LONGi Clarifies: Didn’t End Contracts With Indian Power Developers

In response to recent reports suggesting that Chinese PV manufacturer LONGi, among other solar developers, had withdrawn from signed contracts with Indian power developers due to increasing commodity prices, the company issued a clarification stating that this information being passed around was false and that no such contracts had been terminated.

The company claims that the increase in module prices was expected, owing to the rising cost of raw materials used for manufacturing, and explains that contract terms were renegotiated with every developer to make them mutually beneficial for both parties. According to the firm, it takes cognisance of the fact that independent power producers (IPPs) have thin margins in  a highly competitive market like India where modules comprise 55-60% of project CAPEX, and has accepted negative margins and losses to fill the price gap so that their customers’ planned projects can run as per schedule.

LONGi also acknowledges that it cannot control all the factors affecting the cost of raw materials such as polysilicon (64% hike), PV glass (80%), silver paste (55%), etc, which has been steadily rising since the latter part of 2020. The 35% overall hike has been a matter of concern for almost all panel manufacturers whose upstream cost has likewise gone up. The global pandemic also led to freight rates shooting up, further increasing module prices.

Dennis She, Senior Vice President, LONGi Solar, said, “Our clients, which are leading IPPs in India and worldwide, are fully aware of the price increases in raw materials and freight cost. It is a difficult situation and beyond any of our control. It is in this scenario that LONGi and our partners mutually renegotiated the price terms in supply contracts to ensure on time project completion. We are happy to announce that we have been able to successfully fulfil almost all our clients’ orders and made deliveries on time. There has been no instance of unilateral contract termination whatsoever. In fact, LONGi, being a vertically integrated player, was able to minimise the price impact for our clients as much as possible by realising negative margins on the delivery of modules.”

The company has emphasised its strong, long-standing relationships with both large and small IPPs in India, which include several large and strategic contracts signed with leading solar power developers. It claims that it continues to deliver successfully on all its promises, especially on its commitment to support the Indian government’s mission to encourage the domestic production of solar equipment. As per the firm, it has been evaluating in great detail the establishment of a production base in India and preliminary preparations regarding the same have already come to a close, including the acquisition of land in the country to set up local manufacturing operations.

Mr. She added, “India has always been a market we have paid great attention to. We hope to offer high-efficiency monocrystalline photovoltaic (PV) products in India on a large scale as well as support the government’s policy of domestic manufacturing. In 2020, we brought over 1.5 GW PV products to India, and in 2021, we have already supplied 1 GW till date, which has been praised and trusted by Indian customers.”