India recently joined the global solar trade wars with the Ministry of Commerce starting an investigation into dumping of solar cells on a complaint made by Indian solar manufacturers association. Note Indian domestic solar producers have been almost been completely wiped out by imports of Chinese solar panels and First Solar (US solar thin film producers). The prices of imported solar panels are much lower than that of the costs of the small Indian solar cell and module makers. While one of the objectives of India’s solar policy was to promote the use of indigenous solar production, that has not happened despite a rapidly growing market. The Indian market has been taken over by imports almost completely leaving almost nothing for the domestic guys.
Indian solar developers and power supplies like Welspun Energy, Reliance Power have benefited enormously from the currently overcapacity and crash in solar panel prices globally. Solar Panel price has crashed to 65-70c/watt in 2012 from $4/watt in 2008. This has not only reduced the solar electricity price to Rs 7-8/KwH from Rs 16/KwH but also generated handsome profits for the developers. The import duties on solar products will put a major setback as the pries of solar systems will rise if domestic panels are used. To ward off this danger, Indian solar developers who are a much more influential group than the small solar manufactures are planning to:
1) Revive their lobby Solar Independent Power Producers’ Association
2) Appoint a Consultancy to show how cheap imports are benefiting India
3) Hire a Legal Firm to fight the Case in Court.
Like the duties on imports of Chinese telecom and power equipment, the Indian consumers of these products will fight tooth and nail to prevent duties on imports of solar equipment.
Read our earlier article on how First Solar benefited from a Loophole:
US based thin film solar panel manufacturer First Solar has captured the lead marketshare in India’s solar panel market. This is quite surprising since First Solar’s competitive position is being eroded globally by Chinese crystalline solar panels which are cheaper and of higher efficiency. In fact First Solar has mostly stopped selling solar panels because they are no longer competitive. The reason for First Solar’s spectacular success in India is due to India’s solar subsidy policy JNNSM. The policy which was meant to support India’s domestic solar panel companies though a “domestic content” provision has ironically helped First Solar become the undisputed leader in winning most of the JNNSM projects. The reason is that JNNSM excludes thin film solar panels from the domestic content provision which means that solar developers can buy thin film technology from foreign companies. Given that the cost structure and scale of Indian solar manufacturers is clearly no match to that of the global solar companies, First Solar has benefited hugely . The company recently won a 50 MW solar panel supply contract to Kiran and Mahindra Solar companies which won the bid under JNNSM.
Despite talks about making the conditions more stringent and imposition of duties on solar panel imports, nothing has been done till now. Note USA is strongly opposed to this as it knows First Solar will lose an important market where it is still being able to compete
USA opposed India’s domestic content requirements in Solar Energy (in vain)
USA has opposed India’s Local Content Requirements for the Federal Solar Energy JNNSM program. Note according to the JNNSM rules,solar panels will have to be produced in India for the first year and solar cells will also have to produced from the second year. There is also a proposal that the local content requirements may be extended beyond 2013 and will also include solar inverters. US administration is opposed to these rules as it will lead to export hurdles for its solar companies Sunpower and First Solar. India installers and developers have also opposed the move as it will lead to lesser choice amongst suppliers and probably higher costs.
Note India solar cell/module manufacturers are heavily in favor of the domestic content rules as it will be difficult for them to compete with much larger and lower cost Chinese companies. Note China has not protested against these moves as it promoted its Domestic Wind Energy Industry in 2006 through this policy. Ontario, Canada too is following the same policy and has been take to the WTO by Japan. Note USA has not been a party to the Japanese move, as its companies have won large contracts in the region. There are both pros and cons to the domestic content policy for solar energy but one thing is for sure if free imports are allowed, Indian companies are not in a position to compete with the foreign ones on cost.
Solar Companies around the world are facing hard times with bankruptcies galore. Not only hundreds of small installers, erstwhile behemohts like Q-Cells have defaulted on debt and declared bankruptcy. So its not a great surprise that Indian solar companies which were never very competitive anyway are facing equally bad times. The biggest and oldest solar panel companies like Moser Baer and Tata BP Solar are facing survival questions. These companies have seen departure of top executives and are looking for CDR resolutions. Moser Baer which had invested hundreds of millions in investments into crystalline silicon and thin film solar is having difficulty in paying back its debt. The stock price has cratered to almost nothing as well. The company which had invested into exotic solar technologies as well as the mainstream has managed to fail everywhere. The company had even invested in a polysilicon startup as well as concentrated solar power technologies. It shut down its thin film equipment plant a year ago as Applied Materials the equipment supplier itself got out of the business. The company is now mainly into the EPC business. Other companies like Indosolar are also looking like a write-off. When the biggest solar panel companies like Suntech are themselves in such trouble, it is a surprise that these companies are managing to produce anything at all.