New Delhi: Faced with stiff competition from Chinese players, and under utilised capacities, domestic solar equipment makers are in talks with the government for "policy interventions" to cushion their business against shocks.
Low-cost equipment supplies from countries such as China and Taiwan are impacting domestic manufacturers, even as things are promising on generation side, according to solar panel makers.
Many solar project developers are also getting equipment from the US. In most of the cases, the companies also get cheaper loans from China and the US.
"There is tremendous strain on domestic solar manufacturers. We are in dialogue with the Ministry of New and Renewable Energy (MNRE) for possible policy interventions...," Indosolar CEO S Venkataramani told reporters.
Indosolar is a leading solar photovoltaic cells maker.
Without divulging specific details, Venkataramani pointed out that only about 20-30 percent of domestic solar equipment makers' total capacity is utilised, especially against the backdrop of cheap import from China and Taiwan.
Venkataramani is also the General Secretary of Solar Manufacturers' Association, a grouping of about 22 domestic entities that account for around 80 percent of total manufacturing capacity in the country.
Jupiter Solar Power CEO Dhruv Sharma said that"unethical pricing" of equipment by overseas entities is hurting domestic industry and funding is also taking longer time for projects.
"Such a trend does not augur well for the industry," he noted.
However, a top official at the Ministry of New and Renewable Energy said, "... there are no plans to pitch for any kind of levy on solar equipment imports."
The country is expected to see a solar power capacity addition of about 500 MW in the current fiscal.
Going by estimates, about Rs 7,000 crore investments is expected in the solar manufacturing segment in the coming years.
When it comes to solar equipment, there are photovoltaic cells, modules and thin film, among others. Indian manufactures are mainly into cells and modules.
A top official at the Ministry of New and Renewable Energy said that solar power is expected to "proliferate' in the next five to eight years.
"To meet the rising demand of the solar power industry, a very strong domestic manufacturing market is necessary...India is quite capable oof making good quality solar panels at relatively low cost," the official pointed out.
Interestingly, the government is mulling as much as 14 percent levy on imported power equipment to provide a cushion for domestic players such as BHEL and L&T. Even though, the solar power sector is looking good on the generation side, most manufacturers are facing tough business conditions.
As per estimates, prices of solar panels slumped as much as 20 percent in 2011.
Sanjay Chakrabarti, Partner and National Lead Cleantech Practice at Ernst & Young, said that prices of solar modules have "significantly" dropped in recent times but the "potential for solar power is tremendous".
The decline has been due to many factors, including the sluggish global economic conditions, especially since 2008 financial crisis, but such a fall was not expected, he added.
In setting up a solar project, about 60-65 percent are capital costs and any fall in price would be beneficial for solar farm developers.
According to Chakrabarti, there are rising concerns about financing, which along with lower tariff (for power generated) are posing challenges for solar projects.
"If the trend of falling price continues, sooner than later, solar power will start competing with power produced from conventional sources (such as thermal)," Chakrabarti said.
First Published: Sunday, January 08, 2012, 13:09