Solar Module Prices Expected To Rise, Domestic Players To Benefit

With China's decision to reduce tax rebates on export of its solar modules and cells kicking in on Dec. 1, price hikes are likely, Nuvama Research said.

A rise in solar module prices will not only benefit Indian players, but could also lead to a rise in renewable energy projects.

A supply glut in China has led to international prices of mono PERC solar modules seeing a significant decline over the past two years. Prices are currently trading at an all time low of 9-10 cents per watt currently, which stands around 67% lower from the peak prices in 2022. In fiscal 2024 so far, prices have fallen 25%.

The reduction in the export tax rebate on solar PV modules and cells, effective Dec. 1, is likely to lead to price absorption by Chinese manufacturers, according to brokerage and research firm Nuvama.

With the rebate dropping from 13% to 9%, export costs will rise, resulting in a 4% increase in input costs for solar panel manufacturers, Nuvama said in a note.

To offset these higher costs, manufacturers may either absorb the increase themselves or pass it on to buyers, potentially raising international prices for solar cells and modules. Nuvama noted that this price adjustment could impact both domestic and foreign markets, depending on how manufacturers manage the cost changes.

The fall in international solar prices has likely bottomed out, according to experts. As per Rupesh Sankhe, vice-president at Elara Capital, module prices will not go down further. He attributes this view to factors like, maturing technology of Chinese module manufacturers, who are now reporting losses, as well as expected tariffs in Chinese imports by the US.

With Chinese products becoming less competitive due to the reduced rebate, Indian manufacturers like Waaree Energies Ltd. and Premier Energies Ltd. can potentially offer their products at more competitive prices in domestic as well as global market.

This not only adds value to India's growing solar export market, but could also reduce the country's solar imports, which have been hurt by cheaper imports dumped by China via various South East Asian countries.

Nuvama Research also notes that the proposed 'Approved List of Models and Manufacturers' for solar cells that is expected to come into effect by April 2026, will also raise prices across the solar value chain. The proposal will mandate government funded solar projects to only use domestically manufactured solar cells, which increases demand and opportunities for companies like Waaree Energies and Premier Energies.