Domestic solar modules’ cost to come down by 11 per cent in April

The assessment is based on an imported module price level of 27 cents per watt for Mono PERC modules and cell price at 15 cents per watt.New Delhi: The cost of modules supplied by domesticOriginal Equipment Manufacturers(OEMs) is expected to come down by by 10-11 per cent post April this year, assuming the applicable Basic Custom Duty (BCD) on imported cells and modules, according to Vikram V, Vice President at research and ratings agency ICRA.

This is based on an imported module price level of 27 cents per watt for Mono PERC modules and cell price at 15 cents per watt. “OEMs based on imported cells remain exposed to volatility in cell and module price levels,” he said.

He added that the extent of discount will reduce, if the prices of imported cells and modules reduce from the prevailing level. The PV module price environment has remained elevated over the last 10-12 months, with demand-supply imbalances in polysilicon as well as supply chain disruptions in China, according to the agency.

“From the viability perspective in case of OEMs with integrated facilities, the scale of operations, pace of technology adoption with the emerging trends in key markets such as in China or Europe as well as module price movement remain the critical factors,” he said.

The policy focus by the government in the renewable energy sector remains strong as evident from the target of 500 GW of non-fossil fuel-based capacity by 2030 as well as policy direction in the energy transition with net zero emission target by 2070.

“Capacity addition in solar energy segment within the renewable energy sector is expected to remain significant with about 65-70 per cent share by 2030, given the relatively lower execution challenges in solar power segment,” said GirishKumar Kadam, Senior Vice President, ICRA.

Experts say the government has policy focus to encourage the domestic manufacturing for photovoltaic modules through various policy measures announced in last 2-3 year period.

This includes notification of approved list of module manufacturers (ALMM) with effect from April 2021, imposition of BCD on imported cells and modules with effect from April 2022, award of manufacturing linked PPAs for aggregate capacity of 12 GW, ongoing implementation of production linked incentive (PLI) scheme as well as that of various central schemes announced earlier, requiring use of domestic modules.

Also, the ALMM list has only domestic solar OEMs and there remains an uncertainty for inclusion of foreign solar OEMs as of now.

Given the strong response for the PLI scheme for solar modules, the scheme outlay has been further increased to Rs 240 billion from Rs 45 billion earlier. This is expected to support the setting up of additional cell & module manufacturing capacity of up to 40 GW.