It has become difficult for the Indian solar module makers to stay in business. The reason is widening of the differential import prices to 10-12%. This encourages developers to opt for overseas imports of modules side kicking government’s ‘Make in India’ campaign.
Almost all the big domestic players, namely Indosolar, Tata Power Solar, Adani Group, Jupiter Solar and state-run Bhel, are fighting to keep their businesses viable in front of the cheaper supplies from modules manufactured by Chinese companies both in India and outside. The situation has resemblance to what happened a decade ago when India rolled out its ambitious project of expanding thermal generation capacity. At that time, too, all the developers opted for cheap Chinese supplies for offering the lowest tariff; it nearly pushed the domestic manufacturers to the edge. Then government had to come in the game to level things up by introducing quality and other regulations.
Instead of thermal power expansion it is solar power expansion to 100GW by the year 2022. Expectations are that India will place orders for 80,000MW of solar power installations which will be worth INR 2.44 lakh crore at current rates. India has 16GW of utility-scale solar power capacity out of which 11.5GW is in the pipeline and 5.6 GW is on its way for bidding.
Owing to the cheaper import last year, record low tariff of INR 2.44 per unit was observed. The tariff was lower than even the cost of coal-based electricity. But a sporadic rise in imports is making the domestic manufacturers fear about their $2 billion investment.
The normal span of a project is of 25 years and the developers opt for buying cheap equipment from Chinese manufacturers with 5-7 years life. They tend to recover the cost in this much span but they are compromising with project’s quality and future.
Estimations show that India’s significant portion of 3,164 MW of domestic solar cell-making capacity is either dysfunctional or operating at losses, additionally every 1,000 MW of loss in manufacturing capacity costs 3,000 jobs.
Those solar manufacturers which are able to survive are those which themselves have solar power construction projects. A differential import duty on imported solar cells will certainly help level the field, however, the manufacturers don’t want same duty on imported cells as domestic manufacturers don’t have this much production capacity.
The increasing pressure on domestic solar units is likely to bring a rise in bad loans. Moserbaer Solar is already facing insolvency proceedings and has a total debt of INR 1,000 crore. Websol Energy also faced a similar situation in 2013 in the form of liquidation after being burdened by the debt of INR 350 crore in working capital and long-term loans.