In what has come as a shock to India’s solar power developers, Chinese module manufacturers are reneging on their contracts and are demanding an upward price revision to supply the equipment already contracted for, informed several people aware of the development.
Any price increase will impact the internal rate of return (IRR) from such projects, many of which have already signed power purchase agreements (PPAs).
Some Chinese suppliers have sought an increase of around 6 cents per watt in module prices in a market which they dominate. Module prices are currently around 37 cents per watt. Modules account for nearly 60% of a solar power project’s total cost.
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 demands for a cap in prices of cheap imports into the US.
Major Chinese solar module manufacturers include Trina Solar Ltd, Jinko Solar, JA Solar Holdings, ET Solar, Chint Solar and GCL-Poly Energy Holdings Ltd.
This comes at a time when states are now looking to renege on their offtake commitments for projects awarded at a comparatively higher tariff triggering concerns that it will precipitate a crisis in the Indian green energy space which has been attracting investors in droves.
By Baishakhi Dutta
