Chinese Solar Panels to put tariffs on as now India is going through a solar power boom
India is going through a solar power boom as it has found its place among the top three cheapest solar power suppliers in the world. This is because of the reason that solar tariffs dropped under Rs.2.50 KWPH today. The auctions were conducted by state-run solar energy cooperation of India to build 500MW of the solar projects in the sunny state of Rajasthan. India’s ACME group and Japanese Softbank, India clean energy venture called SBG CLEANTECH quoted the lowest tariffs to win rights to build these 500MW of projects in Rajasthan. While these low tariffs are a big affirmation for PM Narendra Modi’s climate goal, they also enable India to affordable power and fight pollution. While on point experts point out that these Chinese Solar Panels tariffs may not be sustainable, many others say that the upside is that now it will take only half the investment or half the money to build solar projects at these rates as supposed to building new coal projects.
A combination of government targets and steeply falling prices have meant developed its falling over them to build huge new solar farms across the country. Last year, one developer set a new record for help cheaply; it was willing to build a farm in Rajasthan. The panel manufacturers like IB Solar (outside Delhi) are facing competition from across the border in China where manufacturers are selling goods of very cheaply because they have simply made too much for the domestic market.
In the last four years, Indian domestic solar manufacturers have gone for making 246 MW of capacity every year to over 500 but in the same period imports have increased for 1275MW every year to nearly 10,000. The reason is simple, price. If a developer wants to buy an Indian made solar panel, it is going to cost them around Rs.62 per watt of capacity but if you want to buy the same panel from China, it will cost you closer than 25 rupees. However, the U.S and the EU have taken action imposing anti-dumping duties against Chinese companies for what they say is selling at the low cost of price.
Now, India is proposing to do the same thing by planning emergency 70% tariffs on most of all its solar panel imposed including those from China. This plan seems to be controversial in many ways, as developers say it will push up the power prices and make them less likely to bid for contracts in the future. Government is on record to say that all the bids which have happened before this proposed safeguard duty on solar panels will be exempted. So to that extent all the bid out projects of state and central government are safe. Smaller manufacturers say that by including raw materials under the tariffs will make panels more expensive. Wherein today the states have been used to buying power at 2.5 or at 2.8 per unit and suddenly with 70% safeguard duty, the tariffs will go up to Rs.3.7-3.9 per Unit. It will be a huge jump in tariff which doesn’t seem to be good when we are surplus in energy. Even today, the manufacturers believe that the gap between the Chinese pricing and the Indian manufacturing prices is not more than 3 to 4 sites that mean 10% of safeguard duty should have been more than enough to make a balancing act. And the project cost will go up with the rise in tariffs because manufacturers have to make their returns anyhow. But as the tariff fall, a near probability of the government’s target for a 100GW solar power by March 2020 becomes all the more realistic. Despite this, land also remains a big stumbling block and therefore recently manufacturers suggested that government should give more allocation of capital for solar power so that the government acquires the land and creating infrastructure for the developer resulting in low risk and developers will get aggressive in bidding. If the government can bid out 50 to 60,000 MW of solar park bids is quite achievable for instance, a 300MW project can be done in 12 months probably then. Last year, the government gave something around 20,000 crores and it is believed a similar kind of capital is required again.
Finance ministry should also need to incentivize some discoms to buy more renewable power, both solar and wind. Wind is a 100% make in India vertical and therefore, it is very imperative to encourage wind. For FY18-19, if commissioning of solar projects is concerned there is a challenge of about 8000-9000MW, maybe 10GW as well. The prime reason here would be lack of bids in the previous year, what you bid last year, would only get commissioned in this year. The outlook for the wind sector is just going to be worse this year as it is not possible to cross just 1000MW compared to 5000 and 5200MW was done earlier. Manufacturers are also ready to venture into Charging Infrastructure & Battery Manufacturing because of the government giving a major push to e-vehicles nowadays. India is still struggling with our policies and that too without any clear roadmap as to what the country wants to do so it is very important that the government calls a largest stakeholder consultation meeting framing the policy as soon as possible. The largest manufacturers are happy though by saying that if the government wants to protect Indian jobs and manufacturing, they need to take action pretty soon.