The cost of solar prices in the Indian market has continued to registered massive falls, despite the government's imposition of safeguard duty on imports from China, Malaysia and the West, as global prices have fallen 25 per cent year-on-year, reports Financial Express.
With the imposition of safeguard duty of 25 per cent on imports from China and Malaysia, India saw a surge in import of cheaper solar panels and associated components from Vietnam and Thailand, given no such duty has been attached to imports from those countries. This has ensured that the supply of cheaper solar panels from foreign nations continues to dominate the Indian market, weighing on the prospects for domestic manufacturers.
Another factor leading to more supply and lesser demand in the market can be found in the approximate 55 per cent drop in solar installations year-on-year in FY19 to 4,569 megawatts (MW), which was much below the planned target of 16,000 MW. Albeit, throughout FY19, the Ministry of New and Renewable Energy was seen to be on a tender issuance spree, but the actual progress was tepid owing to repeated instances of tender cancellations. The unavailability of sufficient transmission network is also weighing on developer sentiments.
With China's having pared down its installation targets by a steep 60 per cent, global supply is going to remain high, even though some relief is expected on the demand front, in view of a procurement drive in Europe, new solar policies in Latin America, and new markets in Africa, said Kunal Chandra, managing director of Proinso India, the Indian arm of the UK-based solar solutions provider.
In August 2019, the safeguard duty will come down from 25 per cent to 20 per cent which would further impact the supply and price patterns. These are expected to have a positive impact on demand, complemented by the rise in tenders from central and state agencies like Solar Energy Corporation of India (SECI).
Panels constitute about 60 per cent of a solar project's cost. Major fall in prices over the last five years has facilitated installation of 28,000 MW of solar capacity in India as of December 2018. Between 2013 and 2019, solar panel prices have fallen 71 per cent.