According to a recent report by Mercom India, unless the domestic solar power equipment manufacturers reinvent themselves, they will be facing difficult times ahead. In fact, the analyst firms feel that the days when the government is willing to pay more for domestic modules has come to an end.
Domestic solar manufacturing capacity in India is almost 60 percent of the market’s power, comprising of approximately 6 Gigawatts of the total 10 Gigawatts, stated Mercom. However, the manufacturers in India managed to cover only 10-15 % of the Indian market.
An analyst from Mercom India quoted, “On top of that there are no government programs to help domestic manufacturers. Considering where the market is today, they will find it is extremely tough to compete with the Chinese players on price.”
According to expert analysts, if the government instructs the domestic content requirement on modules for airports, railways, ports and other sectors, manufacturers in India could claim some market share. According to the domestic content requirement (DCR) category, it is mandate for the solar projects in our country to utilize solar modules and cells manufactured domestically in India.
This was started in the beginning of the year 2010 at the Jawaharlal Nehru National Solar Mission (JNNSM). This was introduced with the aim to create a robust and healthy manufacturing base, which will boost and promote India as a solar hub. However, with the volatile market dynamics and the rise of China as the manufacturing center, the DCR category tenders are halted.
The solar projects in the first batch of the year 2010-2011, under the JNNSM policy, which were based on crystalline silicon technology, were mandatorily required to use modules that were manufactured in India. The second batch of solar projects in the FY 2011-2012 were also required to abide by the same condition. However, a clause was added that stated PV modules made from concentrator PV cells or thin film technologies can be sourced from other countries.
According to an official at the Solar Energy Corporation of India (SECI), gradually the developers realized that there was a possibility of increasing the profits by sourcing materials under the open category.
In the year 2011 and 2012, module prices dropped from $1.80 per Watt to $0.65 per Watt, which is almost sixty five percent drop. Manufacturers in China captured most of the global market, including India, and released cheap Chinese modules into the market. This refrained the developers from buying expensive domestic panels.
According to Mercom, the non-DCr modules manufactured in India cost almost 10-15 percent higher than the Chinese modules. Auctions grew more competitive, and it seemed projects were feasible only with the help of Chinese modules, whose price kept falling with every quarter.