Home › Renewable energy ›ALMM on Solar Cells May Push Tariffs by 40-50 Paise per Unit: CareEdge Ratings
ALMM on Solar Cells May Push Tariffs by 40-50 Paise per Unit: CareEdge Ratings
The introduction of ALMM-II for domestic solar cells could temporarily raise the delivered cost of domestic modules by 6-7 cents/Wp, leading to a rise in solar tariffs by 40-50 paise per unit till local cell supply scales up, according to a CareEdge Ratings report.
December 20, 2024. By Mrinmoy Dey
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The introduction of ALMM-II for domestic cells may result in an increase in the delivered cost of domestic modules by 6-7 cents/Wp, leading to a rise in solar tariffs by 40-50 paise per unit for the short run till local cell supply scales up, stated a report by rating agency CareEdge Ratings.
“The imposition of tariff barriers in the form of BCD on imported cells and modules has increased the cost competitiveness of domestic cells and modules to an extent. However, the impact is partly offset by international prices languishing at record-low levels,” reasoned the report.
CareEdge Ratings envisages that implementation of ALMM-II for DCR modules could push solar tariffs further up to Rs 3 per unit levels, which were last seen over 2 years ago, in the short run.
The report noted that overcapacity has forced Chinese manufacturers to dump products in export markets at very low prices, further exacerbated by UFLPA sanctions, meaning that surplus Chinese production is flooding non-US markets including India. As a result, the landed cost of imported module prices in India has plummeted to ~18 cents/Wp as of September 2024, down from ~45 cents/Wp in March 2022, nearly offsetting the impact of BCD.
Similarly, a staggering dip in cell prices has lowered the landed cost of domestic modules from ~41 cents/Wp to ~20 cents/Wp over the same period.
Although imported modules remain cheaper than domestic modules by 8-10 percent despite the applicable duties, non-tariff barriers and government-sponsored schemes are likely to push demand towards domestic modules,” the report noted.
“This is primarily due to a steep fall in global module prices over the last two years, which is partly offsetting the impact of BCD. Nonetheless, the BCD remains a key tool in enhancing the cost-competitiveness of domestic modules,” the report reasoned.
The implementation of the Approved List of Models and Manufacturers for solar modules (ALMM-I) is expected to boost demand for domestic modules. This, along with government-aided schemes supporting demand for modules with domestic content requirements (DCR modules), will drive growth. Policy support for progressive backward integration remains crucial for India’s solar equipment value chain.
“The solar equipment manufacturing sector has several tailwinds including healthy domestic demand prospects, rising export opportunities, proactive policy support, and improved lenders’ appetite for RE projects. However, lack of integrated solar equipment capacity, supply chain dependence on China, increasing competitive intensity, and delay in RE capacity additions due to systemic issues are some headwinds that remain monitorable over the medium term,” stated Jatin Arya, Director, CareEdge Ratings.
As per the report, India’s solar equipment manufacturing capacity is poised for a healthy growth over the next 2-3 years, with module and cell manufacturing capacities of ~80 GW and ~50 GW respectively, in the pipeline.
This will entail a capex of nearly INR 1 lakh crore, with an estimated debt funding of nearly INR 70,000 crore over the medium term, including investments in polysilicon and wafer capacities.
“The imposition of tariff barriers in the form of BCD on imported cells and modules has increased the cost competitiveness of domestic cells and modules to an extent. However, the impact is partly offset by international prices languishing at record-low levels,” reasoned the report.
CareEdge Ratings envisages that implementation of ALMM-II for DCR modules could push solar tariffs further up to Rs 3 per unit levels, which were last seen over 2 years ago, in the short run.
The report noted that overcapacity has forced Chinese manufacturers to dump products in export markets at very low prices, further exacerbated by UFLPA sanctions, meaning that surplus Chinese production is flooding non-US markets including India. As a result, the landed cost of imported module prices in India has plummeted to ~18 cents/Wp as of September 2024, down from ~45 cents/Wp in March 2022, nearly offsetting the impact of BCD.
Similarly, a staggering dip in cell prices has lowered the landed cost of domestic modules from ~41 cents/Wp to ~20 cents/Wp over the same period.
Although imported modules remain cheaper than domestic modules by 8-10 percent despite the applicable duties, non-tariff barriers and government-sponsored schemes are likely to push demand towards domestic modules,” the report noted.
“This is primarily due to a steep fall in global module prices over the last two years, which is partly offsetting the impact of BCD. Nonetheless, the BCD remains a key tool in enhancing the cost-competitiveness of domestic modules,” the report reasoned.
The implementation of the Approved List of Models and Manufacturers for solar modules (ALMM-I) is expected to boost demand for domestic modules. This, along with government-aided schemes supporting demand for modules with domestic content requirements (DCR modules), will drive growth. Policy support for progressive backward integration remains crucial for India’s solar equipment value chain.
“The solar equipment manufacturing sector has several tailwinds including healthy domestic demand prospects, rising export opportunities, proactive policy support, and improved lenders’ appetite for RE projects. However, lack of integrated solar equipment capacity, supply chain dependence on China, increasing competitive intensity, and delay in RE capacity additions due to systemic issues are some headwinds that remain monitorable over the medium term,” stated Jatin Arya, Director, CareEdge Ratings.
As per the report, India’s solar equipment manufacturing capacity is poised for a healthy growth over the next 2-3 years, with module and cell manufacturing capacities of ~80 GW and ~50 GW respectively, in the pipeline.
This will entail a capex of nearly INR 1 lakh crore, with an estimated debt funding of nearly INR 70,000 crore over the medium term, including investments in polysilicon and wafer capacities.
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