Is India’s Price Sensitive Renewables Market Leading to Compromises on Latest Technology?

India’s renewables market is quiet price sensitive. Does this sensitiveness lead to compromises on the latest technology front? Here we have taken a quick opinion on this from few industry veterans, see what they say…

“Yes, I do agree that India is a price sensitive market due to highly competitive tariffs, and it witnessed continuous fall in module prices over the last few years and more particularly in the last 2 years, as more and more suppliers came into India. However, we must also accept that developers are demanding latest technologies & highest ratings at competitive prices to keep up with the low tariff trend where latest technology is playing crucial role to bring down the overall project cost, which Indian developers are adopting, to make their projects viable.

There has been a significant increase in the demand of latest technology like highest wattage & Mono PERC modules which contribute more than 50% cost of solar project.Although Renewable industry runs on global demand & supply, but prices are depending on volumes. All reputed solar component manufacturers are supplying same technology across the globe however price varies. As Indian market is growing exponentially, developers are getting benefits of competitive prices with latest technology. Therefore, I would say that India’s renewable industry is quite mature and exploring updated & latest technologies to bring down the overall project cost,” said Krishan Sharma, Vice President – South Asia, ReneSola Jiangsu Ltd.

Ritu Lal, Senior Vice President Institutional Relations, Amplus Solar, said, “Definitely! India’s price sensitive renewables market is leading towards compromises on the new technology front. We are focusing only on prices (tariffs) and losing out on innovations & new technology adoption, especially regarding modules.

Also, given the overall state of the domestic module manufacturing industry, there is hardly any real innovation that is happening locally. Newer technologies are likely to be a little more expensive, at least in the initial stages, and our tariff obsession is hindering our engagement with them.

Tariff reduction on its own is actually a very positive thing as it brings down the cost of solar energy – this is one of the major drivers behind the explosive growth of solar in India.

However, when we drive down the cost beyond reasonable levels, we risk hurting India’s solar growth story in the long run, as such cost reductions may force developers and EPC players to compromise on equipment as well as construction quality. Poor quality will certainly manifest itself in poor plant performance at some point or the other. Another risk with driving down costs to such levels is the potential for financial distress. Even if the asset quality is fine, the developer may struggle to be operationally profitable in the long run.

This can again lead to stranded assets. A compounding factor fueling this in the utility scale solar segment is the delay in payments from Discoms in certain states to solar developers. These delays range from a few months to even beyond a year, as the discoms themselves are cash-strapped. Unless the government steps in to address this painful issue, it can derail India’s solar story entirely.” These are Ritu Lal’s personal views and not of Amplus.

“It is a common perception that Indian consumer is price sensitive and may compromise on latest technologies. But the latest trends have shown the Indian market to be value sensitive. If you are able to give a value which justifies the price in the eyes of consumer, they tend to buy the product. This shows Indians have become very savvy consumers. Today, Indian consumers are eyeing long term benefits with latest technologies rather than buying old technology products.

On long term, cost and technology go hand-in-hand. As more and more new technologies are being adopted, the efficiency of power plants is also increasing, resulting in decrease in the production costs. Thus, any R&D in new technology and ensuring its smooth implementation may possibly result in initial high investment but it would eventually even out in the long run due to its impact on efficiency and production costs,” believes Manish Aggarwal, Managing Director, Enkay Solar Power.