India's Solar Glass Duty: A Boon For Domestic Makers, A Bane For Module Players
While Borosil Renewables stands to benefit from India's latest anti dumping duty, module makers like Waaree Energies and Premier Energies could see higher costs.
Increased solar glass imports have impacted the Indian solar glass manufacturing industry. In a move to offer some relief, the government imposed a provisional anti dumping duty on solar glass imports on Friday.
While this is a big boon for domestic solar glass manufacturers, it could have a short term negative reaction on solar module players.
India's Anti Dumping Duty On Solar Glass
India will now impose a provisional anti dumping duty on solar glass imports from China and Vietnam, for a period of six months.
Duties on Chinese imports range from $673 to $677 per metric tonne, while Vietnamese imports face a duty of $565 per metric tonne.
Benefit To Borosil Renewables
The latest move is a big relief for India's largest solar glass manufacturer Borosil Renewables. The company's stock prices were up almost 8% on Friday.
The company has been facing financial difficulties due to cheap solar glass imports for several quarters now.
Its capacity expansion plans, which have been put on hold, were contingent on an anti-dumping duty coming into place. This increases the possibility of the company going ahead with their 1,100-tonne capacity expansion, which would involve a capex of Rs 1,500 crore.
Negative For Solar Module Makers
While the anti-dumping duty is a positive for Borosil Renewables, the move could be a short term negative for Indian solar module makers like Waaree Energies Ltd., Premier Energies Ltd., Tata Power Co. and Mundra Solar PV Ltd.
Over 90% of India's solar glass needs have been met from China and Vietnam of late. Thus, the additional duty would raise costs for solar module makers.
Bernstein noted that domestic modules sell at 15 cents per watt in India and 9 cents per watt globally. The duty could, thus, erode profitability of solar module companies in a big way in the near future. This pressure, however, would only last till the companies pass on the higher costs to the end customer or re-negotiate existing contracts.
Impact On Renewable Developers
The duties have nil or neutral impact on Indian renewable project developers due to the 'change in law' clause of the power purchase agreement that developers sign.
As per Bernstein, the 2.5 cent per watt additional cost would increase overall solar project costs by 6%. However, this cost would be passed to the end customer, who has contracted the project, who would then pass it on to general consumers via power distribution companies.
