India solar panel prices continue to fall on 25% y-o-y dip in global rates

Despite the safeguard duty imposed on imports from China, Malaysia and the West, effective July 2018, solar panel prices continued to fall in the domestic market, as a 25% year-on-year fall in global prices has more than offset the duty impact.

Though demand for the panels could look up in 2019, with a sharp cut in China’s installation target (down 60%), supplies might still continue to outweigh demand keeping prices low through the year, analysts feel. Panels constitute 60% of the solar project cost; a precipitous 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%.

Kunal Chandra, managing director of Proinso India, the Indian arm of the UK-based solar solutions provider, said going ahead, some of the important events that will drive demand in the solar market would be a procurement drive in Europe, new solar policies in Latin American countries and new markets in Africa.

Also, the safeguard duty in India will come down from 25% to 20% from August. All these factors will have a positive impact on demand, but the panel prices will fall by another 5-6% in FY20 as supplies will exceed the demand.
In India, the prices were also impacted by estimated 55% y-o-y drop in solar installations in FY19 to 4,569 MW which was only a quarter of planned target of 16,000 MW.

Though the ministry of new and renewable energy was on a tender issuance spree, the actual progress was much slower owing to multiple instances of tender under subscription and cancellations. Private sector response has dimmed owing to poor tender design, low tariff expectations and transmission sector bottlenecks.

Renewable energy consultancy firm Bridge To India, in its report on the solar sector, said, “The capacity addition has been weak in the last quarters, but we expect a significant pick-up in activity in 2019. Market confidence has been weakened by falling rupee, increasing interest rates, arbitrary tariff ceilings and increasing tender cancellations. Rooftop solar market continues to grow faster than expected. Largely unaffected by policy uncertainty and not reliant on land or transmission infrastructure.”

sources @financial express