Module Manufacturers implore customers to delay projects during supply crises; Solar Power Developer Association appeal extension of BCD imposition – EQ Mag Pro

A joint statement issued by the five leading module manufacturers of the solar industry- LONGi Green Energy, Jinko Solar, Trina Solar, JA Solar and Risen Energy warns of an impending crisis regarding module supplies.

The open letter appeals to developers to consider delaying projects and calls for greater collaboration between upstream and downstream players. Polysilicon prices recorded a rise by nine per cent last week, and the glass prices have increased again.

The letter emphasizes the need for all parties involved in the manufacturing of solar panels to collaborate more closely. Moreover, it warns that many signed orders will cause ‘serious losses’ and “seriously endanger the… sustainable development of the industry” due to the rising prices of materials as well as logistics.

This year, the polysilicon price further increased by nine per cent after the Chinese government ordered silicon metal refineries to reduce working hours due to the power crisis in the country. The letter also mentions a jump of 18.2 per cent in the solar glass prices and a 35 per cent rise in the cost of adhesive films year-on-year felt last year, while the cost of the modules has recorded a rise by a comparatively modest nine per cent during the year 2021.

Leading module manufacturers warn that the development of the industry is at a crisis point at present, suggesting four solutions that they consider critical to the future of the sector. The companies emphasized they are coordinating resources collectively to stabilise supply. They appealed to the relevant state departments in China and others to help stem a rush of installations forecast for Q4.

As capacity utilization rates are falling below 70 per cent, manufacturers implored customers to delay the projects if possible. The module manufacturers have also called upon the relevant PV industry associations along with other bodies to monitor the upstream and downstream production capacity more closely to assist the planning of production capacities beforehand and balance upstream and downstream supply and demand.

On the other hand, Solar Power Developer Association has requested an extension of the imposition of Basic Custom Duty (BCD) by at least one year to ensure the development of a true ecosystem from sand to solar panels in India. In a request letter to the Minister of Power and New & Renewable Energy, Government of India, the association highlighted some facts in the context of the date of imposition of BCD, along with extraneous factors that are creating significant issues.

PLI scheme for manufacturing is expected to conclude by October 2021 due to the delay caused by multiple reasons. The cell and module manufacturing facilities have a minimum gestation period of 18 months. Therefore, the first batch of the solar module from the facilities is unexpected before May 2023.

India’s present manufacturing facilities of the module are 8-10 GW, a significant portion of which is based on multi-crystalline technology, which is now obsolete. “Solar Power Developers have engineered and designed all upcoming solar plants using Mono-PERC and bifacial technologies. Hence, basing our capacity addition with older technologies with lower efficiencies will not be optimal on cost,” the association stated in the letter.

India’s target to achieve 280 GW solar power by 2030 implies a capacity of nearly 45 GWp per annum. The association mentioned that the domestic capacity is not sufficient to meet the requirement and will cause a severe supply crunch.

Further, the association also highlighted the extraneous factors creating issues stating that the sector is going through a perfect storm. The prices of major inputs to the manufacturing of modules like Polysilicon, Aluminum, Silver, and more have increased substantially. The sea freight has also increased enormously. The containers that were earlier available at USD 800 are now priced around USD 10,000. The Chinese government has imposed severe power cut on their industry, which resulted in an abrupt increase in solar panels cost and retraction of signed binding contracts.

The association emphasized that it is unviable for solar power developers to do business in such situations, which would aggravate by the imposition of 40 per cent BCD. The letter quotes that the Chinese suppliers are taking advantage of the deadline and forcing Indian IPP to pay over 1.5 times the original signed contract. “Through this deadline, we are only benefitting Chinese companies.”

In the last decade, the solar industry has recorded rapid growth, and after COVID 19, it is recovering well. “BCD imposition will be the virtual death nail for developers if not extended. We request an extension of the BCD imposition by at least one year. This will be a win-win situation as domestic manufacturing will come up, and Indian solar developers won’t have to depend on Chinese imports,” the association quoted.