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Solar energy boom turns to bust for Indian manufacturers

Some of India’s biggest solar equipment makers are facing financial collapse, priced out by Chinese competitors as Prime Minister Narendra Modi’s government prioritises cheap power over local manufacturing despite his ‘Make in India’ push.

Though President Donald Trump is pulling the United States out of the Paris accord on climate change, India is sticking to its huge renewable energy programme. That has created a multi-billion-dollar market for Chinese solar product makers, who are facing an overcapacity at home and steep duties in Europe.

India’s solar power generation capacity has already more than tripled in three years to over 12 gigawatt (GW) as Modi targets raising energy generation from all renewable sources to 175 GW by 2022.

Chinese companies have gained the most from that increase, accounting for around 85 percent of India’s solar module demand and earning around $2 billion, according to industry data. The total annual market could jump to more than $10 billion in the next few years going by the government’s capacity targets.

Local companies such as Jupiter Solar, Indosolar Ltd and Moser Baer India Ltd, however, are struggling to win contracts.

Orders funnelled through a domestic-content policy have all but dried up after the World Trade Organization last September upheld an earlier ruling that found the move violated global trade norms.

As a result, Jupiter said it could shut shop by July after delivering their last orders this month; Indosolar auditors have raised doubts over it remaining as a “going concern”; and Moser Baer says it needs support from its lenders to revive its solar business.

TORPEDOED

Indian solar power plant developers – including companies backed by Japan’s Softbank and Goldman Sachs – are quoting ever-lower tariffs in auctions to win big projects, encouraged by steep drop in Chinese solar equipment prices.

That is squeezing out Indian cell and module makers, many of which have inferior technology, depend on imports of raw materials, have limited access to cheap loans and operate below capacity. Chinese modules are 10-20 percent cheaper than those made in India, company and industry executives said.

“The WTO ruling has torpedoed everything. It’s not a case of one company – we have the largest cell operating capacity – everybody below us will shut down one after another,” Jupiter CEO Dhruv Sharma told Reuters by phone.

Chinese companies were selling solar cells in India at 19-20 U.S. cents, around 35 percent below his production cost, he added.

There are more than 110 Indian solar cell and module makers registered with the government, out of which consultancy Bridge to India expects only a handful to survive.

Santosh Vaidya, a senior official in the Ministry of New & Renewable Energy, said the government was working on several initiatives to promote the domestic solar manufacturing industry. He did not elaborate.

Source By : Morung Express News

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