The rising costs of solar panels and components like glass, wafers and silicones, which are mostly imported from China, have forced contractors to hold up more than 3,000 MW of ground-mounted and over 300 MW of rooftop projects, eventually leading to renegotiation of contracts.
Solar module prices have been trending high since mid-2020 and have risen around 17% year-to-date. At the beginning of the year, module prices hovered around Rs 18 per watt peak, and companies that bid aggressively expecting prices to fall are finding it difficult to keep their projects viable.
Puneet Goyal, director and co-founder of SunAlpha Energy, told FE that more than 300 MW of rooftop projects have been held up due to the rising price of panels. The problem is compounded by a lack of clarity on the extension of safeguard duty, which ends on July 31.
“The indecisiveness on when and where to purchase the panels has delayed the projects. The cap on net metering by various states — albeit increased by central government to 500 kWh — has dented developers’ capacity expansion plans in the rooftop segment,” Goyal said.
If the safeguard duty is not extended after July 31 — which is likely, as it cannot be extended more than once — the government may bring in an anti-dumping duty. If there is no extension for the nine months up to April 2022, when the basic customs duty will be levied, Chinese panel manufacturers are expected to dump their panels in India, driving down the cost and affecting domestic manufacturers.
While the rising global commodity prices of steel, copper and aluminium have contributed to the overall price pressure, experts said suppliers have already factored in the basic customs duty in the solar panel prices. For a competitive market like India, where independent power producers play on lower margins and modules represent 60% of the project cost, even a modest increase in module price will make projects unsustainable.
Gautam Das, founder of Oorjan, which offers turnkey renewable energy solutions including funding, said increasing cost of solar panels and components is an uncertainty to the ecosystem. It eats up the incentive of investors