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					</table>At a time when the solar industry had started to gain momentum, with 2022 expected to be one of the best years in terms of installations, the increase in domestic module prices is worrying stakeholders.
For the first time, India <a href="https://mercomindia.com/solar-installations-crossed-10-gw-2021/" target="_blank" rel="noopener">installed</a> a record 10 GW of new solar capacity in 2021, a big jump of 210% year-over-year (YoY) compared to 3.2 GW installed in 2020.
According to Mercom India Research, India&#8217;s utility-scale project development pipeline is over 54 GW, with another 33 GW of projects tendered awaiting auction.
However, the rise in module prices due to the increase in the cost of the balance of system (BoS) components has added to the developers&#8217; challenges. A rise in input costs means the overall cost of projects will go up.
Demand-supply gap 
Domestic module manufacturers have been hit hard due to solar supply chain disruptions and increased raw material prices. The current demand-supply gap in the market will take time to ease.
The increase in raw material prices has led to the rise in prices of polysilicon, EVA, backsheets, aluminum frames, and solar glass. Consequently, prices for solar panels have reached a level not seen in the last year or so.
Speaking to Mercom, Juhi Marwadi, Director of <a href="https://www.pixonenergy.com/" target="_blank" rel="noopener">PIXON Energy</a>, said, &#8220;The supply chain disruptions are now stifling domestic sector growth. Local manufacturers are struggling to close the demand-supply gap and keep up with the rising commodity and module BoS component prices. Smaller manufacturers, who lack the benefit of scale, are more affected by the disruptions.&#8221;
Saumya Ranjan Jena, Manager-Business Development at <a href="https://premierenergies.com/">Premier Energies</a>, said, &#8220;There is definitely a demand-supply gap, especially for aluminum, EVA, backsheets, junction boxes, interconnect copper &amp; busbar, RTV, potting material, etc.&#8221;
Due to the price increase of module BoS components and unavailability in the domestic market, module prices have gone up, affecting existing long-term contracts. &#8220;All parties resorted to re-negotiate the price; hence many contracts went unexecuted or short closed.&#8221;
He said that due to the price increase, many manufacturers did not get orders and their production lines remained idle.
Marwadi said that the increase in component prices had impacted module pricing significantly. &#8220;Prices continue to rise on a regular basis, affecting demand for solar modules. These costs vary widely among regions, technology, and market groups and are influenced heavily by local conditions and regulatory environments. To compete, the BoS industry is undergoing extensive cost-cutting and optimization.&#8221;
She expects the trend to continue until October this year.
Bharat Bhut, Co-founder and Director of <a href="https://goldisolar.com/" target="_blank" rel="noopener">Goldi Solar</a>, said, &#8220;Yes, there is a demand-supply gap, as the indigenous supply chain has not developed yet. Major BoS items have an additional duty component with anti-dumping duties, making it impossible to import raw materials too.&#8221;
Harsh Jain, Director, <a href="https://www.citizensolar.com/" target="_blank" rel="noopener">Citizen Solar</a> concurred, &#8220;The demand-supply gap regarding the availability of module BoS components in the market is hurting manufacturing. Take the case of copper ribbons used in module manufacturing which are imported from China. Indian ribbons are also there in the market, but they are not of the same quality as the Chinese imports. We have to pay duties on the import of raw materials from China, which has led to the increase in module prices. EVA prices have stabilized, and the same is the case with backsheet. But metal prices have gone through the roof.&#8221;
Limited BoS suppliers 
With a constant decrease in solar power tariffs, developers have been trying their best to enhance the efficiency of solar projects to maximize the return on investment. But their hands are tied with the rise of module prices and other components.
Highlighting the increase in module prices, Jena said that the price of mono PERC in January this year was $0.27-0.29/Wp. Currently, it has gone up to $0.35-0.37/Wp.
In India, there are not many BoS suppliers. &#8220;We have a limited supply of solar glass, EVA, backsheet, and junction boxes in India. Domestic prices are higher (5% to 10%) than the landed Chinese prices,&#8221; added Jena.
Bhut said that the China Nonferrous Metals Industry Association reported that polysilicon prices had steadily soared to CNY 280 (~$41.78)/kg in June – the highest level ever recorded. &#8220;These materials add to the total module cost, making the Indian modules costlier than the Chinese ones. This has affected domestic module manufacturers.&#8221;
Jena said, &#8220;Most of the supplies come from China, which is unpredictable for a manufacturer. However, module prices are expected to decrease sooner than later, with  polysilicon capacities being added on a large scale in 2023-24.&#8221;
Bhut suggested that customers consider short-term buying to insulate themselves from rising prices. The government must intervene by removing duties on raw materials to keep the demand stable.
Stressing the need for domestic manufacturing of module BoS components, Jain said there was an urgent need to manufacture high-level module BoS components in India to cut the dependence on China.
&#8220;In India, we have eight to ten companies for EVA manufacturing. But for backsheets, we only have RenewSys. The most important thing is that the benefits we used to get earlier are not there, affecting the manufacturing sector, including the manufacturing of BoS components,&#8221; he added.
With the rise in module BoS component prices and the inception of Basic Customs Duty (BCD) and the Approved List of Models and Manufacturers (ALMM), the market is getting more challenging for developers increasing the capital cost of the projects.
For developers, module price hikes and module component demand-supply gap are worrisome because solar tariffs have not increased in proportion to the increase in input costs. They have no option but to ride out the situation before normalcy returns.
&#8220;We are feeling the growing pains in developing a domestic supply chain. Relying on duties to block imports is a double-edged sword, especially when the industry is so dependent on imported components. The industry has to learn to live with volatility in both directions and better manage price risks when bidding for projects,&#8221; said Raj Prabhu, CEO of Mercom Capital group.

Demand-Supply Gap of Solar Module BoS Components is Driving Domestic Module Prices Up

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