Solar panel prices may fall in early 2018 as US weighs anti-dumping duty; China FIT incentives come to an end

Indian solar project developers facing the brunt of rising panel prices can breathe a sigh of relief in the coming months as the United States and India plan to impose anti-dumping duties on Chinese solar module and panel manufacturers by December-end that could positively impact the industry. The development could be further aided by closure of incentives provided under the Feed-In-Tariff regime of China to the panel manufacturers. All put together the industry could be in for a good surprise in 2018 after going through a tough phase where aggressively bid projects failed to progress as desired. The solar panel prices have risen around 10-15% in the last six months on higher raw material prices and greater demand in China. The tier-1 module prices rose to around 40 cents/WP (watt peak), when they were expected to stay in the sub-25 cents/WP range. As per industry estimates, prices were expected to fall to below 25 cents as per the trend of 2 cents fall in previous several quarters. On the contrary the prices rose, due to large scale demand in China and increase in raw material prices. Read On ..

Gajanan Nabar, chief executive officer of CleanMax Solar believes, anti-dumping duties in US and India and FIT regime coming to an end in China, could be positive in terms of drop in panel prices and may help companies who bid aggressively for projects in recently concluded auctions. The increase in prices have seriously jeopardized projects that were bid aggressively on the premise that panel prices would continue to drop in future as well. Many Chinese module and panel manufacturers have held-on to their supplies and are forcing companies to renegotiate the prices upwards, according to industry experts.

China is setting up around 45,000 MW of solar capacity this year which has created huge demand for solar panels and increased their prices. However, the panel prices are expected to drop again after December when the demand in China would come down. “Even if the demand slows by 50% in China as the subsidy under FIT ends, the impact on panel prices would be substantial. We expect the prices to drop from the first quarter of calendar year 2018,” Kunal Chandra, India head of UK based solar power company Proinso said.

Chandra believes that projects that were bid aggressively in the last few months in Rajasthan like the Bhadla project at Rs 2.44 per unit have around 18 months to execute them. Hence, the viability could be threatened if the prices don’t improve by March-April next year.

Modules make for nearly 60% of a solar project’s total cost and last year their prices fell by about 26% benefiting new and under-construction solar projects in India. This led to aggressive bids for solar projects leading to record low power tariff of Rs 2.44 kWh in May this year at the Bhadla Phase III project in Rajasthan (falling around 17% from February bid rate of Rs 2.97/kWh).

Earlier, renewable energy consulting firm Bridge To India had predicted that global demand in 2017 would stagnate and predicted the panel prices would close 2017 in the range of 25-26 cents/watt peak. On the contrary, the increased demand from China raised the prices to more than 38 cents/watt peak.

Industry officials cautioned that companies should be careful while bidding aggressively for solar projects in the near future, but noted projects that were bid aggressively will feel the heat if the prices do not start falling by March-April in 2018.

Nabar of CleanMax adds, there is every possibility that China may increase the price of cells if there is anti-dumping duty on modules, either in US or in India, making up for losses. "The only way out is to increase the production of solar cells and panels within the country," Nabar said.

An E&Y consultant believes drop in tariffs to Rs 3 - 3.20/kWh were sustainable, however, they become highly ambitious below Rs 3.0/kWh.

IHS Markit, the information handling and analytics company, said 26,000 MW of installations were completed in China in the first half of 2017, and a further 12,000 MW is expected to be installed in the third quarter of 2017. For the full-year IHS Markit is forecasting China to install a total of 45,000 MW in 2017.

- TradeBriefs Bureau - 

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