11. Mʏ brother recommended I might like this blog.
    He was entirely rigһt. This post actually made my day.

    You can not imagine simply how much tіme I had
    ѕpent foг this information! Thanks!

Leave a Reply

Your email address will not be published. Required fields are marked *