Solar sector woes rise as module prices warm up

Current projects to face higher expenses, even as existing ones wait for buyers

- Rituraj Baruah

A spike in prices of solar modules is expected to raise costs and tariffs for projects under construction, even as multiple solar ventures languish for want of power purchase contracts.

Solar module prices have surged by roughly a third since late December, thanks to soaring prices of silver and aluminium, a weaker rupee, and a global scramble for components after China tightened wafer quotas and signalled a rollback of a 9% value-added tax refund. The price of photovoltaic cells—the core of the solar panel—has jumped to 5.5 cents per watt peak from 3.5 cents in just weeks, four people aware of the matter said. A module comprises multiple cells, which are largely imported.

"The recent jump in cell prices highlights the structural vulnerability of India's solar supply chain," said Prashant Mathur, chief executive officer (CEO) at Saatvik Green Energy Ltd, a Gurugram-based solar component manufacturer. "As equipment costs rise, upcoming projects will face higher capital costs, and tariffs for new power purchase agreements (PPAs) are likely to harden after a prolonged period of deflation."