Solar Panel Price on the Rise – What does it mean for the Indian Market

Solar panel prices have continued to rise in the last few months which is adversely affecting the commercial viability of most projects in India. Cases, where panels have yet to be procured are the most affected. First COVID and then supply chain issues, as well as labor constraints, have challenged the overall development of solar projects in India. The price of solar panels is being quoted at an average 30 cents per watt peak, compared to 26 cents before the crisis. Solar which was touted as the popular alternative energy source owing to its status of the cheapest power source, has reported an ~18%-20% price increase, since the beginning of 2021, given the rise in prices of commodities (polysilicon, silver, glass, and metals like copper and aluminum) and supply chain problems.

What It Means for the Indian Market

India imports ~85%-90% solar modules from China. The country also plans to introduce a 40% basic customs duty on imported solar panels from April 1, 2022, which is further going to pressure the Indian solar market. Moreover, Indian developers operate at a cut-throat margin hence even a marginal increase in panel prices put an additional financial strain on them.

Since modules account for the majority of total solar project costs, an increase in panel prices will lead to an overall increase in project prices and will further pressure India’s target of achieving 175GW by 2022. The polysilicon shortfall is expected to last through the first half of 2022 and solar panel prices are likely to stay high until next year. Large project developers will find it difficult to maintain the profitability as well as the financial viability of their projects. While the times sound challenging for the solar players in India, it could also be an opportunity for India to shine and become independent. Though the country houses one of the largest glass makers and is one of the biggest aluminum producers in the world, we import these components for solar panels. With the PLI scheme and an Atmanirbhar Bharat, can we hopefully look at turning the grim situation into an opportunity?