Indian Solar Manufacturers Impacted by Both the Pandemic and the Expiring Safeguard Duty

published: 2021-06-28 9:30 | editor: | category: News

India had previously stipulated an ambitious renewable energy target, which comprises of an establishment of 175GW green energy by 2022, including 100GW of solar energy and 60GW of wind power, though the particular target is moving further away from realization under the impact of the COVID-19 pandemic. 

The abrupt arrival of the pandemic disrupted global economic activities, and the deployment of energy has been undoubtedly affected, where the installed capacity of renewable energy was merely 44GW as of the end of March 2021. The second wave of outbreak in India has yet to conclude despite deceleration, and Vinay Rustagi, Managing Director of Indian renewable energy consulting firm BTI, commented that the installed capacity of renewable energy, including biomass energy and small hydroelectricity, was initially anticipated prior to the outbreak to arrive at 122GW at the end of 2022, and the figure will lower to 110GW at best after the pandemic. 

According to the report of BTI, India has seen a marginal increase in the installation of solar this year, where the grid-connection capacity had risen by 2,105MW during the first quarter of 2021, which is a QoQ growth of 33%. The total installed capacity arrived at 44,241MW as of March 31st 2021, which comprises of 35,939MW solar energy from public utility companies, 7,162MW rooftop solar, and 1,140MW off-grid solar. There are approximately 52,392MW of solar projects that are currently under construction. 

The Indian solar industry is hit with numerous challenges. Local solar manufacturers have to compete with imported solar that is relatively cheaper, and the sales reduction of solar panels caused by the pandemic, as well as the surging solar materials, while also having to deal with the expiring safeguard duty of solar in July.

India is no longer implementing the national lockdown that was enforced in May 2020, and manufacturers are able to maintain operation if they are located in areas with relatively mitigated pandemic status, whereas local logistics and services are still functioning normally. Bharat Bhut, co-founder of solar manufacturer Goldi Solar, commented that manufacturers are experiencing sluggish demand amidst the decelerated installation progress derived from labor force and logistics issues. 

Amol Anand, co-founder of solar module and lithium battery supplier Loom Solar, commented that most retail stores have shut down, and the reduction of market demand to 70% has resulted in the closing down of warehouses, which created significant impact to small solar manufacturers. Large manufacturers with a capacity of over 500MW are still fulfilling the old orders from EPCs, and small manufacturers are enduring a comparatively high risk of financial risk. 

Simultaneously, the safeguard duty imposed by India on the solar cells and modules imported from China, Thailand, and Vietnam will expire on July 30th this year, and the new protective measure will only become effective after April 1st 2022. The current inflation of solar materials that has suppressed the profit level that was already insignificant forces Indian solar manufacturers to worry that the market will be occupied by the cheaper imported solar panels, as pointed out by foreign media. 

Bhut commented that a long-term guarantee on the duration and prices is impeded by price fluctuations and unpredictable variables, such as solar module prices, shipping cost, and insufficient labor force. 

(Cover photo source: shutterstock) 

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