Why in news?
Rise in Chinese solar module prices could hurt India’s solar parks.
What is the background?
- A recent assessment was made by “Investment Information & Credit Rating Agency” (ICRA) on solar investments.
- It says that the recent rise in China’s Photo-Voltaic (PV) module prices could make the costing of India’s solar sector unviable.
- Solar projects in India is now seeing bids well below Rs. 3/kwh, with the lowest being Rs.2.44/kwh at Bhadla phase III in Rajasthan.
- The rise in imported PV module prices between May and August, has been from 30-32 cents per watt to 35-37 cents per watt.
- This is expected to impact the viability of all projects where bid tariff is below Rs. 3.5 per unit.
Why has this unexpected price spike emerged?
- It has been attributed to the sudden spurt in buying in the US, as a trade ruling against China’s solar module makers is anticipated.
- Two US panel manufacturers, Suniva and Oregon World, have moved the US International Trade Commission for protection against Chinese imports.
- If the President intervenes, the US may see a slowdown in demand for Chinese panels.
- That could lead to lower prices for Indian panel buyers.
- But uncertainty prevails currently since it cannot be said whether these price spike will last for months or years.
- In this backdrop, some Chinese suppliers are reported to be delaying on supplies and are seeking renegotiation of contracts.
How does the future look?
- For solar power to raise its presence, the industry will have to step up installations and improve panel efficiencies.
- The annual imports of solar equipments, amounts to over $2 billion at present.
- India is touted to emerge as one of the world’s largest markets for PV modules in future.
- Hence, indigenous solar equipment production capacity needs to be enhanced to cope with financial and trade shocks even if costs go up a little.
Source: Business Line
