Solar in India struggling to rise and shine


Domestic companies trying to harness the power of the sun have registered declining sales in the past year

Bangalore, Feb 1, 2018: Sales at the biggest publicly listed Indian solar companies have dipped significantly in the last year casting a dark shadow on the immediate future of domestic solar manufacturing.

Major solar cell and panel manufacturers such as Indosolar, Moser Baer, Websol, Swelect and solar project developers such as Ujaas Energy saw significant declines in net sales. Financial results available on the Bombay Stock Exchange state that  between the March and December quarters of 2017, net sales at most of these companies have dropped.

For instance, net sales at Indosolar Ltd. have dropped from Rs. 113 crore to Rs. 52 crore. Similarly, between the March and September quarters of 2017, net sales at Moser Baer have dropped from Rs. 115.5 crore to Rs. 67.6 crore, at Websol Energy from Rs. 96.47 crore to Rs. 43.17 crore, at Swelect from Rs. 84.5 crore to Rs. 47.2 crore, and from Rs. 161.9 crore to Rs. 85.1 crore at Ujaas Energy.

Chinese players are dominating the solar supply chain in India. Over 85 per cent of solar equipment used in India is imported from China. Imports have risen in line with growth in capacity addition but exports have seen a significant downward trend shows data made available by the Ministry of Commerce.

“Indian manufacturers have very little share in open market sales in past four to five years. Most of the manufactured products are used in projects which are tendered under mandatory domestic content rules,” said Mudit Jain, a senior consultant at Bridge for India. “However, India has lost a case in WTO and the domestic content can’t be tendered anymore resulting in sharp decline in shares of Indian manufacturers in overall market.”

Chinese players have been accused of dumping—a predatory pricing policy where a company floods a foreign market with its goods priced lower than its home country to gain market share in the foreign market. In fact, an anti-dumping petition has been filed by domestic solar manufacturers against solar imports from China, Taiwan, and Malaysia with the Directorate with the  Directorate General of Anti-Dumping (DGAD), said a report from Mercom India, a leading clean energy communications and consulting firm.

“Indian manufacturers are not competitive. Over a period of time, Chinese manufacturers have built large scale and upgraded their manufacturing. But India didn’t follow suit because the industry lacked support,” said Mudit Jain.

India lacks economies of scale and is no competition to global players yet. Therefore, solar cells and modules are imported for the most part. The solar sector offers a ton of potential. However, a lot of them are burdened with heavy debts, some are trying to restructure, some are dealing with idle manufacturing capacities, said Vaibhav Singh, an energy sector consultant at Pricewaterhouse Coopers.

The constantly changing solar landscape is creating uncertainty among manufacturers and investors. Solar prices reached an all-time-low of Rs. 2.44/kWh in May, 2017 which was Rs 10.95-12.76/kWh in 2010-11).

“There is buyer’s remorse for projects already built and under development. In particular, states that have completed auctions with prices of Rs. 4.00-5.50/kWh in the last 6-12 months (Jharkhand, Andhra Pradesh, Haryana) are refusing to sign power purchase agreements, which is creating uncertainty in the market,” said a report from Bridge To India, a leading solar-only consultancy firm in India.

Incidentally, several financial incentives to encourage solar manufacturing in India were phased out or undercut last year. Historically solar projects were eligible for accelerated depreciation where they could avail depreciation of 80 per cent of asset value, but this value has been cut down to 40 per cent. In addition to that, a ten-year corporate tax holiday that was offered to solar projects was withdrawn from April 2017 onwards.

-By Bharath Manjesh. Twitter- @bharathmanjesh