- As solar developer community figures out a way to deal with module supply challenges in the wake of BCD coming into force, MNRE has brought in BCD and GST impositions under Change in Law definition, with conditions attached
- S&P Global sees this as accelerating solar installations in the country, however for 2022 the guidance is 13 GW AC/18 GW DC solar capacity
- Indian companies are happy with the Indian government’s supportive policy moves, but they want it to address the raw material supply gap till the country stands on its own feet
The mood was clearly upbeat at today’s concluded largest renewable energy show of India, Renewable Energy India Expo (REI) 2022, with almost every Indian module maker planning expansion, large format-high power modules and eying the US and European markets for exports.
India’s market is influenced a lot by the Ministry of New and Renewable Energy (MNRE) recently announced imposition of Basic Customs Duty (BCD) on imported solar cells (+25%) and modules (+40%), and an increase in Goods and Services Tax (GST) from 5% to 12%, as Change in Law.
MNRE has now allowed these 2 events to be treated as Change in Law for projects whose bid submission date for solar PV, or wind-solar hybrid projects was on or before the announcement of BCD on March 9, 2021, and their scheduled commissioning date was on or after April 1, 2022. It does enter a caveat that the Change in Law will not apply if there are some specific provisions in the tender documents or contracts that disallow the same.
Speaking with TaiyangNews at REI 2022, Senior Research Analyst, Clean Technology at S&P Global (formerly IHS), Dharmendra Kumar said it could mean some 18 GW to 20 GW capacity being accelerated towards completion.
While this opens up the blockage that has been stalling module supply to the country, Kumar expects India to install 13 GW AC/18 GW DC solar capacity in 2022. He explains the reasons for this subdued forecast for this market. Indian developers have already imported 9 GW worth of solar modules from Chinese suppliers within Q1/2022. Add to that an inventory of 3 GW from last year.
“However, post the Basic Customs Duty (BCD) coming into force from April 1, 2022, there has been a real slowdown in module supply since China was and is the largest supplier to India,” observed Kumar. “Installations should pick up pace next year which is when we expect solar installations in the country to reach around 14 GW-15 GW AC/18 GW-20 GW DC.”
In H1/2022, India installed around 7.2 GW capacity according to Mercom India Research, but JMK Research pegged the number at 8.4 GW and also forecasts 20 GW annual additions for 2022 (see India Installed 3.9 GW Solar Capacity In Q2/2022).
Official numbers from the MNRE show India’s cumulative grid connected solar power capacity was 59.3 GW as on August 31, 2022.
The MNRE announcement should bring some relief to Chinese suppliers who were quite conspicuous by their absence at the show. Some of the ones present admitted of having a ‘dry spell’ in terms of module orders from India ever since the BCD came into force. One Chinese company we talked to indicated that Q1/2022 was still quite good for them, while the following quarters this year were rather difficult.
Meanwhile, Indian manufacturers are working their way to an integrated supply chain. Adani Solar’s Marketing Communications Head Kumar Arpit believes India will be competitive to China by 2025 in the solar space. However, he added that while this capacity will take time to come online, in the meantime the government needs to ensure it helps bridge the raw material supply gap.
Adani Solar has unveiled plans to develop 10 GW vertically integrated solar PV value chain within India. From only 2 GW cell and module capacity now, by July 2025 it targets 10 GW polysilicon, 10 GW Mg-Silica, 10 GW ingot, 10 GW wafer, 10 GW cell and 10 GW module capacity. There is several more Indian companies preparing to enter the space or expanding.
The not so big ones are also expanding capacity going by growing demand, but also eying Europe and the US as their export markets where demand is to shoot up considering the governments there are not so keen on Chinese modules.
However, there were also voices that were not so happy as the high cost for cells and other module BOS have made it very difficult to sell profitably. One company told us they see hesitance among developers to build products as module prices are simply still too high.
However, inverter makers are happy as they are not so much impacted by tariffs. SolarEdge said the temporary dip in installations during COVID-19 went back to the same levels as earlier very soon. The C&I market is growing quickly, they said. Another inverter supplier Sungrow, which is addressing primarily the large scale system segment, said that it operates 10 GW manufacturing capacity in India at full steam. Not impacted by any tariffs at all for its inverter product, it claims to have 45% market share and is also using inverters produced in India to ship to the US, Europe and Middle East.
The REI organizers were were happy with event, expecting visitors to have crossed the 30,000 threshold this year – and are expecting the show to be even bigger in 2023, when a battery show will be added and a focus be put also on green hydrogen.
