Double Whammy For Project Developers In India

• Chinese module makers are increasingly asking solar power project developers in India to revise module prices
• They are asking for upward revise revision up to 6 cents per watt, according to a local newspaper
• This might affect the internal rate of return for projects
• At the same time, Indian project developers are feeling pressure from DISCOMs, who increasingly push for retroactive power tariff changes

Solar PV project developers in India experience a lot of trouble these days. If bullying by electricity distribution companies (DISCOMs) to renegotiate solar tariffs is not enough, they are now feeling strong pressure from their Chinese module suppliers as well.

Several Chinese module makers, including some big names, who have already signed contracts to supply their products to Indian developers, are now demanding higher prices. Indian business daily Mint reported that those companies now want an 'upward price revision' for supply of solar modules 'already contracted for'.

Recently, modules cost around $0.37/W. The nearly 10% price revisions would take it up to around $0.43/W, according to Mint. The changes would heavily affect the internal rate of return (IRR) of such projects.

Developers in India have tight deadlines to bring their projects to completion; if they fail, they will be penalized. Apparently, several module suppliers are taking advantage of that situation. The same is true for DISCOMs. As PPAs have decreased a lot in the last few months, several DISCOMs have been asking for retroactive cuts for the originally won tariffs (see TANGEDCO Wants Retroactive Solar Tariff Cuts). Both cases endanger the viability of the projects.