Swift decline in module prices over the last three to four months is the single most important positive event for the Indian solar sector. The project development landscape has changed significantly over the last quarter, largely due to oversupply and falling solar module prices from China.
Crystalline silicon module average selling prices have declined by approximately 10 percent over the last three months and by about 30 percent over the last 12 months. The lowest price quoted was $0.31 (~₹21)/W, an inconceivable price point a few quarters ago. This drop in panel prices has provided a much-needed boost to developers who won projects at low bids and were struggling to make the project economics work.
Projects that have bid around ₹4.5 (~$0.066)/kWh are in a comfortable position compared to three months ago, according to many developers. However, low component prices will be factored in future auctions and could push bids even lower.
Based on the current manufacturing overcapacity situation in China, module price declines may continue, albeit more slowly than in 2016, reported Mercom Capital Group in its India Solar Quarterly Market Update Dec 2016. However, a lot depends on Chinese policy makers and installation goals that will be set for 2017.
“Indian solar project developers got lucky in 2016, but there is no guarantee 2017 will be the same,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group.