Mitigating solar supply chain challenges

India’s ambitious renewable energy goal is threatened by supply chain disruptions. Many of the Chinese solar photovoltaic module manufacturers are alleged to have reneged on their supply contracts, leading to an escalation in prices of the panels that are critical for solar power generation.

With more than 80% of India’s solar PV module market being controlled by Chinese suppliers, the domestic engineering, procurement and construction (EPC) companies are hit with amplified costs. Several of their clients have opted to defer projects.

Tanmoy Duari, CEO, AXITEC Energy India, says, There are lots of utility-scale projects that need to be commissioned before the ALMM abeyance period elapses on March 31, 2024. As the time is short, the developers cannot wait too long. If developers cross the commercial operation date deadline, they will have to pay a huge fine to the project’s owner/govt or can even be blacklisted for a few years.

The Ministry of New & Renewable Energy (MNRE), vide its order dated March 10, 2023, exempted solar projects to be commissioned till March 31, 2024, from the requirement to source modules from the Approved Models and Manufacturers (ALMM) list. It took the step given the challenges faced by solar power developers in sourcing modules from domestic manufacturers.

Duari says accelerating PV deployment in India requires a multifaceted approach addressing the following challenges:

Price uncertainty: The volatility in prices, especially after contracts between Chinese module manufacturers and Indian assemblers, poses a significant challenge. Implementing long-term contracts or exploring diverse sourcing options can help mitigate this uncertainty and stabilize prices.

Currency fluctuations: The continuous increase in the value of the Dollar, affecting the purchase of cells and other components, demands strategic financial planning. Hedging mechanisms, financial instruments, or exploring local alternatives for certain components can be considered to counter the impact of currency fluctuations.

Financial closure challenges: Securing loans and financial support is a critical aspect of PV projects. Streamlining the financial closure process by fostering collaboration between financial institutions and project developers, along with offering incentives or easing regulations, can enhance accessibility to financial resources.

Clearance for substations: Delays in obtaining clearances for substations can impede project timelines. Streamlining approval processes, ensuring transparent communication between stakeholders, and leveraging digital platforms for documentation can help expedite clearance procedures.

By addressing these challenges collaboratively, the solar industry in India can work towards a more stable, resilient, and efficient deployment of PV projects.