Solar developers step up panel imports as removal of safeguard duty cuts costs

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Updated: September 02, 2021 4:05 PM

Close to 3000 MW of ground mounted and around 300 MW of rooftop solar projects that were held-up have moved ahead, with companies placing orders with panel suppliers from China, South Korea, Vietnam and Taiwan for the next quarter, said industry officials

Officials believe the drop would have been significantly higher if the freight cost for containers had not doubled in the last nine month.Officials believe the drop would have been significantly higher if the freight cost for containers had not doubled in the last nine month.

Solar panel prices that rose consistently over the last one year due to various constraints in the supply chain have seen a dip of around Rs 2.5 per Watt peak or up to 15% after the safeguard duty on imports ended on July 31.

Close to 3000 MW of ground mounted and around 300 MW of rooftop solar projects that were held-up have moved ahead, with companies placing orders with panel suppliers from China, South Korea, Vietnam and Taiwan for the next quarter, said industry officials. There is a nine-month available for developers before the basic customs duty on panel imports kicks in from April next year.

Animesh Damani, managing partner of Artha Energy Resources told Fe, “There has been a drop of Rs 2 to Rs 2.5/wp in solar panel prices which is around 11-15% over the July prices. The solar panel prices in the polycrystalline segment are at Rs 18/Wp as of August 31, while in the monocrystalline segment the prices are at Rs 20/Wp compared with the July end prices.”

Officials believe the drop would have been significantly higher if the freight cost for containers had not doubled in the last nine month.

“The prices would have been lower by another Rs 0.87 paise to Rs 1/wp had the freight cost not risen to close to $7000 per TEU (Twenty Foot Equivalent Units) of a container,” Damani said.

There has been a positive impact on margins as well since the developers had taken a cut on their return on investments also impacted by cap on net metering for rooftop projects. Many ground mounted players operating in the open access segment had taken a cut on margins and were operating on as low as 10% compared with a high of 16% a few years ago.

Puneet Goyal, founder of SunAlpha told FE: “We have over booked ourselves for next quarter. But this time we have ordered from domestic manufacturers as well as they have optimised their production and efficiency ahead of BCD.”

Going ahead experts opine there will be challenges in terms of higher component costs and logistical costs leading to difficulty in purchasing panels at the best price.

Raj Prabhu, CEO of Mercom Capital Group said, “With duties and import restrictions, purchasing quality solar components at the best price will be the biggest challenge for the industry going forward as solar system costs ticked up for the fourth quarter in a row. The demand for building large-scale projects is extremely high, while auctions have slowed down.”

Gautam Das, CEO of Oorjan Cleantech said, systemic interventions like safeguard duty may be relevant to boost domestic manufacturing. However, the domestic panel manufacturer can hardly supply only 25% of the demand now and the Indian solar market is at a growth phase. “Safeguard duty adversely impacts both the cost of solar projects and tariff to end consumers. Removal of safeguard duty is a welcome step and the tariff may reduce by 6 -10 paise per unit which will enhance solar adoption in India,” Das said.

“Government should assess the global supply chain and come up with alternative incentives for Indian manufacturers. A balanced policy approach and alternate incentives will boost domestic manufacturing while sustaining the pace of solar adoption,” Das said.

There are others who believe that break from any form of duties for the next nine months is a respite that the developers were badly looking for to complete their projects and the biggest trend has emerged from Tier-1 and Tier-2 cities for adoption of solar..

Mayur Mishra, director and CEO of Corrit Energy and Infra, a solar EPC company said, “The demand in the last one month has surged. The biggest trend is witnessed in demand from tier-1 and tier-2 cities where commercial and industrial complexes are looking at hybrid model to make use of solar in case of power outages and compensate for higher cost of diesel. On an investment of Rs 50,000 per 100 kilo watt the developers are likely to get a payback in 4-5 years,” Mishra said.

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