![Module costs and logistics challenges are driving up overall project costs for Indian solar project developers, which are likely to impact as much as 5 GW capacity according to analysts with CRISIL. (Illustrative Photo; Photo Credit: Diyana Dimitrova/Shutterstock.com)](http://media.assettype.com/taiyangnews%2Fimport%2Fwp-content%2Fuploads%2F2022%2F05%2FPresentation1-100.png?w=480&auto=format%2Ccompress&fit=max)
S&P Global's Indian credit ratings agency CRISIL counts soaring prices of solar modules, related components as steel and freight costs to negatively impact 5 GW capacity in India that were bid out at less than INR 2.35 ($0.030) per kWh between October 2020 and December 2021.
This is part of 25 GW bid out during this time period when module prices were 'softening' and commodity prices 'benign', and analysts believe the return on equity (RoE) for the 5 GW capacity is likely to fall by as much as 140-180 basis points to around 7%.
By way of comparison to show the rise in prices, CRISIL says from $0.21 module cost in January 2021 and February 2021, spot prices went up to $0.28 per kWh by April 2022. They warn prices to remain at this elevated level throughout 2022 driven by strong global demand and continued supply disruptions in China where COVID-19 and extended lockdowns remain a challenge.
To help counter these high price levels partially, analysts state 3 factors that can partially offset the loss on return while adding the disclaimer that RoE remains sensitive to further rise in module and commodity prices due to geopolitical or supply chain disruptions. The 3 factors are:
"The remaining ~80% of projects under implementation (~20 GW) will also be hit, but their comparatively higher tariffs and partial cover on cost of modules will limit the impact to 60 – 80 basis points," explains Senior Director CRISIL Ratings, Manish Gupta. "Most of these projects are in advanced stages of implementation and have imported or tied up some proportion of modules at prices below the current level."