The pace of capacity-building in the solar power sector may slow down, as cost of key capital equipment is set to rise with an import tariff to be effective from the next financial year. Prices of domestically manufactured solar panels have jumped 20% in the last two months to Rs 26-27 per watt peak as many developers expedited their projects, ahead of the basic customs duties (BCD) of 40% and 25% to take effect from April 2 on panels and cells respectively
What will slow the pace of projects is also the fact that the domestic market for panels is set to be out of bounds for Chinese suppliers because none of them are on the approved list of models and manufacturers (ALMM) which is to be effective from April 1.
The prevailing low demand for panels is despite the historic trend of demand rising in March as companies hurry up to buy panels for upcoming projects before the end of a financial year.
Gautam Das, CEO of Oorjan Cleantech said geopolitical tension coupled with introduction of BCD and ALMM policy has made prices of both domestic and imported panels extremely volatile, adversely impacting viability of projects.
“Consumers are bearing the cost at the end of the day. Developers and consumers may defer the solar adoption plan. Hope the prices would correct and find an equilibrium soon,” Das said.
Puneet Goyal, co-founder of SunAlpha Energy said, manufacturers of both domestic and Chinese panels are unsure about the policies, hence they could be testing the market with higher panel prices to discover a new normal. “In a few weeks after BCD is implemented, the price volatility may come down,” Goyal said.
The ministry of new and renewable energy’s (MNRE) new ALMM will include open access and net metering projects for solar modules, which comes into effect from April 1.
Animesh Damani, managing partner of Artha Energy Resources, said the increase in module prices is a result of rising polysilicon and wafer prices due to strong demand for solar modules globally. Besides, the prices have increased in India due to a piling up of stocks before the application of BCD from April 1. “It is widely expected module prices should cool down in the next few months as the current prices are already unsustainable,” Damani said.
