Price of solar panels surged 50% resulting into delay in projects in India

Solar panels industry

The prices of solar panels in India have surged over 50 percent in the last two months to over Rs 30 per wattpeak due to the imposition of 25 percent import duty on cells and higher commodity prices caused by the Ukraine-Russia war.

Many developers have put their solar projects on hold as panel prices in India are on par with imported panels from China or even higher. China supplies around 85 percent of India’s panel requirements for solar projects, a news report in Financial Express said.

India government on April 1, 2022 introduced 40 percent import duty on solar panels, and 25 percent on solar cells in order to help domestic manufacturers expand their capacities across the country.

“We were forced to hike the panel prices as all the input costs increased drastically. The 25 percent duty on cells translates to 12.5 percent of the panel price. Higher commodity and shipping cost prices added to the price hike,” Hitesh Doshi, chairman of Waaree Energies, India’s second-largest panel manufacturer, said.

The developers have put their projects on hold. “The PPAs signed for the projects become unviable at such high project costs. Indian manufacturers have now good manufacturing capacity and latest technology but they need good local demand,” Doshi added.

“The price needs to be regulated. The current crisis of high price of panels seems to be a long drawn process unless India achieves the 20 GW manufacturing capacity,” Ashu Gupta, head of regulatory at CleanMax Enviro Energy Solutions, said.

India has an approved panel manufacturing capacity of 12GW per year as of last month. India requires 30 GW per annum capacity to meet its capacity target of 450 GW by 2030. India government plans to approve around 8 GW of panel manufacturing applications by the first week of May 2022, the report said.

“The developers need some solution in terms of reduction of GST on projects that are as high as 13.9 percent or increase in depreciation if the import duty on panes cannot be reduced,” said Puneet Goyal, co-founder of SunAlpha Energy.

The uncertainty over impact of approved list of models and manufacturers (ALMM) policy, increased goods and GST and low manufacturing capacity have added to the volatility in solar panel price in India, Gautam Das, co-founder of Oorjan Cleantech said.