Used Chinese solar panels set off quality fears3 min read . Updated: 25 Sep 2017, 04:33 AM IST
The used Chinese solar panels, which have an average efficiency of 16-22%, are being sold at on discounted prices and carry a one-year warranty
New Delhi: In what has caught the Indian solar industry by surprise, used Chinese solar modules—the rectangular panels often seen on rooftops—are being sold in the domestic market at a discount. Once installed in China, they are now being offered to Indian developers, said several people aware of the development.
Solar modules or panels account for nearly 60% of a solar power project’s cost. Of China’s solar panel manufacturing capacity, estimated to be around 70 gigawatts (GW) per year, the major markets are the US, India and China itself.
“We were offered these modules at a substantial discount of as low as 25 cents per watt on cost, insurance and freight (c.i.f) basis. It was claimed that these were used A-grade solar panels which were installed at the seller’s plant site for just two months," said a person requesting anonymity.
In the case of c.i.f deals, the task of shipping the cargo rests with the overseas seller because it is part of the supply contract. This particular offer offered a substantive discount given that solar panel prices are currently around 33 cents per watt. Any price fluctuation in Chinese equipment cost has a significant impact on the Indian clean energy tariff given that most developers here have been sourcing modules from countries such as China, where they are cheaper.
“To top it a one-year warranty was promised," added the person quoted above.
“Yes, we have heard of this type of imports happening which are primarily used in the unorganized sector. It is important that the government control such imports to avoid giving a bad name to the sector at large," said Hero Future Energies chief executive officer (CEO) Sunil Jain.
The Indian government came up with stringent quality norms last month for solar equipment to be sold in the country while making the destruction of sub-standard equipment mandatory.
Mint reported on 7 September about poor quality Chinese solar modules—rejected by developers—being sold in the domestic market at a discount. With their project deadlines approaching, some Indian developers have taken recourse to this route to meet cost pressures and project deadlines.
“Modules sold and installed in India should pass the necessary technical and certification tests. Any module installed with poor technical specifications will have a negative impact on the sector since the plants may not perform as per expectations. This would hamper future investments in the sector and banks may shy away from providing loans," said Gyanesh Chaudhary, managing director and CEO, Vikram Solar.
With the average efficiency of a solar panel usually just 16-22%, sub-standard quality will impact generation. Queries emailed to a spokesperson of the new and renewable energy ministry on Friday remained unanswered till press time.
“These sorts of offers have been made to Indian firms," admitted a New Delhi-based CEO of a firm that has been actively participating in India’s solar auctions, asking not to be identified.
Module prices have firmed up with China extending the feed-in tariff regime—which ensures a fixed price for power producers— for the third quarter, and with US developers placing advance orders to shore up cell and module supplies amid a demand for a cap in prices of cheap imports into the US.
With the US International Trade Commission (USITC) in a unanimous vote last Friday concluding that cheap imports are hurting US manufacturers, US developers are set to ramp up their orders’ pace. This stockpiling to meet next year’s demand will lead to a price increase of Chinese modules in the short term and further limit their availability for Indian developers.
India has also been conducting an anti-dumping investigation on solar equipment from China, Taiwan and Malaysia.
India’s newly appointed power and new and renewable energy minister Raj Kumar Singh at an event on Friday evening here said that their have been reports of dumping from certain countries at prices which are below manufacturing cost.
“Once we are convinced we will ask for anti-dumping duty," said Singh.
Singh has instructed that 20,000 MW each of wind and solar power contracts be auctioned by December this year in a step that will help India achieve its ambitious clean energy target of 100 GW of solar projects and 60 GW of wind projects by 2022.