Low Solar Prices In China-The Indian Perspective

Spending time at SNEC PV last week at Shanghai in China, one couldn’t help but wonder about the end game as far as current low solar prices go. For starters, despite the stubbornness of the Indian government when it comes to offering a friendly, or even reciprocal approach to the Chinese, that is still missing with the Visa delays and issues at our end. The fact that the world’s top two most populated countries that are also neighbours still do not have any direct flights between the Chinese mainland and India remains a mystery. Or that it has failed to make a significant dent in India’s trade deficit with that country yet. To the neutral observer, the moves at both ends seem counter-productive, to say the least.

Do the Chinese miss easy access to the Indian market? Of course they do, despite the lower margins on offer here for them usually. That is because the Indian market offers an opportunity to keep many solar manufacturing factories running at higher capacity in China, helping overall efficiencies as well as jobs there as well.

Coming to the issue of low module prices, how badly is it hurting Chinese players? This quarter’s results will lay out a good picture of the impact, but suffice to say, the leading Chinese players continue to expect strong volume increases to offset some of the hit on margins, thanks to a strong domestic market and newer markets overseas. A strong energy storage market has also helped many that have diversified early .

For many of the tier 2 and tier 3 players, the margin erosion has been significant enough to call their existence in question at some stage later this year or early next year. Indicating that truly desperate selling is still to come, which will ensure prices do not rise anytime soon from these low levels. We heard of module deals as low as 11 cents per watt, even as the larger players insisted that 13-15 /watt was the norm now.

Indian Manufacturers Not Complaining

For India, which is still limited more to Module making than the rest of the solar supply chain, the low cell and wafer prices continue to be good news for manufacturers, as that effectively means they can offer modules here at 19-22 cents /watt, a cost acceptable to most developer based on bid prices at tenders. Or the much higher electricity costs customers in India seem reconciled to pay as the price of energy security and ‘atmanirbharta’ (self sufficiency)  in manufacturing. These prices are expected to last well into 2025 possibly, before the Chinese players seek an upward push again.

Markets like Europe, which saw an unprecedented solar uptake post the Russian invasion of Ukraine and subsequent spike in energy prices, are beginning to cool already, as high inventory levels and struggling economies allow more time to rejig energy systems. Add to that protectionist impulses in the US backed by the IRA incentives, and it does look like India will wonder what might have been had relations with China been better. A lot of Chinese manufacturing for one might have shifted here.

For now, domestic module manufacturers will take the scenario as it exists, considering how dependent we remain on China for inputs as well as manufacturing machinery. Current low prices are likely to delay any wholesale market changes beyond TOPCon for instance, with HJT technology only making minor inroads. Passivated back contact modules for instance. Indian manufacturers, that have bet wholesale on TOPCon, need at least 3 years of sales at 80% capacity utilisation to ensure they have a return on investment, according to one Industry veteran. Post 2024, that will mean another 2 good years, before the industry is ready to invest yet again in the next big technology breakthrough. 2026 is key from many other aspects as well, as by them domestic cell capacity is also expected to be over 15 GW possibly, and even some wafer and polysilicon capacities might be onstream by then, providing yet more security to the government and consumers here.