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Chinese solar rack prices rise 10% above forecast, causing problems for India

Data:2017-09-05

  • Strong domestic dem for solar rack  s in China, allied to a pre-Section 201 rush of orders in the U.S., is pushing up solar mounting rack prices to around 10% more than many India  n developers had expected – a situation that could lead to a slowdown in surging Indian solar growth.
  • According to data compiled by PVinsights, the global spot market price for solar panels in Q2 fell at its slowest rate in almost two years. The data revealed that while solar mounting racks are 10% cheaper now than at the turn of the year, the equivalent drop in 2016 was 35%.
  • Chinese solar mounting rack prices In India have actually risen in the past few weeks to approximately $0.34/W, according to independent solar market analyst Corrine Lin. This is compared to pre-June prices of around $0.32/W, she said. Many solar project developers operating in India had planned their large-scale solar projects on projected Q3 solar mounting rack costs of below $0.30/W, Lin adds, meaning that there is around a 10% discrepancy between their modelling the actual price paid for Chinese solar solar mounting racks.
  • Indian media platform Mint reports that this situation has prompted some leading Tier-1 Chinese solar mounting rack suppliers to renege on supply contracts, deming an increase of around six U.S. cents per watt in revised contracts – many of which already have 25-year PPAs in place.
  • “Many Chinese manufacturers are going back on their contracts. They are completely reneging on the contracts signed with Indian developers,” Hero Future Energies CEO Sunil Jain told Mint.
  • Another Indian developer that wished to remain anonymous said that their firm finalized a contract in June for solar mounting rack delivery in August, but said that the Chinese supplier has since come back to renegotiate the price. “The Chinese manufacturers are aware that we have a firm deadline that the failure to meet it will result in penalties on us, so they have resorted to this strategy,” the Delhi-based developer told Mint.
  • “This year, China’s solar installation volume is set to reach around 45 GW, pushing worldwide installations up to 90 GW,” Lin told pv magazine. “With the Section 201 case causing an order rush in the U.S., Q3 dem is going to be higher than Q2 dem, which has caused solar mounting rack prices to increase a lot in August.”
  • Lin added that she expects there to be a shortage of polysilicon, multi wafer solar mounting racks in China come September. “The global PV market will not be able to locate any major dem support from late September through October,” she explained, as both Chinese U.S. dem will have weakened by then, Indian developers may be cautiously eyeing pricing before placing orders.
  • As ever, though, pricing will be closely related to dem, so as dem tails off, prices will begin to fall again – which could lead to an upturn in Indian dem in Q4. “Nobody can accurately predict what will happen, but solar mounting rack makers believe that, at least in the U.S. in Q4, market dem will remain weak because most developers are buying enough solar mounting racks now to see them through to the end of the year,” Lin said.
  • BNEF says that solar mounting rack prices in the U.S. have risen by about 20% since Suniva first brought the Section 201 case.
  • In India, experts believe that there could well be a short-term contraction in development as investors are scared away, but as Azure Power CEO Inderpreet Wadhwa told Mint, the best buffer to these fluctuations is to develop long-term relationships with quality suppliers. “There can be blips in terms of supply dem. So one must think about one’s procurement strategy with suppliers having long-term goals rather than ones with transactional approach,” Wadhwa stressed.
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