Indian solar power developers are exploring ways to keep input costs low after tariff barriers on equipment go into effect from April next year, two people familiar with the development said.
To avoid paying higher taxes after the government imposed a base tariff of 25% on solar cells and 40% on modules from the next fiscal year, some developers are planning to import solar cells, then have them assembled into modules by local manufacturers.
In doing so, they expect to save on the higher tariffs for imports of solar modules. This is gaining in importance, as solar modules represent more than 50% of the total cost of the project.
Developers try to keep costs low as solar power prices hit record highs of ₹1.99 per unit.
Despite running the world’s largest green energy program, India has a domestic manufacturing capacity of just 3 gigawatts (GW) for solar cells and 15 GW for solar modules.
“Many developers are looking at it, with some domestic module manufacturers ready to assemble it for them. They are also studying this strategy, given how Chinese suppliers have raised the prices of modules, “said the CEO of a solar energy company on condition of anonymity, one of the two people cited above. .
Chinese suppliers have raised prices for solar modules to 25 cents per kWh from 19 cents. Suppliers renounce their contracts for the supply of equipment already contracted, even if their bank guarantees are cashed.
Indian solar developers also plan to avoid supplies from Xinjiang, China, following reports of alleged use of forced labor by manufacturers, as Mint reported earlier.
A high solar module price of 25 cents per kWh may not only reduce the yields of bidding projects by 200 basis points, but may also increase solar power tariffs by 10 to 15 paise per unit in future bids. , Crisil Ratings said in a recent report.
Indian solar developers are also limited to choosing from a few suppliers, as the Ministry of New and Renewable Energy (MNRE) has required them to purchase equipment from a list of approved solar PV module models and manufacturers.
India’s renewable energy capacity addition will grow to at least 10.5 GW in FY 22, from 7.4 GW in FY 21, according to Icra Ratings. There is a strong project portfolio of 38 GW and an additional 20 GW of clean energy projects being tendered, he said.
India has a solar power generation capacity of 41.09 GW, with plans to reach 100 GW by 2022. According to the Central Electricity Authority, India’s energy needs will reach 817 GW by 2030 , more than half of which would be clean energy. In addition, a green power capacity of 30 GW will be needed to produce around 1.1 million tonnes per year of green hydrogen to meet the proposed requirements by 2030.
“We estimated the growth in electricity demand across India at 6% for FY22 year-on-year, taking into account the favorable base effect, the relatively smaller impact of the second wave on demand for electricity and the resumption of the vaccination program, “Icra said in a statement on Tuesday. It expects the addition of power generation capacity to rebound in fiscal year 22 to 17-18 GW, increasing 45% over the previous year, led by the green power segment.
Never miss a story! Stay connected and informed with Mint. Download our app now !!
