Increasing prices of imported PV modules may put at risk 3.2 GW of solar projects in India, ICRA


If prices of PV modules imported into India continue to increase, this will negatively impact the Indian solar market, and adversely affect solar projects which are priced at a tariff bid lower than INR 3.5/kWh. This is the conclusion of a research conducted by Indian rating agency ICRA.

According to the company, prices of imported panels increased by 15% over the last three to four months, up from $0.30-0.32/W in May 2017 to about $0.35-0.37 in August 2017. This increase, ICRA claims, was due to two factors: the growing import of Chinese modules in the U.S. market (which is due to the possibility of a new solar trade issue between the United States and India) and the extension of the feed-in tariff regime for solar power projects in China till September 2017.

ICRA also explains that any delay in delivery schedule or dishonoring in price terms by Chinese manufacturers may delay the completion of projects along with project cost over-run.

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India’s lowest bid for solar, INR 2.44/kWh, was reached in May 2017. According to ICRA, projects below INR 3.5/kWh have reached a combined capacity of 3.25 GW at the end of August 2017. All of these projects, the rating agency said, are now at risk, unless they are relying on modules produced in India.

ICRA estimates that for a case of $0.06 increase in module price, for a project priced at INR 2.5/kWh, the capital cost will increase by 11%, thereby resulting in a decline in cumulative average debt service coverage ratio (DSCR) by 0.12 times, and decline in project IRR by 180 basis points. As a result, rising prices of imported modules could put at risk many Indian solar projects, as India currently imports almost 70% of its solar PV modules.

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