China captures the solar panel market; US, India feud over rules

Almost shut out of India’s expanding solar-panel market, the US won a ruling against domestic-production requirements, but Indian companies are overwhelmingly choosing Chinese products over US and Indian.

US solar-panel exports to India—which doubled its solar capacity over 22 months ending January 2016—fell 83% since 2011, while Chinese exports grew 90% over the same period, according to an IndiaSpend analysis of Indian commerce ministry data.

Plunging US exports led that country to successfully dispute a “make in India” requirement for solar panels and modules used in the country’s national solar-power programme. That requirement was inconsistent with international trade norms, the World Trade Organization (WTO) ruled late in February.

China’s solar-panel exports grew from $577 million in 2011-12 to $1,094 million in 2015-16 (April-December). China is the largest exporter of solar panels (solar cells/photovoltaic cells, whether assembled or in module/panel form) to India, accounting for 65% or $3.2 billion of $5 billion in solar-panel imports by India over the past five years.

India’s import of solar panels from across the world increased 60%, from $821 million in 2014-15 to $1.3 billion in 2015-16 (April-December), despite the DCR, and it has beenreported that India will contest the ruling.

The US ranks fifth in terms of India’s imports of solar panels, based on data for 2015-16 (April-December). Over the last five years, India has imported solar panels worth $298 million from the US. India’s imports of solar panels from the US declined 83%, from $120 million in 2011-12 to $21 million in 2015-16 (April-December).

Chinese panels are cheaper by Rs 5 to Rs 6 each than those produced domestically. In addition, there are quality issues with locally made panels and cells, according to thisEconomic Times report. While a consignment from China takes 30-45 days to be delivered, there are few customers for domestically produced solar panels.

Why the US wants a slice of India’s solar market

India’s solar-power market is growing rapidly, and the US has complained against what they call “discrimination against imported products” from accessing this market.

For instance, the installed solar-power capacity in India grew 100% over the last 22 months, according to government data, from 2.6 GW in March 2014 to 5.2 GW in January 2016. Similarly, installed renewable capacity grew 25% over the same period.

Solar power crossed the milestone of 5 GW in January 2016 and is expected to achieve the government’s target of generating 100 GW by 2021-22. If the 2022 solar target is met, it will become India’s second-largest energy source, IndiaSpend reported recently.

The decline in tariffs has encouraged a growing number of consumers to bypass India’s creaky electricity grid and directly go solar. The price of solar energy has fallen by half over two years, from Rs 10-12 per unit to Rs 4.63 per unit in 2015, IndiaSpend had reportedearlier, edging closer to coal.

The government plans to achieve 20 GW through ultra-mega solar parks, and has approved 33 solar parks in 21 states at a cost of Rs 374 crore ($58 million).

The government auctioned 375 MW of solar PV projects in 2013 under Batch-I Phase-II of Jawaharlal Nehru National Solar Mission and 500 MW under Batch-II Phase-II in 2014, which must use domestic modules, according to the DCR.

Source: Central Electricity Authority of India/Ministry of New and Renewable Energy

India’s installed power capacity stands at 289 GW, of which renewables account for 14%. Wind energy with 25 GW installed capacity accounts for 9%, while solar constitutes 2%. Thermal energy accounts for 70% of India’s installed capacity, with coal cornering 61% share.

India’s solar-power prices are now within 15% of coal, which will decline by another 10% than domestic coal by 2020, based on current trends, according to this CNN report.