India: Imported solar module prices plunge to 36 US cents per watt-peak

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Solar PV modules imported into India now cost an average of $0.36 per watt peak (Wp) – a fall of around 15% in the space of three months, say analysts Bridge to India.

This steep fall in prices is largely as a result of oversupply from China, where an installation slowdown in the second half of the year has prompted solar module manufacturers to overload their modules into neighboring India. This is likely to cause a supply glut over the next few months, say the analysts, which will in turn result in "severe financial stress" for module manufacturers across the supply chain, said Bridge to India associate director consulting Jasmeet Khurana.

"The impact of this fall on domestic manufacturing is likely to be very damaging," Khurana said. "The current oversupply is likely to result in severe financial stress for module manufacturers and lead to bankruptcies and consolidation."

Bridge to India believes that China’s big Tier-1 suppliers are financial robust enough to survive this downturn, but concerns are mounting that many of the industry’s smaller players may be unable to compete. Higher efficiency technologies are increasingly shaping the sector, and the more bankable companies have already begun upgrading their lines to these superior technologies.

For project developers operating in India, the current price point is something of a "bonanza", Khurana said, as they can benefit from optimal modules sold at record low prices. Indian solar module manufacturers, however, face a double whammy of increased competition and tumbling prices – which can only serve to undermine the government’s aim to promote as much as 2.5 GW of domestic capacity expansions and additions over the next year.

Tariff bids at auction have fallen to reflect the new pricing reality, reaching a low of INR 4.34 in Rajasthan a few weeks ago. However, the slight upshot of cheaper modules is tariffs agreed in 2015 that were – at the time – seen as aggressive are now likely to prove very attractive. An example cited by Bridge to India is a winning bid lodged in Telangana in August last year for Rs 5.17 – 5.72 per unit ($0.08 – $0.09/kWh) for 2 GW of solar capacity that is now widely viewed as a good price, having seen module prices fall by around 20% from $0.45/Wp since first agreeing the tariff.

Across the value chain, Bridge to India claim that polysilicon prices have fallen by 30% in the past month, with wafers also down by around 20% – mirroring the general pricing trends throughout the solar supply chain. These falls are likely to continue through September as international module manufacturing capacity inches past 100 GW, while global demand is expected to reach no more than 70 GW this year.

The current glut could continue for at least 12 months, the analysts at Bridge to India say, with China unlikely to be able to grow its way out of this hole alone.

Local Indian developers will be the chief beneficiaries in the short term, and should be able to significantly boost the country’s cumulative installed PV capacity in 2017, but the longer term outlook will not be so rosy if India becomes viewed by international investors as a dumping ground for Chinese modules.

This could particularly be the case for the smaller projects including ground mounted, rooftop and off-grid, and those that are developed by first time investors or consumers for self-consumption, Vinay Rustagi of Bridge to India told pv magazine. "Bigger developers with adequate technical capability can make informed decisions, appoint third-party quality consultants and carry out necessary testing etc, but smaller developers, investors and end consumers do not have the necessary know-how and unfortunately, there is very high risk that many of them will end up buying sub-standard modules."

At the beginning of the month, Mercom Capital reported that solar modules imported into India from China were retailing at an average of $0.39/W – the lowest anywhere in the world. The continued price decline reported by Bridge to India in the subsequent weeks confirms this general downward trend.