Hardening of PV module price to hit solar power output

When the prices are heading towards North, MSMEs are on back foot, however, a serious customer is undeterred by it as prices are cyclic — Simarpreet Singh, director and ceo, hartek solar

Vijay C Roy

Tribune News Service

Chandigarh, July 7

The rise in prices of imported photovoltaic (PV) solar module by 15-20% in the past six months is likely to impact its demand as the generation cost will go up. According to the industry, it is likely to hit the segments which are price-sensitive such as MSMEs and individual customers.

The price rise has been driven by a sharp increase in the price of polysilicon — a key input for cell and module manufacturers. The industry feels due to its high price, the residential customer may postpone the installation. However, serious customers, especially industry and commercial establishments, would have not much impact.

“When the prices are at an all-time low, demand suddenly rises. On the other hand, when prices are high, the demand is selective. For example, when the prices are heading towards North, MSMEs are on back foot, however, serious customer is undeterred by it as prices are cyclic,” said Simarpreet Singh, director and CEO of Chandigarh-based Hartek Solar.

The high price of module will impact the solar developers’ margins. According to ICRA, given the import dependency of PV modules for a majority of solar power installations in India, hardening in the price of PV modules, if sustained, remains a near-term headwind.

This risk is significant for the capacity won by developers through the bidding route over the past six to nine months at tariffs ranging between Rs 2 per unit and Rs 2.25 per unit and scheduled to be commissioned over the next 12-15 months. This apart, the recent surge in metal prices is also leading to upward pressure on the overall capital cost for solar power projects.

Girishkumar Kadam, senior VP & co-Group Head, corporate ratings, ICRA, said, “Since the PV module component constitutes 50-55% of the overall project cost and this, along with the impact of the basic customs duty on imported PV modules, is likely to result in the overall bid tariff increase by about 55-60 paise/unit for the forthcoming auctions. Nonetheless, the solar bid tariff, after factoring in this dual impact, is still likely to remain below Rs 3/unit.”